Did rescue of insurer save Goldman?

"We have said many times on the record that our exposure to AIG was, and is, not material. Our exposure to AIG is offset by collateral and hedges and is not material to Goldman Sachs in any way."

That was back in September, just after the investment bank had raised $10 billion from a stock offering, of which $5 billion came from Warren Buffett - about as good an endorsement as it is possible to get. Buffett does not invest in bust banks.

But AIG's disclosure that Goldman is the biggest beneficiary of the Federal Reserve's decision to save the insurer from collapse scrapes at old wounds and raises a key question: might Goldman have gone under without this bailout?

The $13 billion it has received from the US taxpayer is a serious amount of money even for such a giant institution - Goldman's "not material" line looks increasingly open to question.

It insists it was hedged against this AIG exposure and that there was never a real risk of it being in trouble. But we only have the bank's word for that.

The true extent of its potential losses and the possible fate of Goldman and other banks had AIG been allowed to go bankrupt will never - perhaps thankfully - be known. Even Goldman can't be sure what would have happened in those circumstances.

Perhaps those on the other side of its hedges would have gone under. Perhaps the collateral it held against an AIG bankruptcy would have itself defaulted.

That Goldman is the biggest recipient of this particular chunk of taxpayer money will give some conspiracy theorists the chance to again argue that the bank has only done better than rivals of late because of its political connections.

Goldman staffers argue - and seem genuinely to believe - that they are less damaged than the rest of Wall Street by the financial crisis because they are so much smarter than everyone else.

An alternative explanation is that having a former chief executive, Hank Paulson, as the Treasury Secretary organising the bailouts was more than a little useful.

Paulson, goes the theory, was happy to let his arch-enemies at Lehman Brothers sink, whatever the collateral damage caused.

But when it occurred to him that Goldman itself was threatened, a taxpayer-funded bailout skewed towards his old firm's interests was inevitable.

The bank may hate the idea that this theory is in circulation. But it's a fact that it has massive political influence and that few senior US politicians get elected without its largesse.