Monday, March 23, 2009

AIG Bonus Scandal—Bernanke and Fed Signed Off

by Sharona Coutts

Posted by Jenny Sutton

Federal Reserve Chairman Ben Bernanke knew of AIG's retention bonus plans well before the controversy erupted this week, CEO Edward Liddy told a congressional panel today.

Liddy also said several AIG executives have agreed to forgo their retention bonuses.

Testifying before a House Financial Services subcommittee, Liddy said all AIG's decisions have been made in conjunction with the Federal Reserve and agreed that Bernanke had signed off on the bonuses.

Subcommittee members expressed surprise at the acknowledgment. Rep. Paul E. Kanjorski (D-PA) in particular showed his frustration referring to his efforts over a two-month period to work with AIG to address the bonus issue.

Kanjorski was clearly angered over Liddy's delay in convincing some executives to forgo the bonuses.

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