Yesterday, Senate Banking committee Chairman Christopher Dodd took responsibility for inserting language into the federal stimulus bill that protected bonuses like the controversial AIG bonuses. A Treasury official has acknowledged that the Obama Administration pushed for the language. On Tuesday, Dodd denied have any role in inserting the language.
I have been criticized (e.g., here and here) for referring on Countdown in this segment to the amendment protecting bonuses and saying “And I believe it was Dodd who inserted it.” While Treasury may have suggested it and pushed it, it was Dodd who agreed to insert it. Nevertheless, Dodd has stressed that it was the Obama administration that pressured him to add the amendment, which he did not want.
Now, Dodd has come out and acknowledged that indeed he was the member who put it into the bill.
This was a change from the day before when Dodd denied any role in adding the language. The record now also contradicts the earlier statements of the White House, which expressed no knowledge of the bonuses and outrage over the very notion of using stimulus funds in this way.
The new spin from members is that they had no choice but to protect past bonuses. That is not true in my view. I believe that language could have been crafted to keep these funds from being used as general revenue in this fashion or for the purposes of bonuses. Members simply did not want to spend sufficient time to draft the law properly and wanted to rush to get out hundreds of billions of dollars. Now, these same members who expressed concern over litigation are attempting to do something far more controversial — imposing a retroactive confiscatory tax.
For the full story, click here.
Buddha Is Laughing:
“Fire Geithner and Summers NOW.”
I’ll see that and raise you a …
“Get Me Rex Kramer!”
http://www.imdb.com/title/tt0080339/quotes
http://politicalticker.blogs.cnn.com/2009/03/19/geithner-treasury-pushed-for-bonus-loophole/
Fire Geithner and Summers NOW.
As I said over one year ago and since, as well, No s***,Sherlock!
Boston is ‘My Town’ and I am still very interested to know what former Gov. D-NY, Eliot Spitzer has to say about all of this given his untimely demise, coupled with his long running feud with Hank Greenberg.
—–
turley.org/2008/03/11/could-spitzer-be-charged-under-the-mann-act/
Patty C 1, March 11, 2008 at 4:46 pm
No s***, Sherlock… 😉
He pissed off a LOT of people on Wall Steet, like AIG’s Hank Greenberg, and notable others, elsewhere…
And I didn’t know he went to school with Jim Cramer, who is/was a
big Romney fan.
http://en.wikipedia.org/wiki/Eliot_Spitzer
“Spitzer used a New York statute to allow his office to prosecute cases which have been described as within federal jurisdiction.[7][8] In January 2005, the president of the U.S. Chamber of Commerce described Spitzer’s approach as “the most egregious and unacceptable form of intimidation we’ve seen in this country in modern times”.[9]“
——-
http://www.insurancejournal.com/news/international/2008/11/13/95484.htm
Chris,say it aint so!!
As I said a year ago and since then, as well, No s***,Sherlock!
Boston is ‘My Town’. And I would still very much like to hear what Eliot Spitzer has to say about all of this, given the timing of his demise coupled with his long running feud with Hank Greenberg…
————–
http://jonathanturley.org/2008/03/11/could-spitzer-be-charged-under-the-mann-act/
Patty C 1, March 11, 2008 at 4:46 pm
No s***, Sherlock… 😉
He pissed off a LOT of people on Wall Steet, like AIG’s Hank Greenberg, and notable others, elsewhere…
And I didn’t know he went to school with Jim Cramer, who is/was a
big Romney fan.
http://en.wikipedia.org/wiki/Eliot_Spitzer
“Spitzer used a New York statute to allow his office to prosecute cases which have been described as within federal jurisdiction.[7][8] In January 2005, the president of the U.S. Chamber of Commerce described Spitzer’s approach as “the most egregious and unacceptable form of intimidation we’ve seen in this country in modern times”.[9]“
——-
http://www.insurancejournal.com/news/international/2008/11/13/95484.htm
Mr Turley,
But of course you knew what was happening, just as a few others of us have known for some time.
But really, this is so easy to understand.
Follow the money, honey.
http://buelahman.wordpress.com/2009/03/19/aigs-congressional-bonus-plan/
mespo727272 1, March 19, 2009 at 10:34 am
rcampbell:
I think you’ve got it. This is bad political theater whose stage was set by Beranake and Paulson well before the Obama Administration even picked out new drapes. All this anger seems misplaced to me too, given the dire predictions of collapse that permeated Washington in the Fall of 2008, and the haste to “do something.” Stupid maybe, but nefarious? As Robert Heinlein said,”Never assume villainy when stupidity will suffice.”
