The NYT editorial board again recycles Gretchen Morgenson's lies about AIG and Goldman:

The A.I.G. bailouts fail the basic test of transparency: Who ends up with the money? ... The serial A.I.G. bailouts are especially problematic for their connection to the Wall Street bank Goldman Sachs. At the time of the first A.I.G. rescue last fall, it was reported by Gretchen Morgenson in The Times that Goldman was A.I.G.’s largest trading partner, with some $20 billion of business tied into the insurer. Goldman has said that its exposure to risk from A.I.G. was offset, or hedged, by other investments. What is certain is that Goldman has lots of friends in high places — yet one more reason why this bailout has to be as transparent as possible. Lloyd Blankfein, Goldman’s chief executive, was the only Wall Street executive at a September meeting at the New York Federal Reserve to discuss the initial A.I.G. bailout.
As I've pointed out before, this is an absurd (and dishonest) accusation, because the Fed hired Morgan Stanley to advise them on the AIG bailout. From Bloomberg:
The Fed has hired Morgan Stanley to examine alternatives for AIG, a person familiar with the situation said. Morgan Stanley will review what role, if any, the government should play in helping the insurer.
Moreover, Morgenson's claim, repeated by the NYT editorial board, that Lloyd Blankfein was the only executive at a meeting at the NY Fed to discuss the first AIG bailout, is fundamentally untrue:
Paulson's successor at Goldman, Lloyd Blankfein, was the only chief executive at a meeting Sept. 15 at the New York Federal Reserve Bank at which the troubles at AIG were discussed, although representatives of other firms were present, a Fed spokesman said.
The other firms' representatives were also "executives," by the way (as if the banks would send mid-level employees to an emergency meeting at the NY Fed about the failure of the largest non-bank financial institution in the world). The NYT conveniently failed to disclose this, even though a few sentences earlier it had accused the AIG bailouts of "fail[ing] the basic test of transparency." Oh, the irony.


Anonymous said...

If Gretchen had a clue , she'd be dangerous

Anonymous said...

Gretchen wrote in the linked article, "One of the Wall Street chief executives participating in the meeting was Lloyd C. Blankfein of Goldman Sachs", not as your blog states.

Ok, so Morgan advised the Fed. The No. 1 rule for consultants is 'the customer knows what they want to do, they just need you to say it too.'

Economics of Contempt said...

"Gretchen wrote in the linked article, 'One of the Wall Street chief executives participating in the meeting was Lloyd C. Blankfein of Goldman Sachs', not as your blog states."

That's the corrected version of Morgenson's article. The original version (see here) said:

"The only Wall Street chief executive participating in the meeting was Lloyd C. Blankfein of Goldman Sachs, Mr. Paulson’s former firm."

Gretchen's original article also said that the meeting was "led by" Hank Paulson, when in reality Paulson wasn't even at the meeting. (See the extensive correction now appended to the article.)

The NYT editorial board then did Gretchen one better, charging that Blankfein was the only Wall Street executive at the meeting.

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