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A group of House Democrats are stepping up demands for greater transparency from the Federal Reserve after reports that the Fed mishandled the bailout of insurance giant American International Group.
The group, led by Rep. Elijah Cummings, D-Md., wants a congressional review of the Federal Reserve system. They want to allow congressional audits of the Fed as part of financial rules being debated by the House Financial Services and Senate Banking committees, according to a letter Wednesday to the committees' chairmen.
"Real financial regulatory reform cannot occur without an examination into the structure" of the Federal Reserve system, the letter says.
Details on which banks benefited from AIG's bailout never would have become known without demands from Congress, and a recent report shows flaws in the Fed's structure as a regulator, the lawmakers write.
The letter follows sharp criticism Monday of the Federal Reserve Bank of New York and Federal Reserve in a report from Neil Barofsky, the special inspector general for the $700 billion financial bailout fund. Barofsky said the Fed may have paid billions more than necessary to banks including Goldman Sachs [ GS 152.49 
+1.39 (+0.92%) ] and Merrill Lynch, now part of Bank of America [ BAC 14.47 
-0.01 (-0.07%) ], to cancel AIG's contracts with them.
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