The U.S. Federal Reserve Board has invited an investigation by the U.S. Government Accountability Office into the circumstances surrounding the Fed’s decision to bailout troubled insurance giant American International Group Inc. back in the fall of 2008.

In a letter to the acting comptroller general of the GAO, the Fed once again defended the decision to step in and save AIG noting that it feared that a disorderly failure of the firm would have intensified the financial crisis. It also defended its’ disclosures to date on the terms of that intervention, amid ongoing criticism it has faced over the handling of the move.

“We have provided and continue to provide this information because it is important that the Congress and the public understand that, in our actions regarding AIG, the Federal Reserve and the Treasury acted in the best interests of the United States to preserve the financial system and to protect households and businesses from potentially calamitous effects on the U.S. economy, while doing everything possible to protect the American taxpayer,” it said.

“In this spirit, to afford the public the most complete possible understanding of our decisions and actions in this matter, and to provide a comprehensive response to questions that have been raised by members of Congress, the Federal Reserve would welcome a full review by GAO of all aspects of our involvement in the extension of credit to AIG,” it said.

The Federal Reserve Bank of New York also said that it welcomes the Fed’s call for a comprehensive review by the GAO, and it announced that it has delivered detailed records requested by the House Committee on Oversight and Government Reform related to AIG.

“We are in favor of a full and objective review of our actions and look forward to the opportunity to document for the public and members of Congress our involvement in AIG. All of the Federal Reserve’s actions regarding AIG were undertaken to protect the American people from an even more severe economic downturn and to safeguard U.S. taxpayers’ interests in the company,” said New York Fed president, William Dudley.

“We are confident that a comprehensive GAO review and the documents we have provided to Congress will clarify the government’s role in AIG and underscore the importance of the intervention,” Dudley said.

The New York Fed has also posted a memorandum on its website regarding its participation in the preparation of securities disclosures by AIG relating to Maiden Lane III, a facility created in November 2008 to address AIG’s increasing liquidity strains.

IE