——-
Maybe, but it’s all a little too cozy for my taste. I do not approve of Larry Summers as a WH advisor nor Tim Geithner as Treasury Secretary. I’d much rather have Tom Daschle as HHS Secretary – given the choice between possible tax ‘evaders’… 😉
I find Maurice ‘Hank’ Greenberg’s CV fascinating – copied in part from wiki, here, but also because of his fascination with China and his desire to return to C.V. Starr’s, ergo AIG’s, ‘roots’,
emergin as far back as Reagan with an offer to be CIA Director, in addition to his long held ties to the Rockefellers.
He is currently head of the multi-million dollar Starr Foundation which funds charitable causes in Boston and New York, such as cancer research, and HOMELESSNESS PREVENTION, interestingly enough…
http://en.wikipedia.org/wiki/Maurice_R._Greenberg
…”Mr. Greenberg is Honorary Vice Chairman and Director of the Council on Foreign Relations and a member of David Rockefeller’s Trilateral Commission. In the 1980s, his extensive foreign connections prompted the Reagan administration to offer him a job as Deputy Director of the CIA, which he declined.
He was appointed as a member of the Hong Kong Chief Executive’s Council of International Advisers in the years of 1998-2005[1].
He was awarded “CEO of the Year 2003″ by Chief Executive Magazine. [3].
He is a former Chairman and currently a Trustee of the Asia Society, Trustee Emeritus of the Rockefeller University, and is an honorary Trustee of the Museum of Modern Art, all three institutions founded by the Rockefeller family.
He is also a former Chairman and current member of the US–Korea Business Council, a member of the US–China Business Council, and the Business Council. He has served on the Board of Directors of the New York Stock Exchange, the President’s Advisory Committee for Trade Policy and Negotiations, and the Business Roundtable. He is a past Chairman, Deputy Chairman and Director of the Federal Reserve Bank of New York.
Mr. Greenberg is Chairman Emeritus of New York-Presbyterian Hospital and the New York-Presbyterian Hospital Foundation, Inc. He serves as a member of the Board of Overseers of the Weill Medical School of Cornell University, Life Trustee of New York University, Trustee for the School of Risk Management, Insurance, and Actuarial Science and is Chairman of the Academic Medicine Development Company (AMDeC). He is on the Board of Directors of the International Rescue Committee and is active in a number of other civic and charitable organizations. He was a former Trustee of the American Museum of Natural History.
As Chairman of The Starr Foundation, Greenberg oversees the disbursement of major financial support to academic, medical, cultural, and public policy institutions…”
rcampbell,
To me the larger point is that our govt. is lying to us about our money. Dodd saying he didn’t think any of this had a relationship to the bonuses is a lie. The Obama administration claiming shock and horror is also a lie. Here is what Dean Baker writes about Geithner:
“One of the issues in the AIG bonuses is what did the administration know and when did they know it. The NYT tells readers that:
“On Tuesday last week, as he prepared for a meeting in London of the finance ministers of the Group of 20 nations, Mr. Geithner learned that A.I.G. by Sunday would send out the bonuses to employees at its financial products unit, which developed the risky derivatives now blamed for the global credit crisis.”
It’s impressive that the New York Times knows when Mr. Geithner “learned” this information. Did this information come to the NYT directly from God?
We get a bit more insight on the source in the next paragraph where we find out that:
“With few senior political appointees on hand, the word came from one of the numerous career civil servants who keep the Treasury functioning through changes of administration, according to an official (emphasis added).”
Perhaps this same “official” is the person who also told the NYT when Geithner learned of the AIG bonuses and provided the article’s unsourced description of subsequent events. It would have been helpful to have some additional information on this unnamed official since it is possible that this person has a stake in minimizing Geithner’s knowledge of the AIG bonuses.
The facts presented in the article lend themselves to an alternative explanation of events.The article tells reports that: “once A.I.G. was under the Fed’s control, its executive compensation plans hardly came up, according to officials,” noting that Geithner was overseeing the takeover.
One may reasonably conclude that Geithner, as head of the New York Fed, had a good understanding of the sort of compensation packages that were used at financial institutions like AIG. It is also reasonable to assume that if he didn’t explicitly take steps to change these practices following the Fed’s takeover of AIG, that the practices would still be in place.
