Goldman: AIG's failure wouldn't have toppled us
| New York
What would have happened if the government had not rescued AIG?
In the case of Goldman Sachs, one of AIG鈥檚 largest trading partners, the answer is 鈥渘othing.鈥�
At least that鈥檚 what David Viniar, the company鈥檚 chief financial officer, maintained on Friday during a conference call with reporters. Instead, the company, which had a total of $20 billion in business with AIG, had either enough collateral or had hedged its trades with AIG so it would not have made a difference if AIG had gone out of business.
鈥淕oldman would have been unaffected by the failure of AIG,鈥� said Mr. Viniar. 鈥淲e would have had no credit losses if they failed,鈥� he stated.
Systemic risk
One of the major reasons the government intervened in the case of AIG was to prevent the risk of big losses rippling through the financial system, hitting especially hard those companies with financial holdings insured by AIG, such as Goldman Sachs.
Does this mean there was no such risk?
If AIG had not been saved by the US government鈥攁n effort that has now cost $170 billion鈥攖he financial markets would have gone into further turmoil, Viniar said. 鈥淔or us volatility is usually good for our trading business,鈥� he added. 鈥淏ut it鈥檚 not good for the financial markets as a whole.鈥�
AIG exposure remains
Even today, Goldman continues to have an exposure of $4.4 billion to AIG. However, Viniar says that the company has gotten enough collateral from AIG to protect itself against a loss.
When AIG collapsed there were reports Goldman Sachs had pushed the company over the edge by demanding additional collateral. Viniar says the value of the assets it was holding was declining and it was within its commercial rights to demand additional collateral.
鈥淲e didn鈥檛 do anything wrong,鈥� he said. 鈥淲e had a responsibility to our shareholders to make sure we were protected. We called for the collateral due on the contracts. We have no guilt whatsoever.鈥�
