When the AIG (AIG) bonus scandal broke in March, there were a lot of questions about when, exactly, officials were aware that AIG would be paying out bonuses for 2008.
Treasury Secretary Tim Geithner swore up and down that he’d had only a vague idea of the bonus issue, but that he knew only few of the details.
New documents, seen by the Washington Post, show that at least some officials at the New York Federal Reserve knew of the bonuses several months earlier.
Documents show that senior officials at the Federal Reserve Bank of New York received details about the bonuses more than five months before the firestorm erupted and were deeply engaged with AIG as well as outside lawyers, auditors and public relations firms about the potential controversy. But the New York Fed did not raise the alarm with the Obama administration until the end of February.
Timothy F. Geithner, who became Treasury secretary early this year, was the head of the New York Fed when it became aware of the bonus details. But his name is not among those of senior New York Fed officials mentioned in the summaries of phone calls, correspondence and other documents obtained by The Washington Post.
By Sept. 29, the bonus matter first appeared on the radar of the New York Fed, which was designated as the primary contact for AIG, documents show. Senior officials from the New York Fed met with AIG officials to discuss the compensation plans in place at Financial Products, whose risky derivative contracts had brought the insurance giant to the brink of collapse.
AIG e-mailed officials at the New York Fed copies of the company’s compensation plans, which detailed bonuses and retention payments, including those at Financial Products, documents show. The issue arose in scores of meetings and conference calls over the ensuing months. AIG also disclosed its retention programs in public filings.
For the New York Fed, the primary contacts were Jim Hennessy, counsel and vice president, and Sarah Dahlgren, a senior vice president and head of its bank supervision group. Leading the effort at AIG was Anastasia Kelly, the company’s executive vice president and general counsel.