UPDATED Wednesday March 18, 2009 c.7:30 PM PDT
UPDATE II Wednesday March 18, 2009 c.8:25 PM PDT
I first learned about the smear campaign against Sen. Dodd on Greenwald's blog
I'm not defending Chris Dodd here. As I said, there are all sorts of legitimate (though still unresolved) ethical questions about Dodd's personal financial matters. And if he were responsible for these compensation exemptions, then he ought to be blamed. But he simply wasn't responsible. He opposed them vehemently (The Hill at the time even noted that "Dodd is not backing down" from his opposition to the exemption that Geithner/Summers were demanding, and Jane has much more evidence, including the legislative history, conclusively demonstrating what really happened here). Geithner and Summers obviously thought that the exemption was justified when they were running around protecting those past compensation agreements, and they simply ought to explain why, rather than trying to sink Chris Dodd's political career in order to protect themselves.
The only point here is that what the White House and many journalists are claiming simply did not happen. They're just inventing a false history in order to blame the politically hapless Dodd for what Geithner and Summers did. And they're being aided by a right-wing noise machine that knows Dodd is vulnerable and which views the opportunity to blame the AIG bonuses on him, probably accurately, as a final nail in his political coffin (Media Matters today details today the right-wing falsehoods in the attacks on Dodd by documenting that the claims against Dodd are inaccurate, but they don't say who was actually responsible for the exemption). The next reporter who writes a word about this or listens to anonymous White House officials blame Dodd for these provisions might want to spend a moment reading Jane's post and looking at the evidence showing what actually happened, rather than mindlessly writing down what
Rahm Emanuelthese anonymous White House officials are whispering in their ears.
Just after reading of the scheme, I happened to catch Prof. Jonathan Turley on Countdown, After saying, public anger against AIG is misplaced, that we should be angry with Congress instead, he slips in the knife.
"And in fact an amendment was put through that protected the bonuses of executives that were brought in before the last stimulus package I believe Sen. Dodd helped put that in," with the emphasis coming on senator's name (c.1:45-2:00 in the first video segment of tonight's show).
UPDATEGreenwald has more on the story:
Some of these emailers have suggested that Dodd's comments are at odds with what I wrote. They quite plainly are not.
The narrative I wrote here (and which Hamsher wrote in her post) both included exactly that sequence:
That was the exact provision that Geithner and Summers demanded and that Dodd opposed. And even after Dodd finally gave in to Treasury's demands, he continued to support an amendment from Ron Wyden and Olympia Snowe to impose fines on bailout-receiving companies which paid executive bonuses."
I explicitly wrote that it was Dodd who, after arguing vehemently against this provision, ultimately agreed to its inclusion. And the statement from Dodd's office that I quoted above included the same series of events ("Because of negotiations with the Treasury Department and the bill Conferees, several modifications were made, including adding the exemption"). That's exactly what Dodd said today on CNN.
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 two choices were the limited compensation restriction favored by Geithner/Summers or no compensation 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, what I wrote.
I agreed reluctantly," Dodd said. "I was changing the amendment because others were insistent."
It was the Treasury Department -- at least according to a Treasury official granted anonymity for the extremely compelling reason that he "asked not to be named" -- that pushed for the carve-out, and did so over Dodd's objections. That was the point from the beginning. That's precisely what made it so outrageous that the administration was trying to blame Dodd for a provision which Obama's own Treasury officials advocated, pushed for and engineered.
Anyone who doubts Dodd's opposition should just go read the above-excerpted articles which reported contemporaneously about the dispute Dodd was having with White House over the scope of the compensation limits. For obvious reasons, those real-time accounts are far more instructive about what really happened than what the parties are saying now that everyone is trying to avoid blame for the politically toxic AIG bonus payments.
UPDATE II Mike Lillis of The Washington Independent has more on the story:
2/4/09 12:34 PM
With Treasury Secretary Tim Geithner by his side, President Barack Obama just announced the highly anticipated new executive pay limits for companies receiving taxpayer help under the $700 billion Troubled Assets Relief Program.
“In order to restore our financial system, we’ve got to restore trust,” Obama said. “And in order to restore trust, we’ve got to make certain that taxpayer funds are not subsidizing excessive compensation packages on Wall Street.”
And while the rules certainly go further than the Bush administration ever attempted, several loopholes stand out: [Full story.]
