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Bill Radke: A new report is out today on last year’s rescue of AIG. The report says the Federal Reserve Bank of New York mishandled key parts of the negotiations. Here’s Marketplace’s Alisa Roth.

Alisa Roth: Here’s a quick refresher on AIG: banks were buying up huge numbers of really complicated — and risky — financial instruments. AIG sold what were essentially insurance policies on those securities.

When it looked like AIG might fall apart, the government stepped in and started buying up those securities from the banks at full value. The new audit says they should have bargained with the banks to get a better deal.

Christopher Whalen is with Institutional Risk Analytics. He thinks so, too:

Christopher Whalen: You should have taken them out at the market, which would have been a discounted payment. They would have lost money, but they would have gotten something.

Among other things, he thinks it would’ve been better if the big banks like Goldman Sachs hadn’t gotten such favorable treatment from the Fed.

For its part, the Fed disagrees with the report. It says there was no choice but to bail out AIG, and it paid as much as it had to to do that.

In New York, I’m Alisa Roth for Marketplace.