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Even after Goldman Sachs cost AIG a lot of money by being involved in risky investments and the Magnetar hedge fund; AIG has reported that they will stand behind Goldman Sachs and continue to0 conduct business with them. Their CEO Harvey Golub stated, “Goldman is a fine firm and does a lot of things extraordinarily well…where they can serve the purposes of AIG we will continue to use them….” This was suprising me a little after what Goldman Sachs has done and pretty much caused AIG to go under. Do you think that Goldman and AIG we working together in any of their financial investments? Or Do you think AIG knows that Goldman is going to change their ways and become a much safer investor?
http://blogs.wsj.com/deals/2010/05/12/aig-stands-by-its-banker-goldman-sachs/
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I don't think AIG and Goldman were working together on any of these past investments. AIG hiring Citigroup and Bank of America as advisers probably is signaling that AIG is slowly cutting ties with Goldman Sachs. It could just to avoid a massive media frenzy and have things go smoothly. How much can AIG really trust Goldman?
ReplyDeleteI think they were working together. There is no reason that AIG would stand behind Goldman Sachs and then they would hire other banks as advisors. Obviously something was going on for them to stand behind them, and then to have it fall out now. I'm very curious to see the story unfold.
ReplyDeleteI wouldn't read too much into this comment. There have been (unproven) concerns that Goldman is loosing clients because of this whole SEC investigation. More than likely, this is just a PR ploy that Goldman called in as a favor.
ReplyDeleteI think AIG is trying to distance itself from Goldman Sachs after the SEC investigation. It wouldn't surprise me if Goldman was losing other clients as well. However, Goldman Sachs is still a huge player and I don't think it would ever be in AIG's best interest to make public, negative comments about Goldman without negative ramifications.
ReplyDeleteI think AIG is simply trying to diversify their accounts between Goldman, Citigroup, and Bank of America. It makes the most business sense to work with Goldman Sachs on business that they excel at and leave matters that they fumble to other companies. If they are trying to distance themselves, they are definitely doing it in a slow and calculated manner. This way any current Goldman investments will not be jeopardized based on consumer expectations resulting in loses/ payouts for AIG.
ReplyDeleteThis is perfectly rational in my opinion. AIG still exists, Goldman did not cause them to cease to exist. In fact, AIG is making money, lot's of money. Goldman also makes a lot of money. To give the superstar of wall street (Goldman) the cold shoulder would be naive and crippling t AIG. Finally, Goldman was never the reason AIG was struggling, AIG was the reason AIG was struggling, I think they know that and I bet, in the future, AIG will be smarter about their own risk valuation (or continue to rely on Uncle Sam to bail them out). Long story short: as long as every one makes (lots of) money, everyone is happy.
ReplyDelete“Goldman is a fine firm and does a lot of things extraordinarily well…where they can serve the purposes of AIG we will continue to use them….”
ReplyDeleteIf Goldman is making them money they AIG is going to stay working for them. I don't see any thing wrong with these to companies doing business with eachother.
I agree with Tommy, although Goldman was given large sums of repayment when their investments turned sour, AIG willingly took on the risk of those investments at extremely low premiums because they thought that the market would stay positive. If AIG should have taken more precaution on these investments. Goldman is an industry leader it does not surprise me that they would continue to collaborate.
ReplyDeleteIt was AIGs responsibility to know who and what to back. Lots of people made and lost lots of money through the AIG-Goldman connection, but the fact is that AIG feels it isn't a risky option to stick with Goldman and perhaps they've learned to look more into what they are getting themselves into now, before they back anything that could lead to a second bust for their business.
ReplyDeleteAlong with Jim, AIG took all that risk upon themselves because a financial meltdown of this nature had never happened and it might have been hard for them to argue it would when they were making so much money off of Goldman. Today, things are different and as people continue to learn lessons from the crisis they will be more cautious with the profits they do make. However, simply ignoring the opportunity to do business with Goldman would be ignoring huge profit potential.
ReplyDeleteI agree w/ Ashlee that AIG is trying to diversify their accounts.
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