Geithner Aides Worked With AIG for Months on Bonuses

Since the fall, senior aides to Timothy Geithner have closely dealt with American International Group Inc. on compensation issues including bonuses, both from his time as president of the Federal Reserve Bank of New York and as Treasury secretary.

By MICHAEL M. PHILLIPS and SUDEEP REDDY
The Wall Street Journal

The extent of their involvement, which wasn’t widely known, raises fresh questions about whether Mr. Geithner could have known earlier about AIG’s $165 million in bonus payments. When the bonuses sparked a political firestorm last week, Mr. Geithner said he learned about their full scope in early March, just days before they were paid.

Mr. Geithner and Federal Reserve Chairman Ben Bernanke will be grilled by Congress on Tuesday in a hearing that is likely to focus heavily on AIG. The flap has prompted lawmakers to seek curbs on an array of bonuses, tested the Obama administration and undermined Mr. Geithner’s standing as he attempts to implement measures to stabilize the financial system.

Treasury officials say the department’s staff kept Mr. Geithner in the dark until March 10. “Secretary Geithner, who has been actively engaged in shaping and executing the president’s broad economic agenda, takes full responsibility for not being aware of these programs” before that date, Treasury spokesman Isaac Baker said Sunday in a written response to questions.

This account of how Mr. Geithner and his aides were apprised of the AIG bonuses was based on interviews with government officials, lawmakers and congressional testimony.

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http://online.wsj.com/article/SB12377
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