Monday, January 25, 2010
GOLDMAN NEEDED A HAIRCUT
Why might AIG have accepted termination? Perhaps if it thought the underlying CDO assets were worth holding instead of a derivative liability to Goldman. Or if Goldman was willing to accept less than face value to close the contracts out.
So was Goldman prepared to offer AIG a haircut in the month before its rescue? A legitimate question, given that Goldman refused to accept a haircut when the New York Fed raised the idea after it bailed out AIG.