During the week of September 15, 2008, the week the federal government decided to bail out insurance giant AIG, Treasury Secretary Henry Paulson spoke to the CEO of his former firm Goldman Sachs, Lloyd Blankfein, more than 24 times, the Times has found. This gives Goldman Sachs conspiracy theorists, as well as those who posit AIG was rescued in order to prop up Goldman, something to chew on — and raises ethical questions about Paulson's involvement with the firm he worked at for 32 years.
Further reading...
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Transparent comedy from Janet Tavakoli.
It's September 2008. Goldman and AIG are trading in the markets, and Goldman notices that AIG seems to be having very severe liquidity problems. AIG needs to renew repo agreements after investing the trades' cash in plunging mortgage collateral bought from investment banks, and asks around for various other sources of funding.
Recognizing an emergency, Lloyd Blankfein whips out his cell phone and calls Hank Paulson. He gasps to the then Treasury Secretary and former Goldman CEO: "AIG, one of my favorite trading partners is going under! This will cause a market meltdown! What should we do?"
Paulson, in a calm comforting voice says: "Take a deep breath and pull yourself together. I can help. First, let's make sure AIG is really going under."
There is a long pause, during which Blankfein checks the status of his credit default protection and other hedges against an AIG failure, yanks AIG's credit lines, and presses AIG with calls for collateral on credit default swap agreements on plummeting CDOs.
Blankfein's voice finally comes back on the line. He says: "OK, now what?"
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Based on the world's funniest joke...
Two hunters are out in the woods when one of them collapses. He doesn't seem to be breathing and his eyes are glazed. The other guy whips out his phone and calls the emergency services. He gasps, "My friend is dead! What can I do?".
The operator says "Calm down. I can help. First, let's make sure he's dead."
There is a silence, then a shot is heard.
Back on the phone, the guy says "OK, now what?"
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These cartoons are pretty entertaining: