In letter to Sen. Kerry, Bernanke warned of Fed's 'limited rights' in AIG oversight.

Fed chair Bernanke warned that the Fed did not monitor bonuses by the company

Federal Reserve chairman Ben Bernanke warned in a private letter to a key lawmaker that the Federal Reserve did not monitor bonuses by the company.

The Fed had "limited rights" in its oversight of AIG, Bernanke wrote Sen. John Kerry, D-Mass., and was "not in a position to review or approve all of the specific compensation or other expenditures" at the insurance company.

In the letter, sent last Tuesday, Bernanke noted that the Fed has the power to "monitor the financial condition of AIG and to restrict certain major decisions that might reduce the ability of AIG to repay its loan from the Federal Reserve."

But he cautioned that the Fed's oversight role was limited, and did not cover compensation or "other expenditures related to the ongoing business operations of AIG and its subsidiaries."
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