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NU Online News Service, may 27, 2:05 p.m. EDT

WASHINGTON–The Federal Reserve Bank of New York came under intense fire at a congressional hearing this week for its decision to allow 100 percent payback for counterparties to American International Group credit default swaps after it bailed out the firm in September 2008.

New York Fed officials, however, argued at the hearing that failure to make good on the CDS deals might have resulted in a bankruptcy filing with systemic implications for the economy.

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