Revealed: AIG docs were to be protected until 2018

Schedule A of AIG bailout documents ordered sealed to Nov 2018

Per SEC request:

In November 2008, the SEC approved a request by American International Group (AIG) to keep secret until November 2018 documents which reveal securities behind the brewing scandal over its bailout by the Federal Reserve.

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The original expiration date for the SEC order was a full 10 years to the day after the Federal Reserve Bank of New York’s decision to set up an emergency financing vehicle to acquire $60 billion of collateralized debt obligations related to transactions with financial institutions which included Goldman Sachs (GS), Societe Generale (SCGLY.PK), and Deutsche Bank (DB).

From Prison Planet website, the blogger does an initial data spread of the unredacted AIG schedule A and found a focus on Goldman Sachs.

Check it out:

It appears that of the roughly 38 Goldman CUSIPs [CUSIP stands for Committee on Uniform Security Identification Procedures. It is the 9-character alphanumeric security identifiers]which have data available, there are exactly zero rated A or higher by Moody’s (we ignore the rating from the other rating agency as they apparently have long stopped rating most of these securities). There are 9 CUSIP issued after 2006, 21 between 2005 and 2006, and 8 issued before 2005. As Matt Goldstein points out, of the 25 or so deals that had CDS written on them after January 1, 2006, Goldman accounts for 40% of this late (post 2005) issuance. Goldstein notes: “that’s critical because in December 2007, former AIG Financial Products head Joseph Cassano had said AIG largely got out of the CDS business by the end of 2005.”

Another observation is that of Goldman’s roughly $15.7 billion in original issues, the current amount outstanding on the underlying securities is only $11.7 billion as of January 2010, a factor of about 75%. Yet, based on paid down amounts, Goldman had the benefit of having almost the full contractual notional on the CDS: recall per BlackRock the firm had exposure of roughly $14.5 billion. In other words: even though Goldman was on the hook for about $11.7 billion in actual outstandings (as of January 2010, the current amount in November 2008 was likely higher), the amount that it received between collateral and ML III presumed almost an unamortized exposure. We are backing into the data to determine what the actual amount as of November 2008 was: we estimate it was about ~$13 billion, which unless we are misreading the data, means that Goldman likely got the extra benefit of amortization on the underlying, which could have amounted to over $1.5 billion.

Click to view the data below: