There’s been lots of talk about the relationship between AIG and Goldman Sachs and the fact that Goldman ended up getting almost $13 billion of the money the federal government ‘loaned’
AIG to stave off its well-earned collapse. And we’ve long known that prior to signing on as CEO to manage the wind down of AIG, Edward Liddy served on Goldman’s board. What we didn’t know until now is that Liddy still owns roughly $3 million in Goldman stock.
I never like to jump to conclusions about whether people took specific actions because of their own narrow economic self-interest. And I think there’s much more involved here — whatever happened — than Liddy’s own personal asset management. But this is pretty elementary in terms of a conflict of interest. Liddy was managing the government’s money. And it turns out he had a huge financial stake in the continuing health of Goldman Sachs.
AIG spokesperson Christina Pretto rather unconvincingly suggests to the Times that the decision over whether to write the $12 billion check to Goldman would not have risen to the level of a decision that would need the CEO’s sign off. I bet. A somewhat stronger argument, if in a rather Pyrrhic kind of way, is her suggestion that $3 million is such “a small percentage of [Liddy’s] total net worth” that it’s unlikely it could have biased his dealings with Goldman.