The New York Fed asked Habayeb to “stand down” from negotiating with counterparties, according to an Oct. 31, 2008, e-mail he wrote to AIG CFO David Herzog. Herzog replied that AIG should “get back with Goldman” about the change in plans.
Before the New York Fed took over the talks, AIG tried to persuade banks to accept so-called haircuts of as much as 40 cents on the dollar, according to people familiar with the matter.
But here is the tidbit, captured in last week's FCIC testimony by Goldman Sachs CEO Lloyd Blankfein (documented by Zero Hedge). Blankfein testified Goldman Sachs never received any request anywhere to take a hair cut on AIG CDS payouts.
So, someone, somewhere is lying about the NY Fed's attempts to not pay out AIG CDSes at 100%.
For the emails between the NY Fed and AIG, see this post to view the emails proving AIG was not to disclose the 100% CDS payouts.
Zero Hedge has more analysis on the latest
See this post for more about the NY Fed potential lies.
Update: Fed Chair Bernanke request GAO audit the Fed's role in AIG. Now this could be distancing as well as trying to make sure his confirmation goes through but regardless, the GAO is not political as much as one can get it out of D.C. these days and having them look into it would be great...unless of course the GAO refuses.