If you use money in a modern economy, you’ll want to read the entire article:

Goldman stood to gain from the housing market’s implosion because in late 2006, the firm had begun to make huge trades that would pay off if the mortgage market soured. The further mortgage securities’ prices fell, the greater were Goldman’s profits.

And:

Negotiating with Goldman to void the A.I.G. insurance was especially difficult, Federal Reserve Board documents show, because the firm did not own the underlying bonds. As a result, Goldman had little incentive to compromise.

Translation: Beyond being incredibly complicated, Goldman didn’t have any incentive to compromise on the “insurance”, Credit Default Swaps[CDS] as they didn’t own the bonds that were “insured”.

naked capitalism’s Yves plus Tom Adams, an attorney and former monoline executive offer their more econ-geek take:

The more logical question then becomes: why weren’t AIG’s other counterparties, such as UBS and Merrill, requesting more in collateral when their CDOs were clearly losing value?

And:

For instance, if they downgraded these CDOs to reflect downgrades and deteriorating market pricing, were there other CDOs, and perhaps even mortgage backed bonds they’d have a hard time NOT downgrading? Or was it that, unlike Goldman, they had hedges with monolines too. With the monlines being downgraded, they’d be having to mark down the value of the CDS with them.

And:

The underlying MBS in the CDOs were already downgraded and declining rapidly in value by 4Q 2007. The credit market had already frozen. The die had already been cast. It was inevitable that this would lead to the CDOs collapse, regardless of their original ratings.

Translation: Other banks really didn’t want to admit reality as that would have acknowledged “publicly” that the whole charade was already blowing up in late 2007. Question you should be asking yourself – why didn’t these seemingly intelligent people not recognize this before we bailed them out with trillions in fall 2008?