Goldman Back on Top, Thanks to Uncle Sam

Competitors killed off, AIG conveniently saved, bank rakes in profits
By Kevin Spak,  Newser Staff
Posted Apr 15, 2009 8:15 AM CDT
Goldman Back on Top, Thanks to Uncle Sam
Goldman Sachs CEO and Chairman Lloyd C. Blankfein, left, and JPMorgan Chase CEO James Dimon, testify on Capitol Hill, Feb. 11, 2009, before the House Financial Services Committee.   (AP Photo/Manuel Balce Ceneta)

Goldman Sachs reported a $1.8 billion profit yesterday, and it owes it all to its helpful Uncle Sam, writes William Cohan in the New York Times. “Government Sachs,” as it’s come to be known, has been pulling Washington’s strings for years, and now its competitors are all dead or in ruins—thanks largely to former CEO Hank Paulson, who played a key role in the fall of Bear Sterns and Lehman Brothers, and the Merrill Lynch buyout.

But critics see the AIG bailout as “the canvas upon which the bank and its alumni have painted their greatest masterpiece of self-interest.” Why bail out AIG and not Lehman? To save people AIG owed money to—like, for example, Goldman Sachs. Goldman says the $13 billion it’s received from AIG had nothing to do with its first-quarter killing. That’s thanks to some creative accounting, says Cohan. Conveniently enough, Goldman’s re-classification allowed it to leave December, and $1 billion in losses, off the report. (Read more Goldman Sachs stories.)

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