Dodd: Treasury Officials Insisted On Weakening Bonus Provision

The Treasury Department demanded that Sen. Chris Dodd insert exemptions into the stimulus bill that allowed bailout recipients to receive bonuses, the Connecticut Democrat said on Wednesday.

According to Dodd, officials at Treasury expressed concern that if the government were to prohibit payouts, it risked being sued by companies like AIG, which had contracts stipulating that bonuses were to be paid.

At the urging of Treasury officials, Dodd modified a clause he had previously inserted into the stimulus that prohibited bonuses from being issued by bailed-out companies. An exemption was added to allow bonuses that applied to in-place contracts.

"The alternative was, in my view, losing the entire section on executive excessive compensation," he said. "Given the choice ... I agreed to a modification in the legislation, reluctantly. I wasn't negotiating with myself. I wasn't changing my own amendment. I was changing the amendment because others were insisting on it."

"I would have preferred that we kept my language, as it left the Senate unanimously," Dodd added. "In fact there were objections when I wrote the language even before it left the Senate. ... The administration expressed reservations with the amendment. They came to us and asked for modifications in the amendment. The alternative was, of course, losing the amendment entirely, which was a possibility. I didn't want to see that happen. I suspect we would be having a conversation tonight why we didn't include some language in here to deal with bonuses, golden parachutes and the like. ... I don't believe anyone had any idea, I certainly didn't, that a month and a half later from February we would be talking about AIG and the bonuses they are receiving for their retentions, these $165 million. So that was never a part of the consideration."

The disclosure should put to rest one aspect of the debate over how a company like AIG, which has received $170 billion in taxpayer funds, was allowed to dole out $165 million in bonus payments. Still unresolved is who in conference removed the amendment introduced by Sens. Wyden and Snowe that would have taxed bonuses exceeding $100,000 at 35 percent.

More detail in CNN's write up here.

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Comments

[Doofus]

09:03 PM on 03/19/2009

One of the truisms about life in the Good Old USA is, no matter whether it's
the Demos running the show, or the Repos, rule #1 is: The rich *always* get richer.

UNLESS 'they' put in some confiscatory taxes, like (say) 75% or so on upper
income brackets. Otherwise, the wealthy folk will only hire whoever they need to
(politicians included) to arrange that they get preferences. Isn't that always the way?

And really, confiscatory taxes will also presumably be worked around also. See rule #1.

[Doofus]

09:14 PM on 03/19/2009

I must add, that in the present situation, with huge amounts of cash being
moved around & handed over to one party or another, there would seem to
be 'terrific' opportunities for various unscrupulous people to pick up a few
million bucks here & there. Kind of like those wonderful, few days after we
achieved 'mission accomplished!' status in Iraq, for example, when truck
loads of cash were moving all over the place, generally out of the country. Ok,
maybe NOT as bad as that, one would hope. But the opportunities are there.

[vanron100]

06:22 PM on 03/19/2009

Paulson designed this 'Ponzi' scheme (TARP). We understand everyone wanting us to buy more stock in order to keep the market up...fix the system...then we'll have 'confidence' to invest.

And that FIX is simple and oblivious, but everyone seems not to be addressing it directly...
- it's 'Corruption-Corruption-Corruption'.
ie. special interest groups, earmarks, lobbyist, elimination of rules and regulations, the financial sector having contributed over $5.2B to political campaigns, same people who got us in this mess are now tying to get us out (humanly impossible...they will, and have instead spent most of the time & money trying to cover-up the industry's underlining behavior).

Corruption is the 'root' problem here...as it is everywhere. Until that gets fixed first...everything else is redundant...we're just pouring $$$ into the abyss! Wall Street has always been Ponzi Street, and the Golden Rule always applies; 'never invest $$$ you can't afford to lose'.

Fix the 'corruption' - then we'll have 'confidence'.
The solution – 'Transparency-Transparency-Transparency'.
How? Start now Restructuring (nationalize, fix, resell) all the zombie banks - the FDIC does this every day.

[PinkysBrain]

05:18 PM on 03/19/2009

So let me get this straight, first Dodd gets over a $100,000 in campaign cashhttp://abcnews.go.com/Politics/story?id=7110145&page=1 from AIG, then lies about having anything to do with removing the provision limiting bonuses. I guess one has nothing to do with the other. I don't think removing the provision was as bad as lying about it (there are some good contractual law arguments about maintaining the bonuses).

The dems need to get their act together, they are imploding as fast as the repubs do.

"The real enemy is from within"

[knowBuddhaU]

06:35 PM on 03/19/2009

If I may offer a slight correction. (BTW, love that username, PinkysBrain.) You're correct on the former, but so sorry, not on the latter.

Blaming Dodd for AIG-Gate Misses the Mark
Mike Lillis
The Washington Independent
http://washingtonindependent.com/34688/blaming-dodd-for-aig-gate-misses-the-mark

So for the administration"s industry-friendly stand on executive pay, Dodd is taking the heat.

