The evidence is mounting that Goldman Sachs may, indeed, have been well-hedged against a potential AIG default. As a result, The New York Times' Andrew Ross Sorkin argues that the insurer's bailout wasn't about helping Goldman, but probably benefited other banks more. That argument sounds familiar. Sorkin says that the Federal Reserve believed that Goldman was already hedged against the loss prior to the bailout. He provides some numbers:
The e-mail message came from one of Mr. Geithner's lieutenants, Brian Peters. In the message, Mr. Peters said that he had just spoken to Goldman's chief risk officer, Craig Broderick.
Mr. Peters spelled out his understanding of Goldman's direct exposure to A.I.G. to Mr. Geithner. He said that Goldman's "net exposure is $2.3 billion," but immediately added, "They have credit hedges of $2.5 billion, $500 million of which is internal, so they are roughly flat."
Read the full story at the New York Times.