The question of who killed a provision that could have reined in lavish bonuses issued by bailout recipients remains a mystery, with key players either declaring innocence or pointing the finger at someone else. Senior Hill aides insist that the main congressional suspects were not involved, and contend that they are still searching for answers themselves.
On Tuesday, Sen. Ron Wyden (D-Oreg.) told the Huffington Post that a measure sponsored by he and Sen. Olympia Snowe (R-Maine) -- which would have levied a 35% tax on bonuses issued by TARP recipients exceeding $100,000 -- was inexplicably and anonymously removed from February's stimulus bill during House/Senate negotiations.
The result was that the legislation, while targeting future bonuses given by bailed-out firms, allowed companies like AIG to award senior executives $165 million for 2008.
"Whenever I went to one of these special interest groups that I knew were one of the people that was likely trying to unravel this, they would say 'oh my goodness. It wasn't us. It must have been someone else,'" Wyden recalled. "And so it was sort of a pin-the-tail on the donkey kind of exercise to figure out who was actually responsible for killing it."
The difficulty in finding the culprit underscores just how sensitive a topic these bonuses have become. Many sources on Capitol Hill claim to be totally in the dark about what happened during the conference committee. Others have simply been mum.
One name floated as a suspect is Sen. Chris Dodd (D-Conn.). He chairs the Senate banking committee, has received large financial support from AIG, and is the insurance company's home-state Senator. But, in a statement released on Tuesday, the Connecticut Democrat said he supported Wyden's legislation: "unfortunately, that provision was removed from the stimulus bill in Conference." Moreover, as one Hill aide notes, Dodd wasn't even part of the conference committee.
Sen. Max Baucus (D-Mont.), on the other hand, was a member of the conference committee. But the Finance Committee Chair, according to officials, was not granted purview of executive compensation. That was considered Banking's domain. And in a statement to CNN on Tuesday, he noted that the stimulus was constructed in such haste that he "didn't have time and other conferees didn't have time to address many of the provisions that were modified significantly." His office confirmed the quote, which seems to indicate that Baucus was not involved..
Then there is Rep. Charlie Rangel (D-N.Y.), who was also on the conference committee, and has long recoiled about using the tax-code as a "political weapon." But the longtime Harlem Democrat, like Baucus, doesn't have jurisdiction over the bonuses. One House Democratic aide noted: "This issue was put forward by the Senate Banking Committee and was never dealt by other members of the conference committee."
If not Dodd, Baucus or Rangel, then who? Much of the ensuing speculation has focused on the Obama White House and/or Treasury Secretary Timothy Geithner. Dodd, for starters, said that a separate provision limiting executive compensation that he introduced to the stimulus was modified at the insistence of the administration to include exemptions for bonuses protected by contracts.
Moreover, during the crafting of the stimulus, "senior administration officials" were letting it be known that they were concerned with hard caps on compensation. Publicly, chief adviser David Axelrod acknowledged that Geithner and Larry Summers "had concerns about" stringent limits.
A call to the White House to discuss this issue was not immediately returned. And while the president's press secretary Robert Gibbs has not been asked specifically about what happened during the stimulus conference committee, he has defended the administration from accusations that it dropped the ball on the bonus front.
"Understand that the compensation structure for executives prior to the President of the United States, Barack Obama, laying out the way we're going to do business changing, there was -- Barack Obama came in and there was a new sheriff in town on executive compensation," Gibbs said on Tuesday. "He changed the way we did business here and the way Wall Street did business, by instituting the toughest executive compensation rules that had ever been entered into, changing the lawlessness with which all of this was governed prior to that announcement."