[quote=Allan from Fallbrook]So, in terms of counterparty risk between AIG and Goldman, I think its safe to say that there wasn’t any and I think we can also dispel the notion that Goldman would have gone hat in hand along with the other creditors had AIG gone boom. Given that they were already holding AIG cash and securities (a point Brian seems unable to comprehend) and also given that they would have gone to parties other than AIG to collect on the CDS, the notion of secured versus unsecured debts within the venue of BK becomes moot.[/quote]

I’m not convinced there wasn’t any counterparty risk. Collecting on the CDSs would still have been GS claims against other creditors, not AIG. (Very possible that would cause those issuers to go bankrupt.) And there is still the issue of their claims over and above the collateral they held. I’ve seen nothing to indicate that everything in excess of that collateral would have been anything other than an unsecured debt.