The Press Wins One on AIG

After six months, we finally know who got backdoor bailouts from the AIG rescue, and how much they got—$105 billion, money that the government, in cahoots with Wall Street, didn’t want to have to account for.

But the pressure became too much. Why? Because some journalists did their jobs really well.

Specifically I’m talking about The New York Times’s Gretchen Morgenson and Bloomberg’s Mark Pittman, who started this ball rolling way back in September with critical stories on the bailout and who it was really helping (Not incidentally, we’ve featured both Morgenson and Pittman in Audit Interviews in recent months).

Here was Morgenson:

Although it was not widely known, Goldman, a Wall Street stalwart that had seemed immune to its rivals’ woes, was A.I.G.’s largest trading partner, according to six people close to the insurer who requested anonymity because of confidentiality agreements. A collapse of the insurer threatened to leave a hole of as much as $20 billion in Goldman’s side, several of these people said.

Here was Pittman:

As much as $37 billion from federal bailout loans to American International Group Inc. has gone to investment banks including Goldman Sachs Group Inc., the firm Treasury Secretary Henry Paulson used to run.

Note the nice dig at Paulson. And that was the lede!

These stories kicked around for a while—Dean Starkman wrote about them here and here—starting the snowball down the hill (and eventually to the Hill) that eventually got us this critical information. Splat.

The NYT today:

Patience with the company’s silence began to run out this month after it disclosed the largest loss in United States history and had to get a new round of government support. Members of Congress demanded in two hearings to know who was benefiting from the bailout and threatened to vote against future bailouts for anybody if they did not get the information.

Goldman Sachs got the most, with $13 billion. And U.S. taxpayers bailed out a bunch of foreign banks, led by Société Générale and Deutsche Bank with $12 billion apiece.

I like this tweaking in today’s Times story, which led the paper:

Among the beneficiaries of the government rescue were Wall Street firms, like Goldman Sachs, JPMorgan and Merrill Lynch that had argued in the past that derivatives were valuable risk-management tools that skilled investors could use wisely without any intervention from federal regulators.

And I hope we get to the bottom of this:

Goldman Sachs had said in the past that its exposure to A.I.G.’s financial trouble was “immaterial.” A Goldman Sachs representative was not reachable on Sunday to address whether that characterization still held. When asked about its exposure to A.I.G. in the past, Goldman Sachs has said that it used hedging strategies with other investments to reduce its exposure.

So congrats to the Times and Bloomberg, Morgenson and Pittman.

This is how journalism is supposed to work. Dig deep. Raise serious questions. Get answers.

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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 Follow him on Twitter at @ryanchittum.