Bailed-out Goldman Sachs played bigger role in AIG trades: report

[Bluebear]

CHICAGO (Reuters) - Goldman Sachs Group Inc played a bigger role in fueling the mortgage bets that crippled American Insurance Group Inc than has been publicly disclosed, the Wall Street Journal reported on Saturday.

An analysis by the paper of AIG's trades on pools of mortgage debt shows that Goldman was a key player in many, including those involving other banks, the Journal said.

Goldman was one of 16 banks the U.S. government rescued last year after closing out losing trades that AIG had made with the financial firms.

The bank originated or bought protection from AIG on roughly $33 billon of the $80 billion of U.S. mortgage assets that AIG insured during the housing boom.

That was about twice as much as Societe Generale and Merrill Lynch, the firms with the largest exposure to AIG after Goldman, according to an analysis of ratings-firm reports and an internal AIG document, the Journal said.

In one deal Goldman acted as the middleman between AIG and banks, taking on as much as $14 billion in risk of the mortgage-related investments. But Goldman then insured that risk with a single trading partner, AIG, according to the Journal's analysis and people familiar with the trades.

http://www.reuters.com/article/idUSTRE5BB1P520091212