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Lawmakers Request GAO to Review AIG Bailout

Source: Associated Press

Posted on 22 Jan 2010

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Two House legislators have requested that the Government Accountability Office, Congress' investigative arm, probe into the role played by the Federal Reserve in the bailout of American International Group Inc.

Rep. Edolphus Towns, chairman of the House Oversight and Government Reform Committee (which is conducting its own probe into the matter) and Rep. Elijah Cummings, a frequent critic of the $182 billion bailout, made the request.

The two lawmakers want the GAO 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.

Among other things, lawmakers 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.