In an interview with CNN's Ali Velshi Thursday, Treasury Secretary Timothy Geithner confirmed that his department had pushed Sen. Chris Dodd to add a loophole in the federal stimulus bill allowing bailout recipients to receive bonuses. Dodd had told the network Wednesday that he had been the one to insert the loophole, but at the request of the Treasury.
From CNN:
The Treasury Department was concerned that legislation that would restrict contractual bonuses would not hold up to legal challenges, Geithner said in an interview with CNN's Ali Velshi.
"We expressed concern about this specific version. We wanted to make sure it was strong enough to survive legal challenge," Geithner said.
WATCH part of the interview:
TRANSCRIPT:
GEITHNER: I was informed by my staff of the full scale of thesespecific things on Tuesday, March 10th. And as soon as I heard aboutthe full scale of these things, we moved very actively to exploreevery possible avenue -- legal avenue to address this problem, to makesure that, again, the assistance we were providing was not going tounduly benefit these people.And, you know, we moved very quickly. We've made it clear that thepayments going forward had to be renegotiated and we're going to makesure that the taxpayer is compensated for any payments we can'trecoup.And we're exploring all legal means to recoup those payments.VELSHI: But you're pretty certain on the advice that you've been giventhat we can't just legally not give these -- or get any of thesebonuses back?GEITHNER: Absolutely. That our best judgment at the time was we had nolegal ability to block a set (ph) of those payments, but those that wehad the capacity to affect, we insisted or renegotiated.In any case, we're going to go back and try to recoup the paymentsthat were already made we had no legal ability to block at that time.VELSHI: As far as you can remember, though, you did not know aboutthis before March 10th?GEITHNER: On Tuesday I was informed about the full scale and scope ofthese specific bonus problems. And again, as soon as I did -- but, youknow, it's my responsibility, I was in a position where I didn't knowabout those sooner, I take full responsibility for that.The people doing this, the Fed and the Treasury people, are workingvery closely together. They're doing -- dealing with an enormous setof complicated problems. They have enormous integrity and dedication.They're working very hard.And they're going to help us move forward to make sure that, again,we're protecting the interests of the American people.VELSHI: Let's just talk a little moment again about those payments andthe legal ramifications of doing anything about it. Senator Dodd saysthat he had a clause that was put into the stimulus bill thatbasically allowed these payments to be made to people at AIG in thisparticular unit and he says that somebody at Treasury asked him to putit in.GEITHNER: Let me just start by saying that Chairman Dodd has played anenormously important leadership role in this and he's doing the rightthing in trying to make sure that the assistance we provide don't goto benefit people that shouldn't benefit from these things. And I amenormously impressed by the importance of what he's trying to do inthis case.VELSHI: But somebody - have we figured out who told him to put this clause in?GEITHNER: This provision? We expressed concern about this specificversion. We wanted to make sure it was strong enough to survive legalchallenge. But we also worked with him to strengthen the overallframework and his bill has this very important provision we're relyingon now to go back and see if we can recoup payments that were madethat there was no legal ability to block.VELSHI: But inadvertently might somebody at Treasury have told SenatorDodd to do something that has now resulted in these payments not beingable to ...GEITHNER: No, again, what we did is just express concern about thevulnerability of a specific part of this provision, the legalchallenge, as you would expect us to do, that's part of thelegislative process, but again, his bill also has this very importantprovision that allows us to go back and see if we can recoup thesepayments and we're going to explore that, but in any case we're goingto make sure that the American people are compensated for any paymentswe can recoup.VELSHI: Do we know who in Treasury had this conversation with whomeveron the banking committee?GEITHNER: Treasury staff were working Senator Dodd's staff throughoutthis process. Again, that's part of the legislative process.VELSHI: But you weren't involved in that directly?GEITHNER: I did have with other officials some conversations withChairman Dodd as he was going through this process but otherprovisions.VELSHI: So not about this particular one. It wasn't you telling ...GEITHNER: No, but I'm not sure that's relevant because Treasury staffdid express concern about whether this provision was vulnerable tolegal challenge.
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