Last year's financial collapse was made possible by the greed and incompetence of credit rating agencies, who got paid to lie about the value of subprime debt. It turns out they were responsible for the Goldman Sachs bailout, too. When AIG was bailed out to the tune of $150 billion last year, we were told it was necessary because of the "systemic risk" to the economy that would have been posed had the insurance giant gone into bankruptcy. Turns out $61 billion of that bailout went straight to banks that AIG owed money to, including $14 billion to Goldman Sachs. They would have gotten pennies on the dollar had AIG been allowed to fail, but after the taxpayers stepped in, the banks demanded to be paid in full. And Timothy Geithner, who was running the Federal Reserve Bank of New York at the time and the de facto chief of AIG, caved to those demands. Why? Because the credit rating agencies had a gun to his head. The Special Inspector General for TARP has released the report of its
How the Credit Rating Agencies Engineered the Goldman Sachs Bailout [Goldman Project]
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