AIG Bailout, Geithner Blasted Hard on Capitol Hill

In one e-mail, the New York Fed crossed out a reference that AIG was planning to make in a regulatory filing to paying counterparties such as Goldman Sachs and Societe Generale the full value of their credit-default swaps.

"The 250,000 documents we received from the New York Fed paint a startling picture," Issa, who in the past has called for Geithner to resign, said in a statement released prior to today's hearing. "It is clear that the financial elites at the Federal Reserve felt it was more important to take care of wealthy Wall Street firms than to protect the taxpayer investments."

"Fed officials mocked the idea of transparency while doing everything they could to ensure the public never knew about the billions they funneled to private firms," he said.

That information was then excluded from AIG's eventual regulatory filing in December 2008, Issa says. In all, 16 of AIG's counterparties -- financial institutions in the United States and abroad that had deals with the insurance company -- received $62 billion after they were paid for their swaps, with Societe Generale raking in $16.5 billion and Goldman Sachs $14 billion.

In a Nov. 17 report from Barofsky, the watchdog stated, "There is no question that the effect of FRBNY's decisions -- indeed the very design of the federal assistance to AIG -- was that tens of billions of dollars was funneled inexorably and directly to AIG's counterparties."

When Issa asked Barofsky to give lawmakers the documents used in his report, the watchdog said the Federal Reserve had directed him not to comply with the request. Towns then subpoenaed the Fed for the information.

With reports from ABC News' Alice Gomstyn.

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