Here, from the "National Review On-Line" is one version:
Well, Chris Dodd.But, here is Gleen Greenwald (on St Paddy's Day) saying it was all Geithner's fault.
From page H1412 of the Final Stimulus Bill, “SEC. 111. EXECUTIVE COMPENSATION AND CORPORATE GOVERNANCE:
'(iii) The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009, as such valid employment contracts are determined by the Secretary or the designee of the Secretary.”
This amendment provides an exception for contractually obligated bonuses agreed on before Feb. 11, 2009, which exempts the very AIG bonuses Obama is condemning every single chance he gets. The amendment is in the final version and is law.
That's the amendment that Dodd got placed in the Obama stimulus bill.
That is simply not what happened. What actually happened is the opposite. It was Dodd who did everything possible -- including writing and advocating for an amendment -- which would have applied the limitations on executive compensation to all bailout-receiving firms, including AIG, and applied it to all future bonus payments without regard to when those payments were promised. But it was Tim Geithner and Larry Summers who openly criticized Dodd's proposal at the time and insisted that those limitations should apply only to future compensation contracts, not ones that already existed. The exemption for already existing compensation agreements -- the exact provision that is now protecting the AIG bonus payments -- was inserted at the White House's insistence and over Dodd's objections. But now that a political scandal has erupted over these payments, the White House is trying to deflect blame from itself and heap it all on Chris Dodd by claiming that it was Dodd who was responsible for that exemption.Frankly, my instinct is to go with those who blame Senator Dodd. He is the one who had the cosy relationship with Countrywide. However, going to Glenn Greenwald's source, Jane Hamsher at "Fire Dog Lake," one wonders. And, one commentor suggests we look for Rahm Emanuel's fingerprints on this.
Too hard to tell, but it is ugly.
My friend Jeff thinks the AIG CEO should have stiffed the executives, let them sue, let the courts give it to the plaintiffs and then cut their salaries for the year, until things turn around.
Of course, that brings up the question of the role of the Board. Shouldn't the reform of this Recession be about the Boards of Corporations learning to be responsible?
UPDATE: Senator Chris Dodd admits he put the provision in the bill, at the request of a Treasury Department official (anonymous official in the CNN report).
"The administration had expressed reservations," Dodd said. "They asked for modifications. The alternative was losing the amendment entirely."They all look guilty.
Regards -- Cliff
Outrage at AIG is, in my opinion, in addition to being fully justified, also fully misplaced to the extent that all of Wall Street operates this way, and it's incredible to me that no one has gotten outraged about any of it until now. Are we stupid?
ReplyDeleteEvery single one of these bailouts is wallpapering over the craven greed of executives pocketing six and seven figure bonuses while the American taxpayers are shafted for the bill resulting from their institutions' failure. The fact that nobody sees it that way is evidence to me that we're all idiots. Let's call a spade a spade: A failed instition needs to have its management team FIRED, not rewarded with ongoing bonuses. What is simpler policy than that?
Bush fired O'Neill for calling BS on parts of the shell game (not to mention the Iraq war sham, but that's another story) and then replaced him with a sycophant (Paulson, who was an ex CEO of Goldman Sachs if you don't remember) who was either too intimidated by the industry he was supposed to regulate, or too enmeshed in it, to do anything but kow-tow when they all cried wolf. Obama's guy Geithner is hardly any better, even if he's not corrupted by his industry associations like his predecessor. They're just following the script that Paulson and his cronies wrote years ago, and we're getting sold down the river just like always.
The simple fact is that we never should have bailed them out in the first place. Becoming surprised that they still operate like they always did is "shame on us" for expecting it to be any different. (You know, "fool me once, shame on you, fool me twice, shame on me").
The bonuses aren't the problem--the bailout is.