Secret AIG Document Shows Goldman Sachs Minted Most Toxic CDOs - Bloomberg.com

Are Hank Paulson, Tim Geithner and many, many other Washington insiders far too inside vis a vis the financial crisis of 2008-09. Bloomberg is reporting this morning that an overlooked item in last month's Congressional hearings is the extent to which Goldman Sachs was implicated in AIG's downfall. As the article notes

Representative Darrell Issa, the ranking Republican on the House Committee on Oversight and Government Reform, placed into the hearing record a five-page document itemizing the mortgage securities on which banks such as Goldman Sachs Group Inc. and Societe Generale SA had bought $62.1 billion in credit-default swaps from AIG.

These were the deals that pushed the insurer to the brink of insolvency -- and were eventually paid in full at taxpayer expense. The New York Fed, which secretly engineered the bailout, prevented the full publication of the document for more than a year, even when AIG wanted it released.

That lack of disclosure shows how the government has obstructed a proper accounting of what went wrong in the financial crisis, author and former investment banker William Cohan says. “This secrecy is one more example of how the whole bailout has been done in such a slithering manner,” says Cohan, who wrote “House of Cards” (Doubleday, 2009), about the unraveling of Bear Stearns Cos. “There’s been no accountability.

Given the unlikelihood of any effective international regulation regime, it would seem to me that the only course here is for national governments, particularly the U.S., must begin looking at criminal prosecutions where warranted. This was theft on a historical scale by individuals and institutions that clearly feel no remorse for their actions. Perhaps a judge can convince them of their liability and guilt. It is obvious that governments cannot.