Fed Officials knew details of American International Group’s contentious bonus payments five months before the debacle erupted and they did not alert the Obama administration, The Washington Post reported Wednesday citing documents.
The documents show that senior officials at the Federal Reserve Bank of New York were deeply involved with AIG, lawyers, auditors and public relations firms about a possible public outburst regarding the payments, according to the report.
Timothy Geithner was the head of the New York Fed at the time, before his current role as Treasury secretary, but was not among the Fed officials shown to be aware of the potential furor, the Post said citing summaries of phone calls, correspondence and other documents.
The documents also showed which members of the government, outside of the New York Fed, knew about the AIG (NYSE: AIG) bonuses and when, according to the report.
Key members of Congress began investigating the issue as long ago as October and repeatedly warned the Treasury about the problem from January, the paper said.
In early March, when the Obama administration was finally up to speed with the issue, the New York Fed had determined that AIG was legally bound to pay the bonuses to its Financial Products division, the report said.
The public outcry over the bonus payments at AIG erupted in mid-March and the implications of the case are still being felt on Wall Street.