On: For Goldman, Government Gift from 2008 Crisis Keeps Giving

[autokad]

goldman bought tons of insurance on bad loans (loans it didnt own). it was gambling they would go bad, but part of that gamble was that the issuer (AIG for example) could pay up. they couldnt, until the government stepped in and made sure that 100 cents to the dollar was paid on those gambling notes. without that, goldman would have failed

[inthewoods → autokad]

The key question is why it was at 100 cents on the dollar - most cases would have required a haircut.