Smith also raises a very, very good point here on why the government deemed the sophisticated AIG’s counterparties worthy of a bailout but the less-sophisticated auction-rate securities holders not:

For instance, the report uncritically repeats (page 14) the excuse that the Fed was worried about the impact of an AIG BK on stable value funds. AIGFP had written $38 billion of them. First, did you see any Federal official run to the rescue when the $200 billion auction rate securities market collapsed? That was a retail market, and the users mistakenly regarded it as a near money market equivalent. Loss of access to these funds was far more catastrophic to many investors than taking a haircut on an investment provided by a dud company (those stable value fund investors should have been delighted to get even 60 cents on the dollar. They were so lucky as to have Goldman as a fellow creditor Does anyone think for one nanosecond that the Fed would have rescued AIGFP if its only creditors were stable value fund investors? Please.

This would be a good question for the press to put to officials. There are a couple more potential stories just in the quotes above.

Also, I’ll reiterate from this morning: Why did Geithner say that the “the financial condition of the counterparties was not a relevant factor” in making banks whole? That was uncritically reported by the Journal this morning, but at least it was smart enough to report it. I didn’t see anybody else pick up on that. Anyone want to take that on?

ADDING: Floyd Norris asks another very good story-worthy question: Who wrote the credit-default swaps that Goldman Sachs and Merrill Lynch bought to protect themselves from an AIG collapse? They are also big recipients of the bailout. (h/t Felix Salmon)

Ryan Chittum is a former Wall Street Journal reporter, and deputy editor of The Audit, CJR's business section. If you see notable business journalism, give him a heads-up at rc2538@columbia.edu.