Not that the Connecticut senator, who"s facing a tough reelection contest in 2010, didn"t invite some of the criticism. When TARP was passed last fall, for example, the Banking Committee chairman hailed the "very concrete" limits on executive pay, even as experts and some other Democrats were quick to point out gaping loopholes in the law. And his amendment, which restricts bonuses for only the top 25 executives of the largest bailed-out companies, wouldn"t have done much to rein in AIG, where 73 employees recently received bonuses in excess of $1 million.

Also, Dodd"s carefully worded statement Tuesday can be easily interpreted as an indication that he wasn"t a part of the negotiations that led to the changes to his amendment. "Because of negotiations with the Treasury Department and the bill Conferees," the statement reads, "several modifications were made, including adding the exemption." Dodd was not a conferee.

IMHO, the point here is that the WH and the GOP somehow arrived at the same solution: demonizing Dodd for their own actions.

[Mecheng]

08:33 AM on 03/21/2009

You raise some good points even though Dodd bald-faced lied. Dodd first and foremost is to blame for the collapse of Fannie Mae and Freddie Mac. Dodd received over $13 million in campaign contributions since 1989 from the banking and finance industries, was the largest recipient of contributions from Fannie and Freddie, supported Frank Raines, who by himself received $52 million in bonuses, and opposed the reform of Fannie and Freddie at every opportunitiy.

DODD AND GEITHNER MUST RESIGN NOW!!

[ManassasMan]

05:08 PM on 03/19/2009

And so, in other words, the Devil made you do it, right ? BULLS--T, Christopher !

[lastjournaliststanding]

04:39 PM on 03/19/2009

"GREAT JOB, BROWNIE."

[Hdaryl01]

04:37 PM on 03/19/2009

IMPEACH DODD NOW!!!!!!!!!!!!!

[cu]

01:44 PM on 03/19/2009

Dodd...You could have been a statesman, sticking up for the people's interest, and said
NO BON US! I am dissapointed in you....always thought you were a straight shooter.

[whit3hawk]

12:59 PM on 03/19/2009

A couple of days after the last version of ARRA was finally made available to the public, in response to their public request to review it, I sent a commented file of Title VII, Compensation to the Huffington Post, showing the immediately visible loopholes which would most likely leave very few that would not get bonuses.

In there was a section there was exempting from the restriction if the bonuses were the result of written employment contract executed on or before February 11, 2009, which was written probably for AIG and probably many others, who normally have bonus contract executed as much as a year earlier!!!

No mention was made of the serious weaknesses in the legislation in any press anywhere until the last few days. Now we're shocked!

[voltage356]

12:04 PM on 03/19/2009

Ok, Dodd, if you really feel this way, then he should return every dime he got from AIG.

[unite4change]

11:57 AM on 03/19/2009

Once again, America is being controlled by our corporate media and the GOP. Our corporate media and the GOP are the same people who got us into war, let corporations have free rein and cause this financial crisis. So why would we believe them now? The AIG bonuses are a sideshow and an attempt to bring down President Obama's approval rating.

Did anyone see Mr. Libby's testimony yesterday? I did, however, our corporate media is not reporting the facts. So far, our government has not loaned AIG $170 billion that is being reported, it's actual around $80 billion. It appears, our corporate media and the GOP doesn't know the difference between the Federal Reserve (Fed), a private institution, and the US Government. They keep blending to the two together when discussing the AIG loans. Listen to what he said:

http://cspan.org/Watch/watch.aspx?MediaId=HP-R-16523

[voltage356]

11:55 AM on 03/19/2009

Then the question remain who is in charge of The Treasury Department. Unless someone has gone rogue.

[voltage356]

11:49 AM on 03/19/2009

Really, people from the Treasury Department speaks with Dodd and he doesn't know their names as to who he talking to. Oh, i guess he needs to get clearance for the NSA before he names the people he spoke to. Here's a funny one maybe i should call up Dodd's office and say I'm from the Treasury Dept and not give my name. You see this is what happens when you mix campaign funds and politics.

[ILibertine]

11:47 AM on 03/19/2009

It's not news that Dodd has been part of the problem. This story illustrates how ignorant of what many of us know as common sense and responsibility many in congress and business are. Whatever shame they might have had has been replaced with cash in silk-lined pockets. And this is the source of the depth in anger that causes many to ponder revolution as the only fix to this extent of infestation of corruption in government and its administration. A clean start that many of us hope Obama will spearhead has to overcome the tarnishment of attitudes and actions characterized by Dodd and so many others.

In the end, there are no "excuses". Either one did or did not function in the best interests of the people, as opposed to actions clearly meant to benefit oneself and a small group of interests.

[jme-SD]

11:43 AM on 03/19/2009

He had the backing of all of the Senate on leaving the bill the way it was, a President unlikely to veto the bill over this one provision, and if he's any sort of politician at all, some inkling that there would be a huge political fall-out when the bonuses got paid. Sen. Dodd must want to leave the Senate because he's now well on his way to doing so.

[Ping]

11:33 AM on 03/19/2009

Why was it even in the stimulus bill? Isn't it a complicated enough issue to warrant hearings?