Lawmakers ask for review of AIG bailout

(AP) — Two House lawmakers asked Congress' investigative arm on Thursday to review the Federal Reserve's role in the rescue of the insurer American International Group Inc.

The request came from Rep. Edolphus Towns D-New York, chairman of the House Oversight and Government Reform Committee, which is conducting its own probe into the matter, and from Rep. Elijah Cummings, D-Md., a frequent critic of the $182 billion bailout, which involves taxpayer money.

The two lawmakers want the Government Accountability Office to look into the handling of billions of dollars in payments AIG made to Goldman Sachs Group Inc. and other Wall Street firms it did business with. That's also the focus of the House committee's probe.

Lawmakers, among other things, want to know why AIG fully paid the Wall Street companies, instead of demanding concessions from them.

The panel will hold a hearing on the matter Jan. 27.

Federal Reserve Chairman Ben Bernanke on Tuesday took an unusual step and asked the GAO to conduct a "full review" of the Fed's role in rescuing the insurance giant.

Bernanke's move is aimed at defusing criticism of the bailout. It 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.

Earlier this week, the Federal Reserve Bank of New York delivered more than 250,000 pages of AIG documents to the House committee.