The Financial Crisis Inquiry Commission grilled Goldman Sachs bankers again this week. Some commissioners appeared to believe that the bank acted improperly by aggressively demanding collateral on derivatives AIG had insured which had lost value. This, however, was a legitimate action, since these assets actually were worth as little as Goldman thought -- if not less. Consequently, I argued that Goldman was right to demand this capital, so the FCIC's time could be better spent searching for more blameworthy causes of the crisis.
Felix Salmon defends the FCIC on this one, saying that this is a worthy investigation:
The fact is that the financial crisis had many moving parts, all of which were interwoven with each other, and one of the central ones was the collapse of AIG. It's reasonable to say that if AIG had not collapsed, then the crisis would not have been as bad as it was -- and it certainly wouldn't have been nearly as expensive as it turned out to be for the US government.
Was Goldman only doing its job when it started demanding ever-increasing amounts of collateral from AIG? Certainly, yes. But in doing so, it helped to bring down a venerable insurance company, and cost the US taxpayer the best part of $100 billion in bailout funds. Some of that money will end up being repaid, with interest; the chances are that much of it won't be. So this is a perfectly legitimate subject for the FCIC to investigate.
Certainly, the failure of AIG had a lot to do with the crisis. But the question to ask is: did Goldman cause AIG to fail, or did AIG do so by making incredibly poor bets on its derivatives? Many other banks demanded more collateral from AIG as well once they realized, as Goldman did, that the mortgage market had collapsed. Goldman just did so earlier and more aggressively.