a blue-chip company itself, with an excellent credit rating, AIG did not have to post any collateral against debts it insured. It collected premiums, in the way insurers do. It never envisaged the colossal pile-up which would occur.

Since 2001, average annual pay for members of Cassano's team surpassed $1m, according to the New York Times. Between 1999 and 2005, the unit's contribution to AIG's total operating income rose from 4.2 per cent to 17.5 per cent.

Last year, Cassano told investors that his unit was insuring roughly $500bn worth of debt, which produced $250m a year in insurance premiums. He insisted that the debt he had insured was solid and in August 2007 boasted: "It is hard for us, without being flippant, to see a scenario within any realm of reason that would see us losing one dollar in any of these transactions."

Then came 2008. As the value of the debt fell, and the cost of insuring it soared, Cassano's unit was forced to recognise hundreds of millions of dollars in paper losses. Cassano resigned in February. AIG's partners began demanding collateral against

the debt it had promised to insure.

As every category of debt began to fall, from mortgages to corporate debt, the collateral demands became crushing. By the end of the most recent quarter, the London unit's losses had reached $25bn. AIG's own debt rating was downgraded, more collateral was demanded and the Treasury rode in.

In the middle of all this sat Goldman Sachs with its $20bn exposure, according to New York Times correspondent Gretchen Morgenson’s anonymous sources.

A spokesman for Goldman Sachs said Blankfein participated in the AIG bail-out discussions because of risks to "the entire system" not just his own firm. The spokesman also disputed the $20bn figure, saying Goldman had numerous other mechanisms in place to diffuse the risk.

Nonetheless, with public anger against the bail-out boiling, Goldman Sachs is fast becoming the focus for the rage. While others have been left to fail, Goldman is perceived to be using friends in government to survive, mixing private with public interest all at the taxpayers' expense.