Goldman Sachs and a parade of major European banks, including Deutsche Bank, France's Societe Generale and the UK's Barclays, were major beneficiaries of more than $90 billion of money paid out by AIG in the first three-and-a-half months after its bailout by the US government last September.
The disclosure by AIG last night is likely to trigger further criticism of why Goldman, with its many government links, and the European banks were funnelled such huge sums of US taxpayer money after making bad bets on various securities, as well as strengthening the case of those who believe the whole bailout was botched.
Already this weekend AIG has come under intense attack by politicians for bonus payments it made to executives and staff for last year's performance despite its near-bankruptcy and rescue.
Through three separate types of transactions, Goldman received an aggregate $12.9 billion. Among European banks, SocGen was the biggest recipient at $11.9 billion, Deutsche got $11.8 billion and Barclays was paid $8.5 billion.
The payments include the provision of collateral to back up credit default swaps, a form of financial insurance that AIG was writing; the purchase of the collateralized default obligations, a type of complex debt security that underlay that insurance; and payments to counterparties of a securities lending program.
The figures released by AIG show amounts it paid to counterparties between September 16th 2008 - the date of AIG's federal rescue - until the end of last year.
The US government, which is spending up to $180 billion on the AIG rescue, extended aid to the insurer after large losses from a financial product unit's bets on toxic mortgage assets that triggered rating cuts and collateral demands that AIG could not meet.
The US government got a nearly 80 per cent stake in AIG in exchange for its bailout of the insurer.
Other European banks that received funds from AIG in the months after its bailout include Calyon, part of Credit Agricole, Barclays PLC, UBS, Rabobank, Royal Bank of Scotland, Societe Generale, BNP Paribas, Banco Santander, Danske, HSBC, and Dresdner Bank AG, now a unit of Commerzbank.
Apart from Goldman Sachs, US banks that received payments from AIG included Merrill Lynch, Wachovia, JPMorgan Chase, Morgan Stanley, Bank of America and Citigroup.
In addition, AIG listed some of the US states to receive $12.1 billion in payments under guaranteed investment agreements since its September bailout.
The information was disclosed days before AIG CEO Edward Liddy is scheduled to testify before Congress on the firm's spending of taxpayer funds. Liddy was appointed by US Treasury officials after the insurer's US government rescue.
Since the $85 billion federal rescue of AIG last September, the government has stepped up twice more, raising the total amount at its disposal to aid the insurer, if needed, to $180 billion.
AIG posted a record quarterly loss of $61.7 billion last week, and the government has said it may have to pour yet more cash into the ailing firm.
Reuters