03/28/2010 05:12 am ET | Updated May 25, 2011

Paulson To Testify With Geithner On AIG Payments

Former Treasury Secretary Henry Paulson, the Bush-era architect of the massive bailout of ailing financial firms, will testify alongside his successor Timothy Geithner at Wednesday's hearing of the House Oversight and Government Reform Committee.

Paulson, the former CEO of Goldman Sachs, has accepted the committee's invitation to testify on his knowledge of the government's controversial decision to pay $27 billion to AIG's counterparties in 2008, says a spokesman for the committee's ranking Republican Darrell Issa.

In addition, former New York Federal Reserve chairman Stephen Friedman will testify. He resigned in May 2009 amid a controversy over his role as a director of Goldman Sachs and his purchases of the firm's shares.

Also scheduled to appear are Elias Habayeb, the former CFO of AIG's financial services division, and Neil Barofsky, the special inspector general for the Troubled Asset Relief Program.

Habayeb spent months negotiating with the counterparties -- banks that had bought $62 billion of credit-default swaps from AIG -- to accept discounts of as much as 40 percent on the dollar, reported Bloomberg News in October. In the end, the New York Fed instructed AIG to pay them par -- or 100 cents on the dollar -- a decision which has sparked endless debate.