(Bloomberg) — The Federal Reserve Bank of New York may be forced to deliver documents related to American International Group Inc.'s government bailout after the chairman of a House oversight committee said he would issue a subpoena.

Edolphus Towns, the New York Democrat who runs the Oversight and Government Reform Committee, said yesterday in a statement he would issue a subpoena for New York Fed records concerning the decision it made to fully reimburse AIG's partners.

Banks including Goldman Sachs Group Inc. and Societe Generale SA were among beneficiaries of AIG's rescue, called by lawmakers a "backdoor bailout" for financial firms.

The New York Fed, run by Timothy Geithner when AIG was rescued, had resisted since November calls to provide documents without a subpoena, Darrell Issa, the ranking Republican on the oversight committee, said yesterday in a letter.

The New York Fed asked AIG to withhold the disclosure of information about the bank payments to the public, according to e-mails provided by Issa to Bloomberg News last week.

"This subpoena will provide the committee with documents that will shed light on how and why taxpayer dollars were used for a backdoor bailout," Towns said in his statement.

Geithner, now US President Barack Obama's Treasury secretary, was asked by the oversight committee last week to testify in public hearings about what he knew of the New York Fed's efforts to limit disclosure of the payments.

Thomas Baxter, general counsel of the New York Fed, said last week that Geithner wasn't aware of the issue because the lawyer didn't think it merited Geithner's attention.

The New York Fed will "work with the committee to provide relevant information as appropriate," said Deborah Kilroe, a spokeswoman for the regulator. Late yesterday, Kilroe and an oversight committee spokesperson didn't respond to calls asking if the subpoena had been issued.

Meg Reilly, a spokeswoman for the Treasury Department, declined to comment on whether Geithner would testify.

She said last week that while at the New York Fed, Geithner "was recused from working on issues involving specific companies, including AIG," after he was nominated for the secretary post on November 24, 2008. The e-mail correspondence between the New York Fed and AIG released last week begins on November 24, 2008.

While AIG "has been cooperative" and provided correspondence between the insurer and the New York Fed, the regulator refused to provide confidential documents, Issa said.

"Consistent with the New York Fed's past practices, in the absence of a subpoena, we have included only public documents in our production," current President William Dudley said in a November 17 letter, according to Issa.

The New York Fed directed Neil Barofsky, the government's lead bailout watchdog, to withhold confidential documents from Issa as well, according to a letter provided by the California Republican.

Barofsky wrote yesterday in the letter that his office obtained the documents as part of a November audit of the US rescue of New York-based AIG. Issa had asked Barofsky to provide data from his audit for the House investigation.

"The Federal Reserve has directed us not to provide you with the documents that it has provided to us," wrote Barofsky, the special inspector of the US Troubled Asset Relief Program. "We regret the Federal Reserve's position in this matter."

Geithner made the decision to pay banks 100 cents on the dollar for their AIG swaps tied to subprime mortgages even though the underlying assets had declined in value, according to Barofsky's audit.

The insurer's bailout "provided AIG's counterparties with tens of billions of dollars they likely would have not otherwise received," Barofsky wrote.

"Who do we hold accountable for these lost billions, and what's wrong with the system that the New York Fed can hand out your tax dollars in these quantities and not think it's particularly important to make sure it's the right amount," Issa said in an interview on Bloomberg Television. "I think the American people deserve somebody's head on a platter."

AIG proposed to disclose that it fully reimbursed banks to retire the contracts in December 2008. The New York Fed crossed out the reference in a draft of a regulatory filing, according to the e-mails, and AIG excluded the language when the filing was made public December 24, 2008.

The insurer was pressured by lawmakers and the Securities and Exchange Commission to disclose more details and in March released a statement listing banks and the payments they received. An AIG filing in May listed individual transactions and identified some of the securities tied to the swaps.

"Our focus was on ensuring accuracy and protecting the taxpayers' interests during a time of severe economic distress," Baxter said last week in a statement. "All information was in fact disclosed that was required to be disclosed by the company, showing that counterparties received par value. There was no effort to mislead the public."

AIG's first rescue was an $85 billion credit line from the New York Fed in September 2008. The bailout was expanded three times and is now valued at $182.3 billion.

That includes a $60 billion Fed credit line, an investment of as much as $69.8 billion from the Treasury and up to $52.5 billion to buy mortgage-linked assets owned or backed by the company.