The Federal Reserve’s role in the new rescue package for American International Group Inc. looks – at first glance – like a potentially important step by the nation’s central bank toward buying distressed assets, something it has tried to avoid doing throughout the financial crisis.

The Fed has powers to lend expansively in a crisis – thanks to a clause in the Federal Reserve Act that allows them to lend to almost anybody in a crisis. Officials have debated for months whether the law allows them to go beyond lending to buying assets, something Fed officials have felt is better left to the Treasury, with authority from Congress. An aversion to asset purchases by the central bank was one reason Fed officials urged Treasury Secretary Henry Paulson go to Congress in September for broader rescue authority.

AIG’s new rescue plan looks like it moves the Fed closer to the role of buying assets itself. Under AIG’s revamped rescue plan, the Federal Reserve Bank of New York will set up a special purpose vehicle with two sources of funding, $5 billion from AIG and $30 billion from the Fed. The vehicle will in turn go out and buy collateralized debt obligations, or CDOs. AIG needs help with its vast CDO exposures because it wrote insurance contracts against many of them, which pay off when the instruments default. Those insurance contracts are draining its cash.

Another special purpose vehicle will take residential mortgage backed securities directly off the hands of AIG.

This isn’t the first time the Fed has created a special purpose vehicle during this crisis and it isn’t the first time it’s taken on potentially distressed assets itself. In March, it created a special purpose vehicle to take assets off the balance sheet of Bear Stearns. And last month it created a special purpose vehicle to make commercial paper loans to firms in need of short-term capital.

In each case, the Fed is technically sticking to its purpose as a lender with collateral and other forms of security backing the loans. It lends to the SPVs, which are backed by assets in the SPVs. In the case of the Bear Stearns SPV, known as Maiden Lane, and the new AIG SPV, somebody else takes the first loss if assets go bad.

But the Bear Stearns vehicle is different from the new AIG vehicle in an important way. In the case of Maiden Lane, the Fed was taking assets off the balance sheet of a single ailing firm. It wasn’t a player in the broader market. Details of the new AIG SPV are still trickling out, but it looks like the Fed in this case will need to go out into the market and buy the assets that AIG is exposed to through its insurance contracts. As the Fed says in its statement, “the New York Fed will lend up to $30 billion to a newly formed LLC to fund the LLC’s purchase of multi-sector collateralized debt obligations.” Fed officials already have been talking to AIG counterparties who own these CDOs.

This new role raises many new questions, including this one: How will the Fed price the securities it is going out to buy? It’s an issue that Fed Chairman Ben Bernanke struggled to explain to Congress when he and Mr. Paulson were selling the $700 bailout to lawmakers in September. Then, it was Treasury’s problem to deal with. Now, it could also be the Fed’s.

Another step into uncharted territory for the central bank. – Jon Hilsenrath