In a previous article that I wrote, I argued that the NY Times had joined a populist uprising against Goldman Sachs. I mentioned in the article, that while I did not believe Goldman in an ethical institution, I it is no different than any other investment bank on Wall Street. Therefore, I failed to understand while all the anger directed at Wall Street seemed to be focused solely on Goldman. The article generated a lot of responses (mostly critical) which I was not surprised to encounter, due to the populist sentiment that has erupted at Goldman.

I thought that things could not get worse, but I was shocked to read the news today in which “Hank” Greenberg former CEO of AIG joined the crusade against Goldman. Mr. Greenberg in an interview today, blamed Goldman Sachs for AIG’s collapse. He further went on to blame Goldman for creative subprime derivatives while simultaneously shorting them.

AIG is one of the most poorly run corporations in history. The company has a current EPS of -$484 per share and it lost$100,000 billion in 2008. AIG has received a staggering $180 bailout courtesy of the US tax payer. This is the largest bailout of any financial institution to date. Goldman in contrast received a bailout of “only” $10 billion. Even if one were to include the money that Goldman received from AIG for CDS it purchased from AIG, the total tab would be around $23 billion. This is nearly eight times less the amount of money AIG received from Uncle Sam.

I might also remind the readers that Goldman has paid back this money. In addition, Goldman has paid the Government interest plus it bought back warrants, which represented a 23% annualized return for the US taxpayer. By contrast, AIG will likely never be able to pay back the Government. In 2006, near the height of the housing bubble AIG earned $14 billion, at that rate it would take nearly 13 years using every penny AIG earned to repay the Government.

Some CEOs of the nation’s largest financial institutions became CEOS of their firms’ too late in the crisis to try and fix up the firms. They then unfairly received much of the blame even though they though it were the previous CEOs who were largely responsible for their firm’s destruction. This argument can be used to defend John Thain of Merrill Lynch and Vikram Pandit of Citigroup who became CEOs of their firms’ in 2007. They did not cause the problems at their companies and came in too late to fix the situation, but received much of the blame.

I think it would be a big mistake to use the same argument against former AIG CEO Hank Greenberg. Although, Greenberg was forced to retire in 2005 and much of the risky practices in other firms reached their peak in 2006-2007, this was not the case at AIG. AIG stopped underwriting insurance on subprime CDOs in 2005. This means much of the awful management practices happened under Greenberg’s rein as CEO. Greenberg was not directly responsible for the practices that led to AIG’s collapse. Most of the problems were caused by the Financial Products division of AIG based in London run by Joseph Cassano. However, Greenberg was the CEO and he failed to foresee to see the reckless practices that were going on in the Financial Products division. While, I think many people have unfairly accused Goldman for their role in the financial crisis, it is the ultimate chutzpah coming from someone who had a huge role in it!

disclosure: long GS