I think Goldman ignored the counterparty risk they had with AIG because they knew it was systematic, and that the government would bail AIG out and protect them.
I think that the stage for this collapse was set with the collapse of Long Term Capital. That's when all the banks learned that if the bets were big enough, they couldn't lose.
I think that the stage for this collapse was set with the collapse of Long Term Capital. That's when all the banks learned that if the bets were big enough, they couldn't lose.