Who knew about AIG bonuses is a riddle

WASHINGTON, March 19 (UPI) -- U.S. Federal Reserve officials knew for months about bonuses AIG but didn't tell the Obama administration about them, government and company officials said.

As pressure and criticism mount on American International Group to return the $165 million in bonuses -- especially since it received billions in federal bailout money -- details have begun to emerge about who knew what when concerning the payments, The Washington Post reported Thursday.

AIG executives said they told the Fed three months ago the company would pay $165 million by March 15 to employees in its most troubled division. The Treasury Department and White House said they learned of the payments from Fed officials days before they were paid.

Treasury Secretary Tim Geithner told the Post Wednesday he was unaware of the size of the bonuses and the timing of their payment.

"I was stunned when I learned how bad this was on (March 10)," Geithner said. "I shouldn't have been in that position but it's my responsibility and I accept that."

Congressional Democrats and Republicans have raised questions about how Geithner couldn't have known about the bonuses, given his role in AIG's bailout, which has totaled more than $170 billion.

When the government rescued AIG in mid-September, Geithner was a key figure as president of the Federal Reserve Bank of New York. Geithner, Treasury Secretary Henry Paulson Jr. and Fed Chairman Ben Bernanke decided to lend the company $80 billion in exchange for an 80 percent ownership equity stake.