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GOP Rep. Darrell Issa: AIG Documents Must Be Turned Over By NY Fed

DANIEL WAGNER   01/20/10 07:39 PM ET   AP

WASHINGTON — The top Republican on a House committee investigating financial bailout decisions says the Federal Reserve Bank of New York is withholding documents it's required to supply under a committee subpoena.

Rep. Darrell Issa., R-Calif., said Wednesday that the New York Fed refused to provide documents related to the bailout of American International Group Inc. from before September 2008 or after May 2009. The committee already has received 250,000 documents from the period between those dates, said a spokeswoman for Rep. Edolphus Towns, D-N.Y., chairman of the House Committee on Oversight and Government Reform.

"We expect the Fed will supplement with more documents as they identify them," said Towns spokeswoman Jenny Rosenberg.

The committee wants details on the AIG bailout, which was managed by the New York Fed under Treasury Secretary Timothy Geithner. Lawmakers want to know more about Geithner's decision to funnel billions from AIG to other big banks to satisfy AIG's debts to them. An earlier watchdog report said Geithner's decision not to negotiate might have cost taxpayers billions.

The committee subpoenaed the New York Fed last week for documents including Geithner's phone logs and notes. It demanded all New York Fed documents related to the deals that paid off AIG's debts to banks including Goldman Sachs Group Inc. Geithner is scheduled to testify at a committee hearing next Wednesday.

Towns also has asked former Treasury Secretary Henry Paulson and former New York Fed chairman Stephen Friedman to appear at the hearing. Neither has yet confirmed he will attend, the Towns spokeswoman said.

Issa called on Towns to hold New York Fed officials in contempt if they do not provide the additional documents. He said documents from before September 2008 might show the New York Fed knew well before the bailouts which banks would suffer most from AIG's collapse. And he said documents from after May 2009 would reveal the New York Fed's secrecy in response to congressional and news media inquiries in the matter.

Issa originally called for the subpoena after the Federal Reserve blocked the committee's access to Fed documents that had been given to a separate watchdog agency.

The New York Fed might have known well before the bailout which banks would suffer most from an AIG collapse, Issa said in the letter. He said the New York Fed was responding to inquiries in the matter long after May 2009.

Top officials from the New York Fed, Treasury and AIG will testify along with Geithner next week.

A New York Fed spokesman would not comment on Issa's letter.

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Filed by Ryan McCarthy  |