In a hearing not covered by the so-called "mainstream media" but covered on Cspan, Liddy, AIG's CEO, in response to a question by Rep Kaptur said:
"When The Fed set up Maiden Lane they took on responsibility for settlement of all of the CDS."
Specifically, I quote: "The Federal Reserve decided we should pay 100 cents on the dollar", but Mr. Issa nailed the truth on this in a followup - they could have purchased those contracts for far less in the open market at the time.
The bottom line is that the testimony was that The Fed decided to settle the contracts in a non-economic manner that resulted in screwing the taxpayer by transferring more than $100 billion dollars of taxpayer money out to these banks when the cash value at the time was FAR LESS.
(Mr. Issa, by the way, is one of the Congress folks who actually does understand securities - and it shows. He refused to let this go until he hammered it into the ground and got the answer in plain, irrefutable English.)
Is it any wonder how the banks managed to "report decent profits"?
The allegation just made by Liddy is that The Fed literally stole $100 billion dollars from you by intentionally overpaying on the settlement of these contracts!
(from market-ticker.org, May 13, 2009)