Lurker Posted September 30, 2008 Posted September 30, 2008 You're right, they gave it to Goldman Sachs... AIG bailout You do understand that they gave Goldman (and the other I-banks) their own money back, don't you? AIG owed their counterparties the $37 billion. When Goldman et al asked them to return it (e.g., a collateral call), AIG had a hard time coming up with the funds and essentially became insolvent. "An AIG bankruptcy would have forced these counterparties to stand in line with other creditors and wait for perhaps years to be paid through the courts." If Goldman had to wait in line with the other creditors, the whole financial house of cards that's unravelling right now would have collapsed even further. Fair? Certainly not. Prudent? No doubt, if the goal is to keep the economy from a deep, long recession.
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