In other words, insofar as he gave the matter any thought at all, it is reasonable to assume that Geithner knew that AIG would be paying large bonuses to most-valued employees. If he did not give it any thought then it was because he did not care that a firm receiving more $160 billion worth of taxpayer dollars was paying multi-million dollar bonuses to its top executives. It is implausible on its face that Geithner was surprised by this situation.”
–Dean Baker
There’s also that other problem of the many give aways to AIG by Treasury. We are being ripped off by our own govt. We have to know what they are doing so we can stop it.
rcampbell:
I think you’ve got it. This is bad political theater whose stage was set by Beranake and Paulson well before the Obama Administration even picked out new drapes. All this anger seems misplaced to me too, given the dire predictions of collapse that permeated Washington in the Fall of 2008, and the haste to “do something.” Stupid maybe, but nefarious? As Robert Heinlein said,”Never assume villainy when stupidity will suffice.”
Now, I’m as screaming red a liberal as they come, but I’m a little perplexed about the amount of furor surrounding this controversy. Here, in a nutshell is what I understand:
The CEO, Liddy, was brought in by the Fed in September, ’08 and is working for $1. He doesn’t appear to be motivated to do anything but move AIG through the muck and mire he was handed. It seems an error to cast him as a villian.
Secondly, there is much discussion and outrage that AIG used Fed and/or TARP money to pay large sums to banks all over the world. This is a confusing complaint in taht this is exactly the business AIG was in. Their business was to provide worldwide banks with insurance against those banks high risk investments. Now, AIG’s previous management probably shouldn’t have accepted the risks involved with the risky bank investments, but they did. When the bank investments went bad, they understandably called on AIG insurance to cover their loses. The number of banks and the amount of losses to be covered was enormous. They would have easily brought down AIG and, with them, banks arould the world.
This is the point at which the Fed got involved last fall. They installed Liddy, fired most of the culprits who built the house of cards threatening to topple the banking system and began working through the problems.
The “work out” was handled largely by AIG employees from a different division than the one responsible for the problems but who had familiarity with the company’s business. It is true that some of the offenders were in this group, but that’s not entirely out of the question when the point is to defuse an imminent financial catastrophe. So, a number of upper and lower level people were offered retention bonuses to delay seeking new jobs and help AIG work through their difficulty with the help of Fed funds.
The bonsuses paid were to those who stayed and helped. There is talk that it was wasted money because some of those receiving the bonus were no longer at the firm. That’s also quite understandable for a couple of reasons. Some may have agreed to stay a specific period, did so, got their bonus and moved on to new ventures. Others may have asked to stay even though part of the initial problem and once their contract was completed it was not renewed. Still other fulfilled their contractual obligation relative to this function, but are valued AIG employees from a better managed division.
I grant that the one $6.4M bonus is offensive, but not inconsistant in the Wall Street scheme of things and the others were smaller. When faced with paying or not paying the bonuses, Liddy, the Fed and the BOD made the decision that given the trillions of dollars these folks handled and having helped improve AIG’s position, the millions involved were not ill-spent. This decision was akin to the one in the fall when the Fed had to decide to either pay the banks who bought the insurance or fold the company and watch the other banks fail. The question in both cases was the same: Should AIG honor its contractual committments or not?
There seems to be a lot of mis-placed anger. It appears to me the real culprits have already gotten away and we’re attacking those who stayed to help fix their mess.
Jill-
I like your analogy to Iran Contra. Kind of like blaming Lynddie England for Abu Ghraib or the line in Casablanca where the officer is “shocked” that gambling is going on as he’s handed his winnings.
The O admin’s reaction brings to mind Kevin Phillips’ statements on Moyers’ Journal last Sept (link at sig) that “the heart of the Democratic carries a lunch box but the new soul… wears a pinstripe suit.” I think we’re seeing the beginnings of a conflict between those forces, the voters and the financiers, now and that the question of “what did Geithner know and when did he know it” will fuel this anger.
Phillips other statements that Obama “doesn’t have any problem with the hedge fund types” and that he doesn’t “see that he is free of the ties to finance and Democratic Party financial types” seem to be ringing true too. (To be fair, though, he also says McCain would be listening to Phil Gramm right now too, so it could be a lot worse!)
I just hope O realizes that the anger over this issue could turn on him if it looks like he looked the other way while the “new soul” was rewarded at the expense of the heart of the party.
