In other words, the decision to acquire a controlling interest in one of the world’s most complex and most troubled corporations was done with almost no independent consideration of the terms of the transaction or the impact that those terms might have on the future of AIG.
Was it a sweetheart deal to help out Timmy's friends at Goldman? Here is what Neil Barofsky, the special G-Man assigned to investigate had to say in typically guarded bureaucrat-speak on that subject:
Irrespective of their stated intent, however, there is no question that the effect of FRBNY’s decisions —indeed, the very design of the federal assistance to AIG —was that tens of billions of dollars of Government money was funneled inexorably and directly to AIG’s counterparties...Federal Reserve officials provided AIG’s counterparties with tens of billions of dollars they likely would have not otherwise received had AIG gone into bankruptcy.
The AIG bailout was badly handled by the Federal Reserve either because (a) they were outwitted in frantic circumstances by cooler heads on Wall Street; or (b) because they intentionally declined to use their considerable leverage to obtain concessions from AIG's counterparties including Goldman Sachs. The IG report says the answer is (b) because then NY Fed President Geithner's policy decisions led directly to a negotiating strategy that had little chance for success. Geithner did demand concessions from Chrysler and GM for government aid, but then he was already Secretary of the Treasury.