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Yesterday we posted on Obama’s other IG scandal, that of Neil Barofsky who is overseeing TARP.  From the timeline of events, it looked like AIG was the target of Barofsky’s inquiries that was meeting with resistance from the Treasury Department.

This speculation has been confirmed.  The Los Angeles Times reports today:

Reporting from Washington — A Treasury Department challenge to the authority of government bailout watchdog Neil M. Barofsky came just as he had begun a sensitive investigation of the department’s role in approving bonuses to executives of insurance giant AIG, sources said Thursday.
Department lawyers had sent a message to Barofsky, special inspector general for the Troubled Asset Relief Program, suggesting that lawyer-client privilege could restrict some of his inquiries.  […]

The audit of the AIG bonuses may be among the most sensitive. It occurred after public outrage emerged over the payments to individuals who worked in AIG. In mid-March, it was revealed that the top recipient at the firm received a bonus of $6.4 million and 73 received bonuses of more than $1 million.
Geithner had approved the bonuses earlier in March after determining that they were contractual obligations by AIG that could prompt lawsuits if not paid.
His decision came less than two weeks after federal officials agreed to extend AIG an additional $30-billion line of credit on top of the $150 billion in bailout funds the government had already provided. The payments provoked outrage across the country.
Among those most upset at the time was Grassley, who asked the Treasury Department for an inquiry into the approval of bonuses to a firm that was so heavily subsidized by taxpayers.

However, as we posted yesterday, Democrats were also demanding and investigation and it wasn’t just Senator Grassley.


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