The Wall Street Journal has a story up disclosing the names of some of the financial institutions to which AIG has paid money.

The story names the usual suspects — Goldman, Merrill, Deutsche Bank, RBS, etc. They throw around an aggregate number of $50 billion. Other than that it’s kind of a vague piece.

Unless there were some sweetheart deals that were cut which were not in the best interests of AIG, I have a hard time getting too worked up about all of this. Yes, AIG acted stupidly when it got into this business but the banks that bought protection didn’t do anything untoward. It was a straight forward business transaction. Times have changed, the bet was wrong and now they have to make good on their bad decisions.

This is the only really specific piece of the article:

The government’s rescue of AIG helped prevent its counterparties from incurring immediate losses on mortgage-backed securities and other assets they had insured through AIG. The bailout provided AIG with cash to pay the banks collateral on the money-losing trades; it also bought out underlying mortgage-linked securities, many of which are currently worth less than half their original value.

Banks and other financial companies were trading partners of AIG’s financial-products unit, which operated more like a Wall Street trading firm than a conservative insurer. This AIG unit sold credit-default swaps, which acted like insurance on complex securities backed by mortgages. When the securities plunged in value last year, AIG was forced to post billions of dollars in collateral to counterparties to back up its promises to insure them against losses.

As I said earlier, the only thing in that statement that might cause me to change my mind would be if AIG bought out the swaps on anything other than normal market terms. As for the posting of collateral, that doesn’t represent an expenditure of funds. If the swaps work out and AIG doesn’t have to make good on the insurance it wrote that money eventually comes back.

I may be missing something here so don’t be shy about letting me know what it is.