NU Online News Service, Nov. 17, 12:54 p.m.EST

WASHINGTON–Federal Reserve officials woefullyunderestimated the potential cost of bailing out AmericanInternational Group, according to a report issued by the Office ofthe Special Inspector General for the Troubled Asset ReliefProgram.

Because of that, and also because it acted more as a creditorthan a regulator in stabilizing AIG in September 2008, the Fedwound up paying more than it should have to close out thecollateralized debt obligations underlying AIG's huge loss-riddledcredit default swap portfolio.

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