When the American International Group chief executive Edward M. Liddy returned to Washington to handle Congress today, there were rumors that the federal officials were known of the company’s recent bonus payments including the inflammatory percentage.
If documents are to be checked, it shows that senior officials at the Federal Reserve Bank of New York were very well known of this bonuses more than five months before the blaze erupted and reported to be deeply engaged with AIG as well as outside lawyers, auditors and public relations firms about this issue. Still there wasn’t any concern of this till Obama administration until the end of February.
Treasury secretary, Timothy F. Geithner, was not in the list of New York Fed officials mentioned in the summaries of phone calls, according to The Washington Post. He was the head of the New York Fed early this year.
The documents also light up whom in the government, beyond the New York Fed, who were also known of this matter. Important members of Congress began their investigation in October last year and kept warning the Treasury about the matter.
When Obama administration was fully engaged in early March, New York Fed had determined that AIG was legally bound to pay the bonuses according to the documents. Even the top officials at New York Fed huddled with AIG about developing a strategy to mollify angry lawmakers which was of no significant help.
AIG is one among those companies which has been benefiting from a government bailout of more than $180 billion disappeared from public view as quickly as it erupted in mid-March.
As the controversy proceeded, the House passed a resolution that would tax the bonuses at 90 percent and the Senate introduced an even harsher bill according to which as AIG employees began promising to return the money.
As the situation keeps going worse, Senior Treasury officials have met several times a week since March to review the documents one by one of even the lower – ranking AIG executives. It is also said that Geithner also attended some of the initial meetings.
As per the current news, AIG is still dealing with the legal and tax issues surrounding the bonuses while trying to stay afloat. And the employees of AIG’s Financial Products division have said they intend to repay nearly a third of their $165 million in bonuses as a response for the public outcry. It is not known when or how much will be returned.
The New York Fed is said to be struggling to understand a complex global company AIG. Even after the $85 billion package bailout in September to this well reputed insurance company,
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