NY Fed emails demanded

The US House oversight committee has demanded all phone records and emails from US Treasury Secretary Tim Geithner that discuss payments from the New York Federal Reserve to AIG's counterparties, the FT reports.

Republicans want to link Geithner to the bailout of banks, such as Société Générale and Goldman Sachs, made while Mr Geithner was president of the New York Fed.

The Telegraph added the names of banks Morgan Stanley, Barclays, Bank of America, Deutsche Bank. It said the committee was also seeking meeting notes.

Why paid in full?

"Questions remain surrounding AIG's credit default swap counterparties and why these companies received full compensation, when the best they could have hoped for in a bankruptcy proceeding was perhaps 30 or 40 cents on the dollar," the panel said in a statement.

The subpoena "specifically requests all documents surrounding the decision to pay AIG's counterparties 100 cents on the dollar."

Reuters said House of Representatives Oversight Committee head Edolphus Towns, a New York Democrat, has invited Geithner to testify at a 27 January hearing and to respond to the request by 15 January.

Back door bailout

Geithner should be prepared to testify about his role in AIG matters including any advice about payments by AIG to counterparties, Towns said. He has called the Fed's decision to compensate the banks in full a "backdoor bailout."

Greenberg rescue plan

In a separate story, Reuters said former AIG CEO Maurice "Hank" Greenberg was using the storm about the NY Fed’s 2008 rescue of AIG to build support for his plan to cut the government’s stake in the company.

"I believe that for the first time there is attention being paid and a spotlight being put on what went on," Greenberg, AIG's largest private investor, said.

"They (government and the media) suspect and smell that something was not right. It takes time, but bit by bit information comes out, and a picture is emerging that isn't pretty."

Christmas came early

"The back-door bailout gave $62 billion to a number of US and foreign banks," said Greenberg. "It wasn't debt on their balance sheets, they didn't have to borrow it, they didn't have to pay interest on it. Christmas came early. But AIG was saddled with it. I think that was unfair."

Greenberg wants the government to slash taxpayers' 79.9% stake in AIG to between 15% and 20%.