Wednesday, March 18, 2009

AIG Bonuses? Don't Look at Dodd - UPDATED

Over the past few days, I've heard from multiple sources that Senator Chris Dodd fought to retain the retention bonuses for executives in the AIG contract. I thought that a bit strange and then I heard it again on Countdown with Keith Olbermann last night. But according to Marc Ambinder, Dodd is not to blame.

...Dodd is being blamed for OK-ing a proviso in the American Recovery and Reinvestment Act guaranteeing previously sanctioned employment contracts. He faces intense political pressure because of his long-standing friendship with bankers and lenders, which has made him a key player in the negotiations between financial institutions and the government. In a statement yesterday, Dodd called on AIG executives to voluntarily refuse their bonuses. The truth is that the codicil was added in conference by mutual agreement of House and Senate Democrats and the White House.

Why would they agree to this? As Ambinder explains, then and now, they had no intention of nationalizing the banks, wanted to work with the banks and were afraid of the backlash if the perception was that the government could step in and abolish employee contracts at will.

...In conference -- Dodd was not a conferee -- the following clause was added to reconcile differences between the Senate and House bills:

iii) The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009, as such valid employment contracts are determined by the Secretary or the designee of the Secretary.

Dodd, the chair of the banking committee, agreed to this language because most all of the stakeholders - including the administration - wanted it. But the original bill passed by the Senate contains Dodd's compensation limits without the carve out the exemption for bonuses. So there is no evidence that Dodd bowed to pressure from his contributors or that he was the author, the force of nature, behind it.Why the rush to blame Dodd? Apparently he has the lowest approval of any incumbent and his seat may be up for grabs. I would be very interested in knowing where the "blame Dodd" story originated, and wouldn't be the least bit surprised if it's a Republican red herring to try and gain a Senate seat in 2010. Good luck with that in the blue northeast.

There are plenty of places to look for fuck ups, but solely putting it on Dodd's shoulders isn't entirely fair.

(H/T Ambinder)

UPDATE (3/19/09 5:20pm): Glenn Greenwald: The dishonest "Blame Dodd" scheme from Treasury officials

There is a major push underway -- engineered by Obama's Treasury officials, enabled by a mindless media, and amplified by the right-wing press -- to blame Chris Dodd for the AIG bonus payments. That would be perfectly fine if it were true. But it's completely false, and the scheme to heap the blame on him for the AIG bonus payments is based on demonstrable falsehoods. (Continue reading using link above.)


Pro said...

Breaking News: Dodd Says loophole that protects AIG Bonuses added per request of the Obama administration. The video is about a fifth of the way down.

Obama should take full and direct responsibility for this mess.

Broadway Carl said...

Pro, Obama did say he takes ultimate responsibility during his town hall today because he is the President. But you can't discount the fact that this provision was added in conference. The ball was dropped on multiple levels.My point was that the finger pointing at Dodd seemed to be scapegoating to me, which is why he's speaking out. Good for him!

Anonymous said...

I'm not singling out Dodd but,the fact of the matter is,congress gets a shit full of money in contributions from both the banking industry & wall st.they have the biggest & most influential lobbyist in D.C. The only way to find out what exactly happened is to have an independent body investigate the whole thing but.its not goin to happen because congress won't let it happen.I would like to see these bullshit rules where a senator can hold up a bill anonymusly so it can't be voted on for example. I just want more tranparency in government.Obama has started doing that but congress isn't going to change.Secrecy is their favorite weapon