Lawmaker wants New York Fed, AIG documents

WASHINGTON (Reuters) - A Republican lawmaker on Friday asked the New York Federal Reserve and insurer American International Group for records relating to AIG's reimbursements to holders of credit-default swaps issued by AIG.

Rep. Darrell Issa said he was concerned about allegations the New York Fed may have overpaid billions of dollars to AIG creditors, including Goldman Sachs, Merrill Lynch, Societe Generale and Deutsche Bank.

"All of this begs the question why the (New York Fed) would not drive a better bargain for the American taxpayer," Issa, the top Republican on the House of Representatives Oversight and Government Reform panel, said in a statement.

A spokeswoman for the New York Fed declined to comment.

The government rescued AIG from collapse in September 2008, saying the firm's reach was so extensive that its failure would cause far-reaching damage.

Bloomberg reported this week that AIG had been negotiating with counterparties to accept repayments with deep discounts, but that the New York Fed instructed the insurer to repay banks in the full amount.

The New York Fed said that creditors had earlier been willing to accept less than par for AIG securities because the insurer was in dire straits. When the government rescued the company, the situation was different.

"In its negotiations with its counterparties, AIG just didn't have the same bargaining power that it did with the Federal Reserve standing in the background," Thomas Baxter, the New York Fed's general counsel, said in a statement.

"The only sensible outcome was to give them what they were legally entitled to," he said.

(Reporting by Mark Felsenthal; Editing by Dan Grebler)