AIG forced by Federal Reserve to pay all CDS contracts at 100% - way above current value at the time of settlement.

I have yet to see this on the MSM – but Karl Denninger picked it up as covered on CSPAN.

AIGs CEO Liddy answered a question posed by Rep Kaptur:

"When The Fed set up Maiden Lane they took on responsibility for settlement of all of the CDS."

"The Federal Reserve decided we should pay 100 cents on the dollar",

Rep Issa expanded the truth of this in a followup - they could have purchased those contracts for far less in the open market at the time.

"AIG repaid counterparties one to one, dollar for dollar, but when it comes to teachers and firefighters in Ohio, [they got] zero," Kucinich said. "This is not acceptable, Mr. Liddy. I'm not going to let you get away with it."

Rep Issa called the three-member board from the NY Fed that oversees the government’s 80% ownership stake in AIG "an unconstitutional and unaccountable entity."

As Mr. Denninger says: “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.”

This is the ONLY reason that the large banks have reported large first quarter profits.

Mr. Denninger continues: “The allegation just made by Liddy is that Bernanke and The Fed literally stole $100 billion dollars from you and I by intentionally and wantonly overpaying on the settlement of these contracts!”

AIG is fighting all requests from the congress: "AIG has spent millions of dollars on high-priced P.R. firms and big-time lawyers to attack its critics," Rep. Towns said. "Clearly, AIG is making sure its lawyers and PR firms are watching its back."