WASHINGTON - Federal Reserve Chairman Ben Bernanke took the unusual step Tuesday of asking Congress' investigative arm to conduct a "full review" of the Fed's role in bailing out insurance giant American International Group (AIG).
The Fed chief's move is aimed at defusing criticism of the government's $182 billion rescue. The bailout sparked public outrage and demands in Congress for more information, especially after it was revealed that millions in bonuses would go to employees in the AIG division most responsible for the company's need for a bailout.
The House Committee on Oversight and Government Reform has a probe under way that seeks to provide a fuller picture of the AIG bailout. Those legislators are especially interested in details involving billions in payments AIG made to Goldman Sachs and other Wall Street firms that did business with the insurer. Some legislators want to know why those firms were fully paid and why concessions weren't demanded.
"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 AIG bailout," Bernanke wrote in a letter to the Government Accountability Office (GAO), the investigative arm of Congress.
Bernanke said the Fed already has provided information to Congress on the AIG rescue, has made "a large amount" of information available to the public and provided information to other oversight bodies such as the Special Inspector General for the Troubled Asset Relief Program.
Congress passed a law last year giving the GAO authority to review Fed documents in the AIG bailout. The GAO said Bernanke's request will be weighed against other demands on the agency's staff.
Rep. Darrell Issa of California, the top Republican on the House Oversight and Government Reform Committee, sounded a skeptical note about Bernanke's interest in openness.
"If the Fed is as vested in oversight and transparency as they claim in this letter, they should be quick to provide us with all the support we need to complete this bipartisan investigation," Issa said.