Greenwald has a new post documenting how disingenuous it is for the GOP to be outraged and to attempt to blame Obama when most opposed any control over compensation. But, just like the Dodd story, this new, false one could come alive. I hope Obama can get control of the issue first. Whether he can do this with Geithner, a guy whose tax issues already made him look either uninformed or manipulative, is another question.
I am wondering if we wouldn’t all fair better if we sent all of the politicians and their staff in Washington home to stand in the unemployment lines with their constituents. (There will be some pretty good unemployment benefits coming soon in a state near you.) Then to replace them with several of the commenters above, astute political talk show hosts from both sides of the divide, objective investigative reporters and political commentators. This collection of people know all of the answers already and certainly would bring out of this mess within a week or two.
David,
I agree with what you said. I read through the legislative history and G. Greenwald’s piece as well. The facts back up the anaylsis you and Greenwald present. Dodd is no choir boy. He took their campaign contributions. Obama also took their campaign contributions. Nothing can erase the fact that Geithner and Summers set about crafting a “sweetheart deal” for AIG that went far beyond the payment of bonuses. Obama saying he didn’t know and approve the terms of this deal is like blaming Iran-Contra on a lone colonel in the basement of the White House. It’s not an isolated misuse of taxpayer funds for wealthy and connected firms–it’s a pattern that keeps repeting. The Fed chairman has flat out refused to identify the banks where our 2.2 trillion has gone to. Bernie Sanders is trying to get that information. There is no reason for these banks to remain unnamed and there was no reason to grant AIG the sweetheart deal it received. Using unconstituional means to retrieve the bonus money is wrong. There seems to be a rather good case for fraud and that is the mechanism that should, most likely, be used.
This $100+ million AIG bonus scandal is all very interesting, but it was recently brought to my attention that a billion is 1,000 times larger than a million. Consequently, it would be greatly appreciated if additional information could be provided on any recent developments on identifying the $170+ billion AIG pass-thru counterparties, other than Goldman Sachs, of course. Thank you.
lol
Maybe.
Buddha,
You’re not thinking of becoming a tree surgeon are you?
It’s rapidly coming time to take Jefferson’s advice.
While it may be technically true that “while Treasury may have suggested it and pushed it, it was Dodd who agreed to insert it,” it’s also unfair to blame him. As Glenn Greenwald puts it: (link at sig):
“The point was — and is — that Dodd was pressured to put that carve-out in at the insistence of Treasury officials (whose opposition meant that Dodd’s choices were the limited compensation restriction favored by Geithner/Summers or no limits at all), and Dodd did so only after arguing in public against it. To blame Dodd for provisions that the White House demanded is dishonest in the extreme, and what Dodd said today on CNN about the White House’s advocacy of this provision confirms, not contradicts [this.]”
The bottom line is that an “unnamed Administration official” fed this story to the NYT and Gibbs repeatedly called it the “Dodd” loophole many times. Thus, to paraphrase Twain the “lie (that this was Dodd’s idea) was halfway around the world before the truth (that Dodd changed his amendment which would have prevented theses bonuses after being pressured by treasury officials) got its boots on.”
So Dodd “insert[ed] it” but previously tried to insert a better amendment that would have prevented this whole fiasco before treasury officials convinced him to amend his amendment and exempt bonuses agreed to prior to 2/09. Bottom line: Obama admin officials threw Dodd under the bus to deflect blame and Obama chose to support Geithner over Dodd, which may come back to haunt him. As Digby said about the willingness of the O admin to unfairly deflect blame onto a vulnerable Democrat:
“It’s political poison for the administration — Obama is already in grave danger of losing solidarity among the Dems. If they feel the administration is willing to sacrifice them on something like this, he’s going to have a very rough go. Democrats aren’t very good at holding together in the best of times. Running scared, they will be unmanageable.”
On the legal front, there is a proposal in Congress to tax 90% of the bonuses, but it would appear to be a bill of attainder in violation of the Constitution because it would (1) be a legislative act that (2) inflicts punishment on (3) named individuals, or individuals described so precisely as to be effective named by the law. On element (2), the record shows a punitive legislative intent.
Now Dodd says he was told by the Obama administration to keep it in!
If you thought it couldn’t get any worse than Bush. The dems are spending more and making mistakes of the grossest incompetence. Here is the latest
(quite shocking) of their trillion dollar blunders:
http://www.butasforme.com/2009/03/17/obamas-stimulus-bill-explicitly-grants-aig-the-legal-right-to-hand-out-bonuses/