Complicity
by Todd Beeton, Wed Mar 18, 2009 at 01:23:07 AM EDT
There were at least two amendments to the stimulus legislation that would have mitigated the AIG bonus fiasco. One was from Sen. Ron Wyden (D-OR) and Olympia Snowe (R-ME.) Sam Stein spoke with Wyden about it at HuffPo:
In an interview with the Huffington Post, the Oregon Democrat noted that during the crafting of the stimulus package, he and his Republican colleague from Maine introduced a provision that would have forced bailout recipients to cap their bonuses at $100,000. Any amount paid above that would have been taxed at 35 percent. The language made it through the Senate, but during conference committee with the House, it was inexplicably removed."The reality is, had that legislation been passed it would have been a very strong disincentive to anybody paying out bonuses in the future," said Wyden.
"Inexplicably removed." Hmm, mysterious. But while Wyden doesn't say who he thinks killed the amendment, he makes clear that the administration opposed it.
"I will say that I talked to most of the key members of the Obama team and I was not able to convince them of the value of the amendment that I authored with Senator Snowe," he recalled. "I think it is unfortunate. I think it was an opportunity to send a careful, well-targeted message, which would have communicated how strongly the administration felt about blocking these excessive bonuses. I wasn't able to convince them."
Which leads to Chris Dodd's amendment limiting executive compensation, particularly bonuses on a retroactive basis. It passed the Senate but then got severely watered down in conference. The more you read, the more it's clear that Geithner's and Summers' fingerprints are all over this.
Why were Geithner and Summers working as recently as last month to water down legislation that would have blocked executive bonuses? If Geithner and Summers are both so outraged by the bonuses given to employees of financial institutions receiving bailout money, then why were they working, as recently as last month, to water down legislation that would have retroactively blocked such bonuses? When Senator Chris Dodd had included legislation retroactively blocking bonuses for employees of financial institutions receiving bailout money, he received a personal call from both Larry Summers and Timothy Geithner asking him to drop the retroactive aspect of that legislation. Eventually, Geithner and Summers prevailed, as the legislation was watered down significantly.
Via Jane Hamsher, WSJ reports that both Geithner and Summers pushed back on Dodd to strip the amendment:
The administration is concerned the rules will prompt a wave of banks to return the government's money and forgo future assistance, undermining the aid program's effectiveness. Both Treasury Secretary Timothy Geithner and Lawrence Summers, who heads the National Economic Council, had called Sen. Dodd and asked him to reconsider, these people said.
Well, Dodd didn't reconsider, which makes it all the more galling that the rightwing is calling him a hypocrite in thrall to Wall St. when in reality the amendment he introduced and got through the Senate proves he is quite the opposite. The fact is, despite what the right wing noise machine tells you, it wasn't because of Dodd that the limitations on executive pay and bonuses in the stimulus package weren't retroactive (and thus applicable to AIG) it was in spite of him.
What's worse than the rightwing casting Dodd as the scapegoat, though, is the administration doing the same thing:
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.
How does President Obama NOT own this now?
During the stimulus debate, Chris Dodd famously said his restrictions on executive pay...
...are necessary if Obama plans to ask Congress for more money to save the financial sector."It will never happen as long as the public perceives that there are people getting rich," Dodd said. "Save their pay or save capitalism."
It seems President Obama may have a similar bad choice before him: save the jobs of those complicit in this fiasco, i.e. Geithner and Summers, or risk his first term's agenda. Actually, it should be an easy choice to make.
Tags: AIG, Barack Obama, Larry Summers, Timothy Geithner (all tags)
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