Well, it looks like Robert Benmosche got his wish. After the AIG CEO reportedly claimed he would leave the beleaguered company unless chairman Harvey Golub resigned, Golub did just that Wednesday. Fellow AIG director Robert S. Miller will come on as his replacement. “At this point, I view asking the board to choose between us would be an abdication of my responsibility to lead,” Golub wrote in his statement. “Consequently, I’m resigning for the simple reason I believe it is easier to replace a chairman than a CEO.” [NYT]

Read more posts by Josh Duboff

Filed Under: aig, business, harvey golub, robert benamosche

The Wall Street Journal reported today that, since bankers are getting "squeezed" by the billions in dollars in lousy stock certificates being showered on them, their employers are coming up with creative ways to compensate them, including "loans" that they don't have to pay back until they leave the company:

"I know it sounds ridiculous to Main Street, but it's a hardship," says Gary Goldstein, who runs Whitney Group, a financial-services job-search firm in New York. "So firms are trying to help out any way they can."

That's so nice of them! According to the Journal, Goldman Sachs has let "a small number of employees" take out loans, but the bank claims that they carry normal interest rates and must be paid back. We took a look at New York City property records to see if, like Condé Nast, Goldman ever sweetens its compensation packages with no-hassle mortgages for employees. The answer is yes, for a few people at least. And from what we can tell, it seems that Goldman began the practice right around the time the economy began collapsing and nobody in the world could get a mortgage.

Goldman is listed as a party in thousands of city real estate transactions, but only a relative handful involve individual residential transactions. And those picked up dramatically after the financial meltdown in the fall of 2008—we suspect because even Goldman bankers were having difficulty getting credit on the open market, seeing as how global credit markets had crashed owing to Goldman's spectacularly successful bet against them.

So on October 24, 2008, for instance—one month after the $85 billion federal bailout of AIG and just two weeks before the Federal Reserve Bank of New York authorized the $13 billion pass-through bailout of Goldman Sachs—Goldman managing director Oliver Frankel purchased a co-op in a "limited edition" TriBeCa building with Goldman Sachs listed as the secured party. The amount of the mortgage isn't listed, but units in the building were going for between $2 million and $8 million as of January of that year.

Whatever credit problems Oliver had that caused him to go to his boss for a loan appear to have lifted, though: He purchased another $4.6 million TriBeCa apartment just last week, putting $1.6 million down, according to real estate records. Looks like bonus season has begun.

We found 17 instances of Goldman lending to individual residential property owners in New York City in the last decade, and all of them were after mid-2008, when the meltdown got going. About half of them involved Goldman employees. Goldman is listed as the secured party, for instance, for a $2.1 million co-op that Lancelot Braunstein, who manages banking technology for Goldman, purchased with his wife in September 2009. Just yesterday, Goldman became the secured party for Goldman managing director T. Clark Munnell's $6.6 million Park Avenue apartment. Likewise, it is the secured party for the $1.9 million Chelsea apartment that Goldman vice president Justin Lee purchased on January 5. Same with vice president Annamaria Timofte-Pelfrey's Queens apartment, purchased last month, and the two units in an Upper East Side building that managing director David Perez bought in August.

Because the mortgage agreements themselves aren't public, we don't know what the interest rates or terms are. But we can get an idea from the $4 million mortgage Goldman lent to one VIP in April 2008: Rodney O. Martin, the COO of AIG's (!) life insurance unit. Martin and his wife purchased a $4 million apartment in 15 Central Park West just as the bottom was falling out, and none other than their new neighbor Lloyd Blankfein, who also lives in that building, supplied them with a 30-year mortgage, which was interest-only for the first ten years. (Wasn't there something bad about interest-only loans?)

The interest rate was 4.8%, nearly two points lower than the prevailing rates at the time. And as evidence of how important Martin was to Goldman's business, the mortgage was executed by William Yarbenet, the firm's chief credit officer, himself.

Anyway, if you don't work for Goldman Sachs, good luck getting a mortgage.

Everybody is angry that when Geithner was the chairman of the Federal Reserve Bank of New York he a) rolled over and paid out 100% of what AIG owed to a bunch of banks, including $13 billion to Goldman Sachs, instead of negotiating the debt down, and b) seems to have worked very hard to keep it all a secret. Geithner's response is that "in a financial crisis you face a tragic choice," and he couldn't "stand back and watch [AIG] burn." Attempting to negotiate with the banks, he says, would have inexorably led to AIG defaulting on its debt, which would have triggered a catastrophic wave of downgrades and a potential collapse of the entire financial system.

And as for his efforts to keep it secret: While he was indeed the chairman of the New York Fed, he says, he played no role in the attempts to limit disclosure of the pass-through bailout because he "withdrew from involvement in...day-to-day management" of the Fed after Obama announced his intention to nominate him as Treasury Secretary. The decisions about disclosure came after that, so questions about that should be directed elsewhere, he said.

Let's take a look at how that went over with members of the House, shall we?

Here's Rep. John L. Mica (R-Fla.) excoriating Geithner for "lame excuses" and resurrecting old charges about his failure to pay taxes. Geithner responded that he's "not a politician" (zing!) and that he was only trying to clean up the mess that the GOP left him.

Rep. Michael Turner (R-Ohio) tried to turn that remark back on Geithner: "I want to assure you, from your answers today, that you are absolutely a politician." To which Geithner snidely shot back, "Do you mean that as a compliment? I can't tell."

Geithner caught just as much, if not more, flack from Democrats. Rep. Stephen Lynch (D-Mass.) got red in the face as he railed that "the commitment to Goldman Sachs trumped the responsibility...to the American people"; Geithner fidgeted like a 14-year-old at the principal's office before saying with exasperation that if he could have avoided getting yelled at by a bunch of congressman, he would have.

The most devastating moment so far was a lawyerly and direct question from Rep. Marcy Kaptur (D-Ohio), who asked Geithner to document his rather dubious claim that he was out of the loop on the disclosure issue because he'd withdrawn from day-to-day management of the New York Fed: "Can you provide for the record a copy of the recusal agreement that you signed when you were at the New York Fed?" Um, well, you see, it wasn't quite so formal as that, Geithner said—but you can totally ask everyone who was there and they'll back me up!

It's currently Ben Bernanke's turn. He's in trouble.