With people as panicky as they are, shouldn’t the Times exercise a little more caution when writing its stories?
NEW YORK (Reuters) – Goldman Sachs Group Inc rejected as “seriously misleading” a published report on Sunday that said the Wall Street bank had as much as $20 billion of exposure to the troubled insurance giant American International Group Inc .
The New York Times had said Goldman was AIG’s largest trading partner, citing six people close to the insurer. It also said a collapse of AIG threatened to leave a hole of as much as $20 billion in Goldman, citing several of the people.
The report contrasted with a Sept 16 comment by David Viniar, Goldman’s chief financial officer, on a conference call with analysts that Goldman’s exposure to AIG was immaterial.
Hours after he spoke, the U.S. government announced an $85 billion bailout of AIG, which had suffered spiraling losses on credit default swaps, a type of insurance contract whose value is tied to securities such as mortgages and corporate debt. A failure of AIG might have convulsed the global financial system because many companies do business with it.
Lucas van Praag, a Goldman spokesman, on Sunday said the Times article was wrong to suggest that Goldman had reason to be concerned about AIG’s problems.
“Although we have said many times on the record that our exposure to AIG was, and is, not material, the reporter chose to pursue a story line which suggests, by innuendo, that is not the case,” he said in an e-mailed statement.
“For the avoidance of doubt, our exposure to AIG is offset by collateral and hedges and is not material to Goldman Sachs in any way,” he continued. “The conclusions about our interests that readers of the New York Times article are invited to reach are seriously misleading.”