By Scott Lanman and Hugh Son
Jan. 19 (Bloomberg) -- Federal Reserve Chairman Ben S. Bernanke 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 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 today 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. The panel set a deadline of 4 p.m. today for the Fed to provide the documents, including Timothy F. Geithner’s e-mails, phone logs and meeting notes tied to the bailout of AIG.
Geithner to Testify
Treasury Secretary 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.
Chuck Young, a spokesman for the GAO in Washington, said the Fed’s request “will have to be reviewed in the context of our future work priorities, given our existing statutory requirements related to federal efforts to stabilize the financial system, as well as requests from congressional committees.”
Bernanke, 56, who may face a Senate confirmation vote this week for a second four-year term, said in today’s letter that a GAO audit would “afford the public the most complete possible understanding of our decisions and actions in this matter,” and “provide a comprehensive response to questions that have been raised by members of Congress.”
Bernanke said the Fed will make all necessary records and personnel available to the GAO, which gained authority to audit the AIG rescue in a law that went into force in May.
Not ‘Hiding Anything’
“It’s just Bernanke’s way of saying, ‘Look, we did the things that were correct and we aren’t hiding anything, and if you’d like to audit us, that’s fine with me,’” said Douglas Lee, who runs Economics from Washington, a consulting firm in Potomac, Maryland, and is a former congressional economist.
The bailout, which began with an $85 billion Fed loan in exchange for a stake of almost 80 percent in the New York-based insurer, was revised three times to prop up AIG. The rescue now includes a $60 billion Fed credit line, an investment of as much as $69.8 billion from the Treasury and up to $52.5 billion to buy mortgage-linked assets owned or backed by the insurer.
The assistance included “significant conditions and protections for the taxpayers,” Bernanke wrote in the letter. “The Federal Reserve and Treasury Department required new management of AIG; we obtained for the U.S. Government a significant stock interest in AIG that materially diluted existing shareholders of AIG; and we required AIG to immediately begin to wind down its systemically risky operations.”
‘Backdoor Bailout’
Representative Darrell Issa of California, the ranking Republican on the House oversight panel, and other lawmakers have called federal aid a “backdoor bailout” because of payments to Goldman Sachs Group Inc. and other banks.
In a Bloomberg Television interview today, Issa said Bernanke “seems unapologetic and unrepentant when it comes to the fact that he spent $62 billion of your tax dollars when $15 billion would have probably bought the paper on the street,” referring to the payouts. “He doesn’t want light shed by Congress. He only wants the GAO.”
No comments:
Post a Comment