Paulson’s former firm, Goldman, had exposure to A.I.G. Paulson had a major part in the decision to rescue A.I.G; the Fed made the loan to A.I.G. and any losses will be absorbed by taxpayers. (The GAO suspects A.I.G. will never be able to pay back the loan.) The government has committed $173 billion to A.I.G.
Goldman received $13 billion in taxpayer money as a result of the A.I.G. bailout. Goldman was also given permission to convert from an investment firm to a national bank, making access to federal financing easier.
Goldman also received federal debt guarantees and $10 billion from TARP. Goldman also benefited when the SEC suddenly changed trading rules, which resulted in investors being banned from shorting Goldman shares.
Goldman has rebounded far more than its competitors; its employees are expected to earn record bonuses this year, averaging about $700,000 each.
Paulson’s former rival, Lehman Brothers, was left to fail.