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?

An Impotent Gesture

The AIG bonus structure was disclosed over a year ago, before the Bush TARP plan and long before Obama added $30 billion to AIG’s portion last month. It didn’t bother him then that AIG had retention bonuses coming up.

It also didn’t bother Senator Chris Dodd, who now wants to tax away 90% of the bonuses he was responsible for protecting in the original TARP, via his provision to exempt “contractually obligated bonuses agreed on before Feb. 11, 2009″ from federal restrictions. Nothing there about controlling whether taxpayers would fund the bonuses he knew were coming. Oh no, then he was protecting a major campaign contributor. (Note who was the second largest recipient of AIG money.)

These are retention, not performance, bonuses. That is, contractual obligations to pay people who stay around; an issue that would have very much concerned AIG and precisely what Dodd targeted.

Finally, Dodd’s provision was in last year’s TARP bill, and as Obama told us when he let 8,500 earmarks slip through in the Omnibus Spending Bill he just signed, he can’t intervene in “last year’s business.” We need to move on. What’s changed?

This whole brouhaha is an attempt to divert attention from Obama’s plans for economy punishing carbon tax proposals and massive federal intervention into health care, education and union elections.

See you at the Tea Party on April 15th. Bring your “Free AIG” signs.

Update: 6:30 PM
Recommended reads from the Wall Street Journal, The Real AIG Outrage and Congress Is the Real Systemic Risk

Franklin, Tim, Jim and Barney the Purple Guarantor

It’s your money in the “government cash infusion,” and it’s your house value they artificially inflated and then artificially crashed. It’s also your 401k that’s in the tank because of these guys. From the WaPo. Emphasis mine.

Fannie Mae, the District-based mortgage finance giant taken over by the government in September, yesterday reported a loss of $29 billion ($13 a share). That compared with a loss of $1.4 billion ($1.56) in the corresponding period in 2007.

…The losses sliced the company’s overall value — assets minus liabilities — from $41.4 billion on June 30 to $9.4 billion on Sept. 30.

The company estimated that home prices this year would decline about 9 percent.

“If current trends in the housing and financial markets continue or worsen, and we have a significant net loss in the fourth quarter of 2008, we may have a negative” value at the end of the year, the company said. That would prompt a government cash infusion.

What’s sickening is how many millions Franklin Raines, Tim Howard and Jim Johnson bilked the taxpayers for in salaries and bonuses, and how much of this nation’s wealth they helped destroy. Their actions are at least as evil as anything Enron did.

These guys should be sharing a jail cell with Barney Frank. Instead, 2 of them have been Obama advisors.


Attack of the Mutant Elephant

James Pethokoukis at USNews, Why McCain Goes Easy on Fannie and the CRA:

The McCain campaign is underestimating how absolutely furious conservatives are that free markets, and by extension Reaganomics and the last 25 years of American economic policy, are getting the blame for the housing and credit crisis. A real morale killer, they tell me. Over and over. Every day.


Jeff Goldstein at Protein Wisdom:

Were McCain the “maverick” he claims to be, the first words out of his mouth in the next debate would be Frank, Dodd, Obama, Raines, Reid, Schumer, Pelosi, accounting irregularities, Enron, investigation, prosecution, government failure, and “let’s fix this mess for the long term.”

Because he’s not really a maverick, however, his first words will likely be to congratulate Obama on helping push through the bailout.

At which point he may as well speak to Obama after the debate and see if he maybe could replace Biden as Barack’s VP pick…


Goldstein again here:

Recall that my early arguments for why I wouldn’t vote for John McCain — which I went on record with at NPR — boiled down to his willingness to do the job of Democrats when it came to demonizing conservatism and playing Godhead of the nannystate.

…Time to step up, McCain. Using big business as a convenient arch criminal for every crisis is why most conservatives mistrust you. Earn your support. Otherwise know that even if you do manage to become President, you will have done so on the strength of the Anybody But Obama vote.

There’s the “Not Enough Difference to Matter, Don’t Reward Betrayal” vote to consider, too.

I still think McCain can’t make this case because he actually agrees that a free market is part of the problem. His reaction to the credit crisis is not different from McCain-Feingold suppression of the free-speech market, clamping down on steroids in baseball, federally regulating boxing, or voting for Sarbanes-Oxley, “Climate Stewardship,” the Patients Bill of Rights, and against drilling in ANWR.

Yes, his record is better than Obama’s, but there’s no telling based on the principles of limited government or free markets where McCain will jump. I think “mutant” is a better term than “maverick.”

Frankly, if we’re going to have monster sized government the Democrats have proven more adept at it, or at least predictable.

Exposing the Barney core after the Bourse is gone

Barney Frank, staunch defender of corporatist socialism, is lately comparing John McCain to Mighty Mouse for McCain’s attempt to “save the day.”

Barney should watch out that he isn’t compared to Pearl Pureheart. Oil Can Harry would be someone named “Reid,” who has claimed McCain caused “the wheels to fall of” the “deal.” In fact, if the Democrats require 110 GOP votes in the House, there can’t be a deal until they’ve got those votes. First, let’s hear from Barney Frank in 2003:

As Bugs would say, “What a maroon!”

Frank is mainly upset that McCain has exposed the House Democrats as the same lackeys who refused to listen to warnings from Bush in 2001 and 2003 and from McCain in 2005. The House Democrats can’t complain that they can’t suck up to the President without help from the GOP, when they ignored GOP concerns.

Doesn’t Hang Together
Jennifer Rubin – 09.26.2008 – 7:59 AM

The Democrats need to get their story straight. On one hand, it is beyond dispute at this point that Congressional Republicans were never on board. It is equally clear that the Democratic majority won’t act without the ”cover” of a substantial number of Republican votes–that is they demand that this deal not be done, in Chris Dodd’s words, ”on a three-legged stool.”

So several things follow. First, this is precisely why Hank Paulson and Harry Reid summoned John McCain–to get Republican cover for the Democrats who despite the looming crisis can’t bring themselves to govern (that is, to vote on and pass a bill which they believe is essential). Second, that is why McCain presented but did not endorse the GOP’s wish list of conservative suggestions in the White House meeting. That is how one cajoles and drags along a recalcitrant party–by allowing them to have their say. (From reports it appears that the hyper-empathetic Barack Obama attempted to corner the Republicans, not a comforting sign that he knows how to negotiate with people who are in fundamental disagreement with him.) Third, while it would be nice for the Democrats to drag more Republican votes along, it is highly unlikely that they need as a mathematical matter all 100 Republican votes they have asked for. Whether they get 50 or 100, Democrats almost certainly could pass the Paulson bill in a form acceptable both to the White House and the Senate. But they don’t want to–Chris Dodd told us that.

Rubin didn’t mention what this tells us about Nancy Pelosi’s leadership.

The leaderless House Democrats can’t even suck up to their BASE without cover from the GOP, as evidenced by the Dems similar display of moral conviction in the question of offshore drilling.

Here is more commentary on Oill Can Harry’s claims about the “deal” and McCain’s actual role: