Good Afternoon
Good Afternoon

Bernanke invites review of AIG bailout

WASHINGTON - Federal Reserve Chairman Ben S. Bernanke Tuesday invited congressional auditors to conduct a "full review" of the central bank's aid to American International Group Inc. after lawmakers accused the Fed of trying to conceal information about the $182 billion bailout.

"The Federal Reserve would welcome a full review by GAO of all aspects of our involvement in the extension of credit to AIG," Bernanke said in a letter to Gene Dodaro, acting head of the Government Accountability Office, that was released by the Fed.

Bernanke's letter coincides with efforts by lawmakers to obtain more details on the Fed's oversight of AIG after e-mails released this month showed that the New York Fed asked the company to withhold information from the public about payments to banks.

The House Committee on Oversight and Government Reform last week subpoenaed all documents related to the New York Fed decision to fully reimburse banks that bought protection from AIG and efforts to persuade AIG to keep information about the payments from the public.

Treasury Secretary Timothy Geithner, who was head of the New York Fed when AIG was rescued in 2008, agreed to testify Jan. 27 before the House oversight panel on the bailout. Geithner said last week on CNBC that he wasn't involved in the decision to limit disclosures.

According to The Associated Press, besides bailout funds, AIG also was given a $60-billion line of credit from the Fed. The company is tapping around $22 billion. In the letter, Bernanke said the Fed expects to be "fully repaid" by Sept. 16, 2013 - five years after AIG's initial lifeline.

Separately, a Wall Street Journal report citing people familiar with the matter said Tuesday that AIG is in talks with MetLife Inc. to sell one of its largest insurance units for between $14 billion and $15 billion. AIG has indicated that about $9 billion of proceeds from the sale of American Life Insurance Co., known as Alico, would go back to the government.

More news