by Calculated Risk on 1/19/2010 07:48:00 PM

Here is the letter from Fed Chairman Ben Bernanke to the GAO.

[T]o afford the public the most complete possible understanding of our decisions and actions in this matter, and to provide a comprehensive response to questions that have been raised by members of Congress, the Federal Reserve would welcome a full review by GAO of all aspects of our involvement in the extension of credit to AIG. GAO is authorized to conduct this review under its current authority (31 USC 714(e)).

The Federal Reserve will make available to the GAO all records and personnel necessary to conduct this review.

From Sudeep Reddy at the WSJ: Bernanke Invites GAO to Audit AIG Bailout

In a bid to soften congressional criticism, Federal Reserve Chairman Ben Bernanke on Monday invited the Government Accountability Office to audit the central bank’s involvement in the U.S. rescue of American International Group Inc. In a letter to Acting Comptroller General Gene Dodaro, Bernanke said the Fed would provide “all records and personnel necessary” for the auditing arm of Congress to review the rescue. ...

The invitation from Bernanke does not change existing policies about congressional reviews of the Fed. The GAO already has authority to review the central bank’s involvement in the AIG bailout, along with other company-specific rescues by the Fed and Treasury Department.

And more from Bloomberg: Bernanke Seeks ‘Full Review’ by GAO of Fed’s AIG Aid

Bernanke’s letter coincides with efforts by lawmakers to obtain more details on the Fed’s oversight of AIG after e-mails released this month showed that the New York Fed asked the company to withhold information from the public about payments to banks.

The House Committee on Oversight and Government Reform last week subpoenaed all documents related to the New York Fed decision to fully reimburse banks that bought protection from AIG and efforts to persuade AIG to keep information about the payments from the public.

The New York Fed said today it delivered 250,000 pages of documents to the House panel. The materials show that the New York Fed’s actions “assisted AIG in ensuring the accuracy of its disclosures and protected important U.S. taxpayer interests,” the bank said. The New York Fed reiterated that its former president and now-Treasury Secretary Timothy F. Geithner had no role or knowledge of the disclosure matters.

Mark Thoma adds:

Most people won't realize Bernanke is asking for something the GAO could have done on its own (though perhaps with less cooperation) ... so the politics work in the Fed's favor. And it does send the message that the Fed doesn't think it has anything to hide.

This is both good politics and good policy.

Note: I added the section from Bloomberg on Geithner too - he is being attacked for something that happened apparently after he left the NY Fed.