Watchdog: Treasury and Fed failed in AIG oversight – AP Wire

AIG BonusesOct 14, 7:07 PM EDT

Watchdog: Treasury and Fed failed in AIG oversight

By DANIEL WAGNER – AP

WASHINGTON (AP) — Treasury Secretary Timothy Geithner is “ultimately responsible” for regulators’ failure to rein in massive bonus payments at American International Group because he led the agencies that provided AIG’s lifelines, according to a bailout watchdog.

Geithner was president of the Federal Reserve Bank of New York before taking over at Treasury in January. He has said he did not learn until March about the $1.75 billion in bonuses and other compensation promised to AIG employees. But Geithner’s subordinates at the New York Fed learned of the payments in November, according to Neil Barofsky, the special inspector general for the $700 billion financial bailout.

Even if no one told Geithner about the payments, “this is a failure of communication and a failure of management,” Barofsky told the House Committee on Oversight and Government Reform on Wednesday. Geithner has been “the head of an organization that was involved in the bailout of AIG” since last September, he added.

A Treasury Spokeswoman would not address the comments about Geithner’s leadership. She said in a statement that the Obama administration’s pay czar continues to develop compensation plans for AIG and the other companies that received the costliest bailouts.

via Daily Record | Morris County NJ | AP Wire.