GS is a trillion dollar bank, that routinely makes that kind of money on the spread between its funding costs to carry a position that size, and what its assets earn for it.
In the CDS market, AIG was not required to post extra collateral against open CDS positions as long as it kept its AAA rating, but it paid its actual losses as they occurred. When it lost that rating it needed extra capital to cover its CDS exposure. AIG is a $2 trillion bank, with $500 billion in "float" (money in its possession on which it owes nothing, accruing to it for insurance contracts, between the time it collects premiums and pays out claims). It had a solvency danger certainly, but not a liquidity one in the conventional sense, given this massive access to uncallable capital it doesn't even pay interest on. Regulatory restrictions on use of capital of its insurance operations to support its trading operations were the cause of its immediate liquidity difficulties last fall. In normal times, that capital can be accessed for the firm as a whole by selling a profitable insurance division if necessary. Needless to say, last year that was not possible.
It is not obvious AIG will lose money for the treasury gross. It may, maybe as much as $100 billion. Or it may not. But it certainly would have cost many times those figures to let it fail. Lehman made that clear as day.
GS wasn't hedging large cash market positions in low quality mortgage securities at AIG, as most of the big European banks were. Those were the lion's share of the AIG CDS market winners, and their winnings matched losses on low quality mortgage debt, which they had only risked taking positions in because they believed they were hedged by CDS's from AIG. Goldman was merely betting that those mortgages were trash, and it was right. Its trades there were almost pure profit if AIG paid. If it had defaulted instead, they would have received something from a dismembered AIG, a year or two down the line. They would not have lost anything on it any way it is sliced. It is not like they lent $13 billion to AIG. Quite the contrary.
You continue to pretend that AIG paying out on its debts is some grievious wrong. It is nothing of the kind, it is ordinary commercial morality being upheld. You continue to regard it as somehow uncapitalist or horrible that the treasury helped it to meet its obligations. It is nothing of the kind, it was simply the right move to support the whole market last fall and stop the credit collapse Lehman set off. Allowing that collapse to continue would not have saved the treasury anything, or US taxpayers anything, or you anything. It would have costed all of the above, more.
You don't need to like any of that for it to be true. Your approval of any of it is not required by any of the adults involved in any of it. Your reckless slanders of them are just that, slander, made up, entirely between your ears. None of them did anything wrong in any particle of it. AIG was dumb in some of the promises it made, and its shareholders have paid for it; numerous banks were dumb to underwrite so many poor quality mortgages to American deadbeats on mainstreet, and everyone has paid some for that. But neither Goldman nor the treasury have harmed you in the slightest in any of it, and your railing against them anyway is the purest ideological spite and class warfare drivel.
Uh, yeah, sure. They did such a great job that they completely missed the fact that if the economy went south, AIG would need $185 billion in government money to meet its obligations. And if the government refused to go through with the bailout, GS could go the way of Lehman. Yeah, that is world-class risk management. /sarcasm
You are the most obtuse weasel I have ever seen posting on FR, and that is saying something. Companies that screwed up the financial system so badly to where the Fedgov has put out $4.7 trillion are paragons of virtue and capitalism, and I'm some ungrateful slob for pointing that out.
Go sell this shinola to someone stupid enough to buy it. In case you haven't noticed, very few on FR will.