What they would do is form entities with other IBs and private equity to do infrastructure projects all over the world. Highways, water facilities, power plants, etc. Whichever way they did it, the entity formed would be pretty much immune to the liquidation proceedings of the firm. Let's say that they did it by taking earnings and making an investment. When the head firm is in trouble and is starting to take losses they can sell their interest in that entity for a fraction of the original investment, or maybe do it before. This can be easily justified as the valuation of these projects is completely arbitrary. But in reality, infrastructure is invaluable. The head guys in Goldman or Merrill or Morgan Stanley, the ones who really know what's up (not the shmuck arrogant traders & MDs who really know jack sh*t) are on the board of that entity or have executive positions ready to jump into. Now take this simple approach and add in all the creative accounting & financial engineering that banks do with their financial statements. Voila! Sidenote: Right before the mortgage money pump of 2001-2002, there was deregulation of electricity. As these government monopolies of utilities were being broken up, banks would come in, buy up the generation assets (in a "fair & orderly" auction process), then sell them back to the newly formed utility entities for huge profits. Another nice scam job at the expense of the ratepayer and bond & equity holders. Now they are buying up many of those assets again at even higher valuations, but really, they are just trying to get rid of soon to be worthless dollars asap.
Paulson still has two months and a pile of cash to help out his ex-partners, who I am sure have plenty of dirt on him from the good old days.
Guys remember they are NOT an investment bank but a normal garden variety bank now . The FED can lend them all the $$$$$ they like. Issue is who will keep lending the FED $$$$$.
Buffet got played like a fat bald guy in a strip joint who pays 1000k for a lap dance. goldman was the stripper and buffet was the bald fat guy.