One can forgive some of the failings in light of the pressure to reach a deal that preserved the financial system. But not all. Once again, one has the feeling that the long arm of the epitome of Wall Street, Goldman Sachs, has produced a "solution" that was very good for it. Examples:
**No real effort was made to get the companies benefiting to take less than the book value of their loans. The Goldman argument that it had successfully hedged its deals with AIG and deserved to be fully compensated is faulted, on grounds that the hedges would not have survived the almost certain meltdown.
**The FED considered itself an AIG creditor rather than a regulator and "could not impose its will on banks but instead asked for voluntary concessions," in contrast to the auto bailout where the terms were crammed down them. Moreover it decided it could not treat foreign banks differently from domestic banks for fear of retaliation.
**Some banks argued that they could not legally take less than the contracted amount unless AIG declared bankruptcy, a long judicial proceeding that had to be avoided.
**The authorities insisted on secrecy to prevent the collapse from spreading but that was mistaken as whenever public funds are spent, the public is entitled to know.
