Dodd: Treasury Insisted On Grandfathering Bonuses
It was a day of outrage on Capitol Hill. Outrage that AIG, recipient of almost $180 billion in federal bailout money, is paying out $165 million in "retention awards" to hundreds of employees, including 73 bonuses of $1 million or more and 11 payments to people who no longer work for AIG.
As CBS News and others have documented, that outrage is disingenuous coming from lawmakers who have known about the pending bonuses for months.
In particular, it's disingenuous coming from anyone who voted for the American Recovery and Reinvestment Act of 2009 (a.k.a. the Obama stimulus package). The stimulus bill included provisions to limit executive compensation at companies receiving federal bailout money. But it also stated explicitly that the limits would not apply to bonuses agreed to prior to Feb. 11, 2009.
For several days, news organizations have been trying to determine who put that clause in the bill. The Treasury Department, reeling from the bad PR associated with propping up AIG while letting the bonuses go forward, pointed its finger at Sen. Chris Dodd, D-Conn., the chairman of the Senate Banking Committee.
The administration official said the Treasury Department did its own legal analysis and concluded that those contracts could not be broken. The official noted that even a provision recently pushed through Congress by Senator Christopher J. Dodd, a Connecticut Democrat, had an exemption for such bonus agreements already in place.The Treasury's linking Dodd to the provision allowing the bonuses is true, but, again, disingenuous and misleading.
Dodd put the amendment in the stimulus bill limiting executive compensation with no grandfather clause. Under pressure from the Obama administration and the Treasury Department (the same Treasury Department pointing its finger at Dodd), he was forced to add the grandfather clause or abandon his amendment altogether.
(The narrative of these events was ably documented by FireDogLake.com's Jane Hamsher and later by Salon.com's Glenn Greenwald. The Treasury's linking Dodd to the grandfather clause was particularly effective because Dodd has numerous links to AIG and has received more campaign donations from the company than any other senator.)
Today, Dodd spoke out in an impromptu appearance on CNN's "The Situation Room."
"The alternative was losing, in my view, the entire section on executive excessive compensation. Given the choice, this is not an uncommon occurrence here, I agreed to a modification in the legislation. Reluctantly," he said. "I wasn't negotiating with myself here. I wasn't changing my own amendment. I was changing the amendment because others were insisting upon it."
The appearance wasn't exactly a cake walk for Dodd. His interviewers focused on the fact that in an appearance the day before, he denied any involvement whatsoever with the clause allowing the bonuses. Untrue, to be sure.
Still, Dodd made clear who wanted the change.
"The administration expressed reservations about the amendment," he said. "They came to us and asked for modifications to the amendment. I was being sought out and asked to modify this, with the alternative, candidly, being losing the amendment itself."
He added, "There were many who were highly critical of the Dodd amendment on compensation – excessive compensation. I find it ironic that the very people who were critical of me putting that amendment in a month and a half ago are now the very people saying we went too far."
He said that the amendment still included a provision disallowing bonuses "contrary to public interest," and said, "Ironically, it's the administration, relying on that section, which is using that as a means by which they can reach back and try to get at these bonuses, which I'm confident we will."
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