I don’t see that as the “real” story either. The TARP money was to some of the bad paper we foisted on the financial markets out of the way. That was afterall the conservative thing to do.
That AIG was used to buy up some of this paper not much of a story but rather a technical detail. That the US used AIG to buy up bad paper that was in foreign hand is possibly a good thing.
what involvement does the federal reserve have in the AIG bailout? According to this it sounds like a LOT: