(DJ US Republicans Make New Claim About Bernanke And AIG Bailout)
By Alistair Barr
Republican politicians made a new claim Wednesday about Federal Reserve Chairman Ben Bernanke's involvement in the 2008 bailout of insurance giant American International Group Inc. (AIG), one day before a vote on his re-nomination for a second term at the central bank.
Sen. Jim Bunning (D., Ky.), a member of the Senate Banking Committee, said he read documents that show Fed staff recommended against bailing out AIG, leaving the insurer to file for bankruptcy like Lehman Brothers Holdings Inc. (LEHMQ).
"His staff didn't agree with him," Bunning said, according to a transcript of a Tuesday interview with CNBC. "I'm talking about an email that he sent his staff after his staff recommended that the Federal Reserve not touch AIG just like Lehman Brothers."
The government ended up committing more than $100 billion to save AIG in multiple bailouts that have become among the most controversial aspects of the financial crisis.
The Kentucky senator is a longstanding critic of Bernanke and is opposed to his renomination.
Rep. Darrell Issa (R., Calif.) said his office received "important information from a whistleblower" confirming Sen. Bunning's comments, according to a letter Issa sent on Tuesday to Rep. Edolphus Towns (D., N.Y.), chairman of the House Committee on Oversight and Government Reform.
"According to the whistleblower, the documents reveal troubling details about Federal Reserve Chairman Ben Bernanke's personal involvement in the original decision to bail out AIG in September 2008," Issa wrote.
A spokesman at the Fed didn't immediately return a phone message and email left seeking comment on Wednesday.
Issa said his staff tried to get the documents, but Fed staff didn't return their phone calls. Issa also asked Towns to subpoena the Fed to obtain the documents.
The claims come as the Senate prepares to vote on the re-nomination of Bernanke to a second term as Fed chairman. Several senators have said they will vote against him, increasing concern about his position. Bernanke's term as Fed chairman expires on Jan. 31.
-By Alistair Barr; 415-439-6400; AskNewswires@dowjones.com
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