Goldman Sachs pushed AIG over the edge and you and I got stuck with the bill:

Behind-the-scenes disputes over huge sums are common in banking, but the standoff between A.I.G. and Goldman would become one of the most momentous in Wall Street history. Well before the federal government bailed out A.I.G. in September 2008, Goldman’s demands for billions of dollars from the insurer helped put it in a precarious financial position by bleeding much-needed cash. That ultimately provoked the government to step in.

With taxpayer assistance to A.I.G. currently totaling $180 billion, regulatory and Congressional scrutiny of Goldman’s role in the insurer’s downfall is increasing. The Securities and Exchange Commission is examining the payment demands that a number of firms — most prominently Goldman — made during 2007 and 2008 as the mortgage market imploded.

Goldman played hardball with AIG and was rewarded handsomely.

Several former Goldman partners said it was not surprising that Goldman sought such tough terms, given the firm’s longstanding focus on risk management.

By July 2007, when Goldman demanded its first payment from A.I.G. — $1.8 billion — the investment bank had already taken trading positions that would pay out if the mortgage market weakened, according to seven former Goldman employees.

Still, Goldman’s initial call surprised A.I.G. officials, according to three A.I.G. employees with direct knowledge of the situation. The insurer put up $450 million on Aug. 10, 2007, to appease Goldman, but A.I.G. remained resistant in the following months and, according to internal messages, was convinced that Goldman was also pushing other trading partners to ask A.I.G. for payments.

On Nov. 1, 2007, for example, an e-mail message from Mr. Cassano, the head of A.I.G. Financial Products, to Elias Habayeb, an A.I.G. accounting executive, said that a payment demand from Société Générale had been “spurred by GS calling them.”

Mr. Habayeb, who testified before Congress last month that the payment demands were a major contributor to A.I.G.’s downfall, declined to be interviewed and referred questions to A.I.G. The insurer also declined to comment for this article. Mr. van Praag, the Goldman spokesman, said Goldman did not push other firms to demand payments from A.I.G.

Later that month, Mr. Cassano noted in another e-mail message that Goldman’s demands for payment were becoming problematic. “The overhang of the margin call from the perceived righteous Goldman Sachs has impacted everyone’s judgment,” he wrote to five employees in his division.

By the end of November 2007, Goldman was holding $2 billion in cash from A.I.G. when the insurer notified Goldman that it was disputing the firm’s calculations and seeking a return of $1.56 billion. Goldman refused, the documents show.

In many of these deals, Goldman was trading for other parties and taking a fee. As the mortgage market declined, Goldman paid some of these parties while waiting for A.I.G. to meet its demands, the Goldman spokesman said. But one reason those parties were owed money on the deals was that Goldman had marked down the securities.

In the end, Goldman got what it wanted, thanks to the American taxpayer:

A.I.G. shares fell 6 percent the day the report was published. Three weeks later, the United States government agreed to pour billions of dollars in taxpayer money into the insurer to keep it from collapsing.

The government would soon settle the yearlong dispute between Goldman and A.I.G., with Goldman receiving full value for its bets. The federal bailout locked in the paper losses of those deals for A.I.G. The prices on many of those securities have since rebounded.

The Wall Street banksters are playing dangerous, high stakes games with our nation's economic well being. We need more reforms so that Wall Street won't ever again demand another bailout.

What do companies that post record losses and teeter on the brink of bankruptcy only to be bailed out by the American taxpayer do? That's right - they dole out $100 million in bonuses to the fat cat executives that scuttled a multi-billion dollar fortune.

Bonus payments totaling $100 million to AIG employees from the same unit that prompted a massive taxpayer bailout are "outrageous" but allowed under the law, the Obama administration's pay czar said Wednesday.

Kenneth Feinberg said the retention bonuses were contractual obligations agreed upon years ago, before American International Group Inc. received a $180 billion federal rescue at the height of the financial crisis in late 2008.

"These are the old grandfathered payments," Feinberg said. "I do not for a minute ignore the outrage out there, which I share. But the fact of the matter is we've got to abide by the law."

It's time to pass a new set of laws to take on the excesses of Wall Street. Our small businesses and our middle class is at stake.

When the farmer throws out the corn, the pigs run to the trough. That's what's happening in American politics today. Wall Street is throwing out the coin and the politicians are scurrying to grab it up.

John Boehner and Mitch McConnell have sensed an opportunity. By staking out pro-Wall Street and anti-Main Street positions against financial regulatory reform, they know they have positioned themselves in the right place to maximize their ability to grab up that Wall Street coin. The WSJ observes:

Republicans are stepping up their campaign to win donations from Wall Street, trying to capitalize on an increasing sense of regret among executives at big financial institutions for backing Democrats in 2008.

In discussions with Wall Street executives, Republicans are striving to make the case that they are banks' best hope of preventing President Barack Obama and congressional Democrats from cracking down on Wall Street.

GOP strategists hope to benefit from the reaction to the White House's populist rhetoric and proposals, which range from sharp critiques of bonuses to a tax on big Wall Street banks, caps on executive pay and curbs on business practices deemed too risky.

Wall Street knows where their bread is buttered. Many of them are against real reform because they know their profits are at stake. So, they're investing in the Republican Party to stop real reform. Read the story and find out where Wall Street is investing to scuttle reform.

Heather Booth from Americans for Financial Reform gives us the State of the Financial Reform Movement and lists ways you can get involved.

SEIU makes it easy for you to contact the FCIC and ask why, when families are being forced into the street by foreclosures, are big banks giving employees the same old big bonuses?

Taxpayers in Iowa delivered a clear message to the big banks during a showdown at the statehouse: give up your bonuses to help meet our budget budget crisis. Isn't Iowa too big to fail?

Americans United for Change is petitioning Congress to support President Obama's financial reform package and put an end to Bush-style economic policies that endanger our pensions, retirement funds, and college savings.

-The news this week has been pretty grim, but we all know when the going gets tough, the tough gets going. Here are a few ways you can get going in the tough fight for financial reform: