Federal Reserve Board Chairman Ben Bernanke says the Fed has pressed American International Group Inc. to think carefully about employee compensation.

Bernanke gave that assurance earlier this week in a letter sent to Sen. John Kerry, D-Mass.

AIG, New York, is using human resources division reviews of compensation decisions, the AIG board compensation panel, and consultations with outside experts to comply with the Fed request, Bernanke writes in the letter.

The Fed also supports the establishment of a special governance committee within AIG, the issuance of a new expense policy guidebook for all employees, “and the cancellation of all meetings, conferences and other events that are not strictly justified by clear business needs,” Bernanke writes.

In December, AIG created a “strengthened internal reporting and oversight process” for expenses under the direction of a senior vice president, Bernanke writes.

In addition to monitoring and reporting compliance with the recent expense guidebook, the objective of the new expense review process “is to establish targets for expense reductions consistent with the company’s divestiture program and a reporting framework for the government and other constituencies,” Bernanke writes.

“We believe it is in the taxpayer’s interest for AIG to provide reasonable, market-based compensation with a view toward attracting and retaining qualified staff in order to maintain the value of the businesses that AIG is seeking to sell in order to repay the federal financial assistance it has received,” Bernanke writes.

“We are mindful that the company must avoid excessive compensation and other unnecessary expenditures that do not further this objective,” Bernanke writes.