The Administration Rejects Plunder ??

There has been some question about the truth of the Obama Administration’s charge that Senator Chris Dodd is responsible for a TARP provision specifically allowing the AIG bonuses. Obama’s people are calling it the “Dodd Amendment,” Dodd’s people are implying it was the White House and the House of Representatives who let AIG get away with the bonuses that represent less than 1% of the federal handout. It is not yet clear who inserted the language in the bill. That is, we don’t know which Democrat was skulking around late at night in conference committee negotiations with whiteout and a Bic.

Whatever. Someone who is pretending to shocked and awed, isn’t. I’ve looked around for some recent, relevant commentary and below you will find a hodgepodge of history on it.

Let us begin with Robert Gibbs, Richard Shelby and Barney Frank on Face the Nation from a little over a month ago before anyone was admitting they knew the AIG bonuses were coming soon to a demagoguery soapbox near you.

Here’s what they’re talking about. It’s a debate that began before Obama even took office. He did have a plan, however. On January 11th, 2009 we find this: Big changes to Obama stimulus plan

Under the initial law approved in Congress, once the administration tells lawmakers it wants to access the second installment of TARP, Congress must approve a resolution turning down that request within 15 days – or the Treasury Department can begin to use the money. If a simple majority in both chambers approves the resolution, the president would have to successfully veto the measure in order to dip into those funds.

The Bush administration is expected to imminently request the second installment, but the money would not be used until after Obama assumes office on Jan. 20. But concerns in Congress have grown about the Treasury Department’s use of the $350 billion it’s already received, with critics saying that there has been poor transparency and accountability and that the package has not stabilized the volatile economy.

Obama’s team is trying to assure Democrats that it will use the next installment more wisely than the Bush administration spent the last one—and are hoping to avoid casting a veto on one of his first days in office.

Sen. Chris Dodd (D-Conn.), chairman of the Banking Committee, said that “there’s a willingness on the part of some Republicans to be supportive provided that there is some additional conditionality”

Obama’s team will draft a letter laying out some assurances on how it would spend the money, and Dodd says it should be broadened beyond the financial sector to include commitments to help stave off home foreclosures, more accountability and tighter requirements on executive compensation for private companies that receive TARP funds.

Obama was right on the job in letter writing, if nothing else, here’s a note from January 12, 2009, wherein Senator Dodd says he’ll trust Obama on the basis of a letter: Dodd: A Letter on Bailout Limits Might Be Enough

…Senate Banking Committee chairman Chris Dodd (D-CT) suggests that a letter of assurances from the incoming Obama administration, detailing its promises for responsible use of the bailout cash, could be enough to alleviate Dems’ concerns.

Apparently, that trust was misplaced: Who me?

The question of how an amendment crept into the bailout bill exempting the very AIG bonuses that are now being criticized by the administration is currently unanswered. The administration calls it the “Dodd Amendment”, but Dodd says he has nothing to do with it.

By February 14th, we were hearing about how Congress had tied up the President on the matter of compensation for bailout recipients: Congress Trumps Obama by Cuffing Bonuses for CEOs

Yesterday, bank compensation lawyers, pay consultants and accountants were combing through the executive compensation rules, which make up 11 pages in the 1,073-page stimulus bill. While there was disagreement over the interpretation of finer points, which would need to be clarified by the Treasury Department, there was broad agreement that the new rules would do more to affect executive pay than years of shareholder efforts combined.

Only 11 pages that nobody in government read. Let’s move on to a February 15 story: Stimulus exec pay caps roil Wall Street

During final negotiations on the $787-billion package last week, Senate Banking Committee Chairman Christopher J. Dodd (D-Conn.) slipped in a provision to limit bonuses for executives at institutions receiving government bailout funds to a third of their salaries. And the bonuses could be paid only in stock irredeemable until the government was paid back in full.

President Obama is expected to sign the stimulus into law Tuesday in Denver. But the White House and Senate Democrats could clash later over the executive pay caps if the White House seeks a legislative adjustment.

