UPDATE 2-U.S. Rep Issa: NY Fed AIG submissions "incomplete"

Wed Jan 20, 2010 6:38pm EST

* NY Fed did not provide necessary documents on swaps-Issa

* NY Fed has stonewalled committee from get go-Issa

(Adds quote from Towns spokeswoman)

By David Lawder

WASHINGTON, Jan 20 (Reuters) - U.S. Rep. Darrell Issa, the lawmaker investigating insurer AIG's payments to banks, said on Wednesday the Federal Reserve Bank of New York's submission of documents to a congressional committee is "incomplete."

In response to a subpoena, the New York Fed on Tuesday delivered over 250,000 pages of documents to the U.S. House of Representatives Oversight and Government Reform Committee relating to AIG's payments to credit default swap counterparties after its September 2008 bailout.

The panel is gearing up for a hearing next week into whether the New York Federal Reserve Bank improperly limited public disclosure on AIG's use of public funds to repay in full banks who bought its credit default swaps.

"Unfortunately, the document production is incomplete and not in full compliance with the committee's subpoena," Issa, a California Republican, wrote in a letter to Rep. Edolphus Towns, the New York Democrat who chairs the panel.

Lawmakers are angry at the Treasury Department and the Fed over the AIG bailout, which cost about $180 billion, and over bonuses paid to AIG executives.

Towns has called the $62.1 billion paid by AIG to bank counterparties a "backdoor bailout".

Issa's letter asks Towns to clarify the subpoena's scope "and hold FRBNY officials in contempt if they do not fully comply."

He said the New York Fed did not provide any documents on AIG's credit default swap counterparty exposures prior to the September 2008 bailout, nor any documents after May 2009. He requested all documents through Jan. 19, 2010.

"The FRBNY has stonewalled this committee's investigation at every turn since I initially requested information from the FRBNY in October of 2009," Issa wrote. "It is crucial that this committee understand the full extent of the FRBNY's efforts to cover up the counterparty payments and to prevent and delay other efforts to bring details about these transactions to the public," Issa wrote.

Jenny Thalheimer Rosenberg, a spokeswoman for Towns, said his committee has already received more than 250,000 of the most relevant documents and expects more as they are identified.

A spokesperson for the New York Fed could not be immediately reached for comment. The New York Fed on Tuesday disputed claims that it had counseled AIG to limit disclosures about the payments to counterparties.

(Additional Reporting by Corbett B. Daly; Editing by Andrew Hay)

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