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US Fed chief asks Congress to review AIG bailout


Washington : US Federal Reserve chairman Ben Bernanke has requested Congress to review the involvement of his organisation in the bailout of insurance giant American International Group (AIG), Xinhua reported.

In a letter to the Government Accountability Office (GAO), the investigative arm of Congress, Bernanke said Tuesday he welcomes a “full review” by GAO of all aspects of the Federal Reserve’s involvement in the bailout of AIG, to afford the public the most complete possible understanding of our decisions and actions in this matter, and to provide a comprehensive response to questions that have been raised by members of Congress.”

The Fed move is in response to criticism of the multi-billion-dollar AIG rescue. The public demanded the Congress for more information about the bailout plan provided to the company. Some lawmakers wonder why the firms were fully paid and why concessions weren’t demanded.

The House Committee on Oversight and Government Reform has a probe under way, with many high-ranking officials, including Treasury Secretary Tim Geithner, on the hearing list.

AIG is one of the largest insurance companies in the world. It received $182 billion from the government since September 2008 when the financial crisis was at its worst.

Bernanke said AIG had wide-ranging operations and extensive financial relationships, none of which was subject to supervision by the Federal Reserve.

The Fed extended its credit to prevent the imminent failure of the company, an event that would likely have led to a significant intensification of an already severe financial crisis and a further worsening of global economic conditions.

Some opponents said the central bank is not transparent in its responses to the crisis. But Bernanke defends the Fed’s role in different occasions that the bank is transparent enough.

Congress passed a law last year giving the GAO authority to review Fed documents in the AIG bailout.