Fed’s Role in AIG May Be First Target of GAO Audit

Scott Lanman
May 29, 2009

Congressional auditors may soon examine the Federal Reserve’s role in the U.S. bailout of American International Group Inc. after gaining authority to review Fed documents under a law that took force last week, Acting U.S. Comptroller General Gene Dodaro said.

“We’re in the process now of developing our future work plans and certainly we’ll use our authorities,” Dodaro, head of the Government Accountability Office, said in his first interview on the topic since President Barack Obama signed the Fed audit powers into law on May 20. “In terms of exercising the newest authority, AIG will be the first entity.”

Audits by the congressional watchdog are part of intensified scrutiny by lawmakers concerned about costs to taxpayers from the Fed’s unprecedented expansion of credit to nonbank financial firms. The central bank, seeking to revive lending and end the worst recession in half a century, has invoked emergency powers and doubled its assets the past year.

The GAO’s first report using the new powers may come within a few months, Dodaro said. “We can report any time we find something significant,” he said.

The Senate voted 95-1 on May 6 to add the Fed clause to a bill that revamps a federal mortgage-aid program and helps the Federal Deposit Insurance Corp. rebuild its insurance fund at a faster pace. The law gives the GAO power to examine Fed emergency aid to specific companies, such as AIG, Bank of America Corp. and Citigroup Inc.


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Posted on May 31, 2009, in Economic Crisis and tagged , , , , . Bookmark the permalink. 4 Comments.

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