N.Y. Fed was aware of AIG bonus plans

WASHINGTON, May 13 (UPI) -- The New York Federal Reserve was aware of American International Group Inc.'s bonus pay plans months before the public controversy, government records show.

The New York Fed had five months head start on the controversy and was working with AIG -- along with legal and public relations experts -- to manage the public reaction they anticipated, The Washington Post reported Wednesday.

It was not until the end of February, however, that the New York Fed alerted the new Obama administration that AIG's bonus payments were a growing concern.

Public outrage erupted when it was learned AIG would pay bonuses after accepting $180 billion in federal emergency aid.

Lawmakers in the Senate and House of Representatives drafted bills targeting the bonus checks with punitive taxes, but the controversy died down after several AIG executives said they would return the money. The bills, in turn, have idled.

The Post said U.S. Treasury Secretary Timothy Geithner was not named in documented correspondence the newspaper reviewed. The New York Fed alerted Federal Reserve Chairman Ben Bernanke about the AIG bonus issue in early February so he could deal with questions on the matter in a congressional hearing, the Post said.