Yesterday, in a letter to Acting Comptroller General Gene L. Dodaro, Federal Reserve Chairman Ben S. Bernanke asked the Government Accountability Office (GAO) to conduct a review of “all aspects of [the Federal Reserve’s] involvement in the extension of credit” to American International Group Inc. (AIG) “to afford the public the most complete possible understanding of [the Federal Reserve’s] decisions and actions” related to AIG. His letter comes in response to recent criticism and debate regarding the oversight role that Congress and the GAO should play in relation to the Federal Reserve’s policy actions, and ongoing Congressional inquiries into the Federal Reserve’s role in AIG’s decision to pay out millions to large banks for credit-default swaps and to executives in the form of compensation and severance packages.

In his letter, Bernanke maintains that “the Federal Reserve and the Treasury acted in the best interests of the United States to preserve the financial system” while “doing everything possible to protect the American taxpayer.” He also stressed the transparency with which the Federal Reserve has acted, but states that in the spirit of protecting the taxpayer, the Federal Reserve will make available for review “all records and personnel necessary.”

Separately, the Federal Reserve Bank of New York issued a statement yesterday supporting Chairman Bernanke’s call for a comprehensive GAO review of the Federal Reserve’s involvement in AIG and to announce that it has delivered detailed records related to AIG, as subpoenaed by the House Committee on Oversight and Government Reform. The New York Fed also posted a memorandum on its website yesterday that details its participation in the preparation of public securities disclosures by AIG relating to a specific facility, Maiden Lane III, which was created in November 2008