3/18/09 5:10 PM
On day four of AIG bonus-gate, the message from Capitol Hill has emerged as clear as it is unanimous: The $165 million paid this week to executives of bailed-out American International Group is “appalling,” “outrageous” and “a breach of public trust.”
Yet as pitchfork populism continues to fuel the congressional castigation, a vital element of the debate has gone largely ignored: Congress, going back to September, has had numerous opportunities to limit executive pay for bailed-out banks, only to ignore or abandon those efforts in the face of opposition from the finance industry, the White House or both.
The result has been that hundreds of billions of dollars in bailout funds have left Washington with virtually no conditions on how the money would be spent. The banks have taken advantage of that freedom, collectively paying out billions in bonuses, retention salaries and other perks to the same employees who helped run the companies into the ground.
Julian E. Zelizer, congressional expert at Princeton University, said the failure of policymakers to limit executive pay for bailed out banks was no accident. “Neither Congress nor the president wanted to look as if they were ‘taking over’ financial institutions,” Zelizer wrote in an email, “nor did they want to anger business.”
The result, he added, was “predictable:” a bailout strategy with plenty of leeway for the companies receiving the money.
Indeed, allowing most bonus payments to continue was a central element of both the Bush and Obama administrations’ bailout strategies. When Henry Paulson, Treasury secretary under the Bush White House, first unveiled the Troubled Asset Relief Program in September, the public wailed about the absence of conditions on the money. Congress intervened to add some limits on executive pay — provisions that Senate Banking Committee Chairman Christopher Dodd (D-Conn.) labeled “anything but mild.” But liberal critics of those compensation limits, including a number of congressional Democrats, pointed out loopholes allowing the companies to pay their executives virtually any sum they wanted. Most provisions, for example, apply only to companies receiving more than $300 million in TARP funds.
“Under this bill,” Sen. Bernie Sanders (I-Vt.) said at the time, “the CEOs and the Wall Street insiders will still, with a little bit of imagination, continue to make out like bandits.”
In January, the House passed legislation placing tighter restrictions on TARP spending, including tougher limits on executive pay. Senate Democrats, pressed by administration officials, never took up the bill. [Full story.]
UPDATE III WaPo has more:
How the Fed Failed to Tell Obama About The Bonuses
Federal Reserve officials knew for months about bonuses at American International Group but failed to tell the Obama administration, according to government and company officials, exposing problems in a relationship that is vital to addressing the financial crisis. As pressure mounted on AIG employees to return the bonuses, new details emerged yesterday about what the Fed, the Treasury Department and the White House knew regarding the payments and when. AIG executives said the Fed was informed by the company at least three months ago that by March 15 it would pay $165 million to employees working at its most troubled division. The Treasury and White House said they learned of the payments from Fed officials only days before they were due.
Close coordination between the Fed and the administration is now more important than ever as they near the launch of two signature programs to rescue the financial system, which together could reach $2 trillion, aimed at reviving consumer lending and purchasing soured assets and loans from ailing banks.
Treasury Secretary Timothy F. Geithner, a central figure in the decision to bail out AIG last fall as President of the Federal Reserve Bank of New York, said in an interview yesterday that he had not been aware of the size of the bonuses and the timing of the payments.
"I was stunned when I learned how bad this was on Tuesday [March 10]," Geithner said in an interview. "I shouldn't have been in that position, but it's my responsibility and I accept that."
Two days later, Geithner told the White House. The last-minute disclosure irked some of the president's senior advisers, but they refuse to point fingers now, saying the timing had little impact on the outcome or the president's public statements this week.
"Would I have liked an earlier warning system on this? Yeah," said David Axelrod, a senior White House adviser. "Would it have markedly changed things? Probably not. The legal constraints are the legal constraints."
One source familiar with the discussions said the company had provided details about the bonuses to senior Treasury officials at least a month ago. A Treasury spokesman said last night that was not true.
Democrats and Republicans in Congress are increasingly questioning how Geithner could not have known about the bonuses, given his past role in AIG's bailout, which has totaled more than $170 billion so far.
"I'm sick and tired of hearing the administration and the Secretary of the Treasury say, 'I just found out about it,' " Rep. Paul E. Kanjorski (D-Pa.) said yesterday. [Full story.]