Craig Pirrong submits:
Several sites on the web (EG) have linked to my recent post on the AIG bailout, and included a hattip to Jim Chanos. Just curious if that is the “noted short seller” (and billionaire) Jim Chanos (a hedge fund manager noted for his very prescient call on Enron). If so, it would be a hoot.
The sites mentioned have quoted the part of the post which notes that unlike the other banks that received payments via the Maiden Lane III SPV, Goldman Sachs (GS) had sold protection on CDOs to its customers, and thus was potentially exposed to collateral calls from them. This means that with no cash flows from AIG (AIG) (or Uncle Sugar), Goldman would have needed to find a few spare billion lying around to meet its obligations–at a time of a market meltdown. (Think of how the market would have responded had Goldman not met the calls, or been observed scrambling around to do so.)