The NYT’s Sunday story on the AIG-Goldman collateral fight didn’t break any major news, but it certainly added some useful details to the record and, for the most part, has held up well against the unusual public response by Goldman spokesman Lucas van Praag on Huffington Post.
But, as they say in the NFL, upon further review, the story in fact does contain a problem paragraph, and the dispute surrounding it offers lessons for the press.
Of course, as we often say around here at CJR, what doesn’t?
(And I’ll get it out of the way early that Goldman is an Audit funder, having giving us about 10 percent of our budget last year; read all about it here and here. I suppose there are press lessons there, too.)
As close followers of the financial conversation know, the latest back-and-forth between Goldman and the Times is part of a continuing institutional clash that began in September 2008, when Gretchen Morgenson first broke the news that Goldman was involved in the AIG bailout at all. In this Nation profile of Morgenson last year, I sided with the Times in an earlier dispute.
The latest Times piece, by Morgenson and Louise Story, explored the precrash struggle between AIG and Goldman over the value of CDOs that AIG had agreed to insure for the bank.
To be clear, Goldman’s response notwithstanding, the main premise of the Times’s story, announced in the headline, is unassailable and, really, not even controversial at this point:
Testy Conflict With Goldman Helped Push A.I.G. to EdgeAnd while he offers a useful alternative view, almost all of what van Praag calls “errors” don’t really qualify. I’ll take them point-by-point elsewhere and add a link when it’s ready. (UPDATE: That’s here.)
Where van Praag does have a point, however, comes in a paragraph about Goldman receiving even more bailout money than had been previously reported via a deal with Societe Generale. This is from van Praag’s piece.
NYT assertion: “In addition, according to two people with knowledge of the positions a portion of the $11 billion in taxpayer money that went to Societe Generale, a French bank that traded with A.I.G, was subsequently transferred to Goldman under a deal the two banks had struck.”
The facts: The assertion is false and misleading. Goldman Sachs provided financing to many counterparties, but in that role we would not have known whether a counterparty had obtained credit default protection, let alone from whom or in what amount.
The two sides here are talking past each other a bit. But on its face, Goldman already has a beef because even if the Times’s assertion is true, the passage gives a sinister cast to what, as written, could easily have been an innocent transaction. With the number of deals between banks, such a transfer doesn’t seem unusual, or at least the Times doesn’t offer any reason to think it was.
In a note to me, Times Sunday Business Editor Tim O’Brien expands on the narrow language of the story and says that the Times learned that Goldman had in fact bought AIG-issued insurance from SocGen, triggering the “transfer” referred to above.
This is O’Brien:
As you noted in your email to me, I think almost all of Lucas’ responses to our piece in his note to the HuffPost were already reflected in the story itself. I don’t think any of them contradict or undermine the exploration of Goldman’s relationship with AIG, as laid out in Gretchen Morgenson and Louise Story’s deeply reported piece.
Regarding Goldman’s trading relationship with SocGen: Louise Story asked Lucas to go on the record twice to comment on that issue and Lucas declined. Although he’s decided to go on the record on the matter after we published our piece, he’s still not actually addressing what we wrote.