The top-most overseer of the U.S. government's bank bailouts on Thursday announced a probe into the how the U.S. Treasury handled the controversial awarding of bonuses to executives at embattled insurer American International Group (AIG). The announcement by Neil Barofsky, the special inspector-general of the newly-passed $787 billion Troubled Asset Relief Program (TARP), came in the midst of controversy surrounding the weekend awarding of $165 million in bonuses to AIG execs. There is scandal stirring as news emerges that the U.S. government bailed the group out, even though they received $182 billion in government bailout money. Amidst this news, some Republican lawmakers are calling for the resignation of Treasury Secretary Timothy Geithner, as he seemingly knew about the planned AIG bonuses, and went on to authorize the bailout. In testimony to the House Ways and Means subcommittee on oversight, Barofsky said he would “act aggressively to recover the taxpayer's money” if wrongdoing is found at AIG. “We're launching an audit that, as part of a larger review of executive compensation practices, will include a thorough review of the process through which Treasury decided to authorize and approve such payments,” said Barofsky, who took office in December to oversee the TARP program. The probe will cover “who knew what, how, when and why,” he said, arguing that a November agreement between the Treasury and AIG “included specific reference (to) retention payments.” Barofsky said he was also cooperating with a separate investigation by New York state Attorney General Andrew Cuomo and with the Department of Justice into “options available to recover taxpayer money.” Republicans on the House of Representatives subcommittee pressed Barofsky on whether Geithner knew of the bonuses when approved an extra $30 billion in AIG bailout money. “The audit that I announced in my opening statement will have the answer to that question, whether he [Geithner] knew,” the inspector-general said. “As part of this audit, we will be looking closely to ensure bonuses to AIG employees are not inconsistent with AIG's legal or contractual obligations,” he said. “If there are any inconsistencies, we will act aggressively to recover the taxpayer's money.” AIG informed the U.S. Federal Reserve three months ago that it would pay the bonuses on March 15, but the Fed failed to notify Treasury or White House officials until the last minute, The Washington Post reported Thursday. “I was stunned when I learned how bad this was on Tuesday (March 10). I shouldn't have been in that position, but it's my responsibility and I accept that,” Geithner said.
