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WASHINGTON (AP) — Federal Reserve Chairman Ben Bernanke is telling a congressional panel he wanted to sue to stop insurance giant American International Group from paying millions in employee bonuses.
Bernanke’s statement is in testimony he prepared for a hearing Tuesday before the House Financial Services Committee. The bailout of AIG underscored a need for Congress to grant new powers to regulators. Among other things, the panel will be told there must be a better way to smoothly wind down failing financial firms.
Treasury Secretary Timothy Geithner, at the same hearing, was asking for power similar to the Federal Deposit Insurance Corporation’s authority to seize control of banks, swallow bad assets and sell good ones to competitors.
The Federal Reserve’s chairman and the secretary of the treasury are making a rare joint appearance at a congressional hearing, ostensibly to take a scolding over the handling of bonuses at AIG, the giant insurance company that has become the symbol of reckless risk-taking on Wall Street.
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