Dec. 10 (Bloomberg) — American International Group Inc.,
the insurer rescued by the U.S. government, made $18.7 billion in
payments tied to credit-default swaps to banks including Goldman
Sachs Group Inc. and Societe Generale SA, according to a person
briefed on the situation.


The insurer sent the money to the banks in the three weeks
after AIG’s Sept. 16 bailout, said the person, who declined to be
named because the information is confidential. The banks bought
the swaps from AIG as protection on mortgage securities that
plunged in value.

“The AIG bailout wasn’t meant to help the American
taxpayer,” said Janet Tavakoli, president of Chicago-based
Tavakoli Structured Finance. “What this has ended up doing is
helping the investment banks who had AIG as counterparty.”

The payments may protect the biggest U.S. and European banks
from investment losses tied to the collapse of the subprime
mortgage market. AIG’s expanded $152.5 billion government rescue
included funds to buy the underlying assets of swaps so the
contracts could be retired. The insurer has won agreements to
terminate $53.5 billion of the swaps.

The largest recipients were Societe Generale, which got
$4.83 billion, Goldman Sachs with $2.97 billion, Deutsche Bank AG
with $2.92 billion, Calyon Securities with $1.89 billion and
Merrill Lynch & Co. with $1.32 billion, the person said.

Nicholas Ashooh, an AIG spokesman, Michael Duvally of
Goldman Sachs, Ted Meyer of Deutsche Bank and Danielle Robinson
of Merrill Lynch declined to comment. Jolyon Barthorpe of Societe
Generale and Bertrand Hugonet of Calyon didn’t return calls.

AIG’s payout was reported earlier today in the Wall Street
Jour