Goldman’s Switcharoo on AIG

As AIG's former wonderboy, Joe Cassano,

that he regrets nothing and by the way,


, Gretchen Morgenson and Louise Story of the

New York Times

are telling us

about the $180 billion AIG bailout.

No, not that it really was meant to benefit a few big banks. We already know that.

What Morgenson and Story have unearthed in the quarter million pages of documents the New York Fed disgorged last month is that the deal, meant to benefit Goldman Sachs, was inked by Goldman people, and that it had a special provision barring AIG from suing anyone later, once the truth came out:

Dan Jester, the government's point man on the AIG bailout, was a former Goldman guy who still held stock in the company, according to the


. He was the guy who, rejecting advice from cooler heads, pushed to pay AIG's counterparties 100 percent of the money supposedly owed, rather than requiring them to take a 10 percent "haircut" on their investment, which is the more common solution. Goldman got about $14 billion from AIG—all of that supplied, effectively, by taxpayers.

Today, Cassano is telling Congress that his company had stopped insuring mortgage-backed securities around 2005—before the most toxic crap was stuffed into the sausage casings.

for the debacle two weeks ago,  he still believes that the securities AIG backed were mainly non-toxic, he says.

If he's right—and that is by no means undisputed—AIG would have cause to seek reimbursement from the banks paid off in 2008 when those securities were given unreasonably low values. The provision barring such a suit, which the


says was not routine, appears to have anticipated this contingency:


"Duress" seems an understatement.

Putting a late-hour switcharoo in a contract is not always illegal, but it's not always kosher either, as

from yesterday's



Until recently, rewriting a loan guaranty "in an identical type size and font as the original restated guaranty" but with words that say, in effect, "not a guaranty," would be considered sharp business—if not standard operating procedure--especially if the counterparty fell for it. Now the Office of Thrift Supervision is coming down hard on a Hunt Valley bank executive for doing just that.

Wonder if those kinds of rules will ever apply to the