Wednesday, March 18, 2009

Who did Goldman hedge with?

In regarding to Goldman's hedges on AIG, we have this answer from Goldman:

Asked why Goldman Sachs took $12.9 billion of taxpayer money if it was collateralized and hedged on its AIG positions, DuVally said it was because AIG was not allowed to fail, so Goldman did not get money from hedges that would have paid out if the insurer had collapsed. And, he said, under the terms of its contracts with AIG, Goldman was entitled to collateral.

Who did Goldman hedge with? It seems that the only bank, that could of hedged Goldman's exposure, would of been JPM, because most every other bank of significance was at the AIG swap trough.

And if we throw in the other $5.6 billion from Maiden Lane III, we are now up to $18.5 billion. So who hedged Goldman's $20 billion of exposure?

After all, Goldman's Duvally said, "the bank does extensive due diligence on all its counterparties."

So once again, that question that needs to be asked is who had the other side of Goldman's $20 billion swaps?

Maybe Goldman's "hedge" was the back door deal that was made with our Government on AIG's rescue.

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