The limits go beyond those advocated by the Treasury Department and came as a surprise to Wall Street. Financial services experts are particularly troubled that the caps apply not just to senior executives but to traders, investment bankers, fund managers and others compensated largely through performance-based commissions.

Somebody changed it. Nobody read it, or will admit to it if they did. Senator Dodd, did you know what you were voting for?

While the Senate was constructing the $787 billion stimulus last month, Dodd added an executive-compensation restriction to the bill. The provision, now called “the Dodd Amendment” by the Obama Administration provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009” — which exempts the very AIG bonuses Dodd and others are now seeking to tax.

Dodd’s original amendment did not include that exemption, and the Connecticut Senator denied inserting the provision.

“I can’t point a finger at someone who was responsible for putting those dates in,” Dodd told FOX. “I can tell you this much, when my language left the senate, it did not include it. When it came back, it did.”

This week, the President is unhappy. Whether it’s the fault of Senator Dodd as he has claimed, or whether he’s secretly kicking himself isn’t clear. What is clear is that the latest bailout funds were handled in every bit as an incompetent a manner as Obama says Bush handled the first half of TARP: Obama Will Hold Back $30B Unless AIG Bonuses Are Repaid

Heh. OK, you’re in charge of AIG. Unless you subtract $165 Million from the $30 Billion you’re about to get, you won’t get the $30 Billion. What to do? What to do? For myself, I pay the $165 Million back. I know that the money is fungible. Maybe Obama doesn’t.

As a final illustration of the faux outrage, here’s perspective on spending on Obama’s watch:

  • Saving the Salt Marsh harvest Mouse = $30 Million
  • Bonuses to AIG employees = $165 Million
  • ~ 8,700 earmarks in the Omnibus Spending Bill Obama signed = $7.7 Billion
  • AIG’s market cap at it’s peak ~ $160 Billion
  • Total bailout money given to AIG = $173 Billion
  • Omnibus Spending Bill = $410 Billion
  • Original TARP = $700 Billion
  • Stimulus Bill = $787 Billion
  • Total Obama budget tax increase on all Americans over the next decade ~ $1.4 Trillion
  • Forgetting you have to implement socialism gradually… priceless

It strikes me that the Salt Marsh Harvest Mouse community did not get as much per capita as did AIG execs. I don’t know how many mice there are, but probably more than there are AIG execs, and the spoils were 5 times larger for AIG. Still, when you think of it on a lifestyle basis, the mice are doing well. Their housing needs are relatively modest, they don’t drive and they are not fond of Wagyu Steak. They only weigh a few ounces, so on a dollar per pound basis they either really made out or they are hardly endangered.

Update: 8:05PM from the New York Times. Some employees agreed to work for a dollar a year because of the contractual bonuses:

A.I.G. has refused to identify the current and former employees on privacy grounds, including one who received $6.4 million, but Mr. Cuomo is seeking to obtain and publicize their names.

The employees took salaries of $1 in exchange for receiving the bonuses, which were supposed to keep them from leaving A.I.G., according to Mr. Cuomo’s office. That, he suggested, undercuts A.I.G.’s claims that it could not renegotiate the bonus contracts agreed to early in 2008, and that the payments were “retention” bonuses.

I’d heard Coumo was not publishing the names of individual private citizens. If he does, he should be impeached and criminally charged.

Congressional Republicans, eager to implicate Democrats, initially blamed Senator Christopher J. Dodd, the Connecticut Democrat who heads the banking committee, for adding to the economic recovery package an amendment that cracked down on bonuses at companies getting bailout money, but that exempted bonuses protected by contracts, like A.I.G.’s.

Mr. Dodd, in turn, responded Tuesday with a statement saying that the exemption actually had been inserted at the insistence of Treasury during Congress’s final legislative negotiations.

It was the Obama Apparatus, not Republicans, that first blamed Dodd, but if Senator Dodd knows how and at whose behest the exemption was inserted, then he lied just yesterday when he said he didn’t know how it got there. I suspect collusion with the White House. How about you?

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