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The Federal Reserve Bank of New York, during its $180 billion bailout of American International Group, Inc., instructed AIG to omit details of its purchase of certain toxic assets from a December 24, 2008, Securities and Exchange Commission filing, according to e-mails between the company and the Fed released Thursday.

Using bailout money provided by the Fed, AIG paid a number of banks 100 percent of the face value of credit-default swaps, contracts tied to subprime home loans, at a time when other institutions were negotiating deep discounts for the paper. The names of the banks were also omitted from the SEC filing.

The information was finally disclosed in March 2009 after the SEC challenged AIG’s filing, prompting lawmakers and analysts to call the transactions a “backdoor bailout” of the banks. Topping the list of banks which benefited from the backdoor bailout of their toxic paper were Goldman Sachs and Societe Generale SA.

AIG New York

The e-mails, released Thursday by Rep. Darrell Issa (R-Calif.), ranking member of the House Oversight and Government Reform Committee, show the Fed wanted a number of other details about the AIG bailout withheld or their disclosures delayed.

The coverage from Bloomberg News has all the gory details, including a non-denial denial that Treasury Secretary Timothy Geithner, who was then chairman of the New York Fed, had anything to do with the cover-up.

Rep. Barney Frank (D-Mass.) has called the disclosure “troubling” and plans to hold hearings on the issue, though he publicly maintains full confidence in Geithner.

“The new details revealed today regarding AIG’s bailout in 2008 come as no surprise to those of us who believe that the American people deserve full transparency from the Federal Reserve,” Rep. Ron Paul (R-Texas) said in a statement. “My strong suspicion is that secret arrangements between cronies like this are not an anomaly, but the norm.”

The Fed, as you’ll recall, fought disclosure of the information, claiming that it would erode market confidence. No such thing happened, of course.

If dollar investors aren’t already spooked enough to run like hell, it’s hard to see what would convince them that the dollar isn’t nearly as safe as they seem to think.

“The status quo has made it entirely too easy and too tempting to behave recklessly with public funds in total secrecy,” Paul said. “The system needs radical change, but we should start with honesty, transparency and accountability to the American people about how their money is being handled.”

Update: TheNew York Times reported Friday that the Treasury department explicitly denied Geithner had anything to do with it. TheTimes quoted Treasury spokeswoman Meg Reilly as saying Geithner “played no role in these decisions and indeed, by Nov. 24, he was recused from working on issues involving specific companies, including A.I.G.”