Bernanke: Bring on AIG scrutiny

WASHINGTON (CNNMoney.com) -- In the latest move to placate critics, Federal Reserve Chairman Ben Bernanke on Tuesday invited the audit arm of Congress to review the Fed's bailout of American International Group.

"[T]he Federal Reserve would welcome a full review by GAO of all aspects of our involvement in the extension of credit to AIG," Bernanke wrote in letter to the Government Accountability Office.

The invitation does not represent any procedural changes, as GAO could have reviewed the issue without such an invitation. But the does letter highlight the Fed's sensitivity to mounting criticism to the events leading up to the bailout.

Bernanke's letter goes on to assure GAO that the Fed took measures to protect taxpayers, like demanding changes in management and requiring AIG to wind down its risky operations.

The letter also says that the Fed should be repaid for the billions of dollars it has lent AIG by Sept. 16, 2013.

Last week, the House Oversight Committee issued subpoenas to the Federal Reserve Bank of New York to get its correspondence with AIG (AIG, Fortune 500), which was rescued to the tune of some $180 billion last fall.

The records in question are about taxpayer dollars that went to banks with counter party insurance contracts with AIG. Some 16 banks got $62.1 billion of taxpayer dollars as part of the bailout of AIG, according to the special inspector general's office for TARP.

The counter party banks got paid 100% of what they were owed, the full-dollar amount of the underlying assets that the counter parties had insured through AIG.

Recent reports that AIG had been instructed to obscure counter party data has caused a new stir on Capitol Hill, with many criticizing Treasury Secretary Tim Geithner, who was running the New York Fed at the time.

However, Geithner was not in the loop on the decisions, since he had recused himself from issues involving AIG while he was under consideration for the Treasury job, officials have said.

Geithner, along with Fed chief Ben Bernanke and former Treasury Secretary Henry Paulson, are considered key architects of the federal response to the economic meltdown of 2008.