[Peace-discuss] Administration protecting bankers' bonuses

[C. G. Estabrook]

[The following prompts interesting reflections on the question of whose 
interests are being served, in regard to the US government (and a fortiori the 
Obama administration). --CGE]


	Dodd: Administration pushed for language protecting bonuses

(CNN) -- Senate Banking committee Chairman Christopher Dodd told CNN Wednesday 
that he was responsible for language added to the federal stimulus bill to make 
sure that already-existing contracts for bonuses at companies receiving federal 
bailout money were honored.

Dodd acknowledged his role in the change after a Treasury Department official 
told CNN the administration pushed for the language.

Both Dodd and the official, who asked not to be named, said it was because 
administration officials were afraid the government would face numerous lawsuits 
without the new language.

Dodd, a Democrat, told CNN's Dana Bash and Wolf Blitzer that Obama 
administration officials pushed for the language to an amendment designed to 
limit bonuses and "golden parachutes" at those companies.

"The administration had expressed reservations," Dodd said. "They asked for 
modifications. The alternative was losing the amendment entirely."

On Tuesday, Dodd denied to CNN that he had anything to do with adding the 
language, which has been used by officials at bailed-out insurance giant AIG to 
justify paying millions of dollars in bonuses to executives after receiving 
federal money.

He said Wednesday that the "grandfather clause" language "seemed like innocent 
modifications" at the time.

"I agreed reluctantly," Dodd said. "I was changing the amendment because others 
were insistent."

The White House did not immediately respond to CNN's request for comment.

Later, in a town hall meeting in Costa Mesa, California, Obama addressed the AIG 
controversy, saying, "I'll take responsibilty. I'm the president.

"We didn't draft these contracts. But it is appropriate when you're in charge to 
make sure stuff doesn't happen like this," he said. "So we're going to do 
everything we can to fix it."

Wednesday on Capitol Hill, AIG chief executive Edward Liddy called the roughly 
$165 million in bonuses "distasteful" but necessary because of legal obligations 
and competition.

"We have to continue managing our business as a business -- taking account of 
the cold realities of competition for customers, for revenues and for 
employees," Liddy told a House Financial Services subcommittee. "Because of 
this, and because of certain legal obligations, AIG has recently made a set of 
compensation payments, some of which I find distasteful."

Pennsylvania Rep. Paul Kanjorski, the hearing's chairman, responded to Liddy's 
statement by arguing that AIG should have refused to pay all the bonuses -- 
regardless of its contractual obligations with the bonus recipients.

"Let them sue us," said Kanjorski, a Democrat.

Liddy, who joined AIG after the bailout, said some employees have returned their 
bonus money.

Senators and representatives have vowed to get the bonus money back, but 
questions have arisen about why Congress didn't act to prevent the bonuses in 
the first place.

"Well, the only lever we have in this is the fact that these corporations have 
come to the Congress of the United States and want a taxpayers' bailout," Sen. 
Chuck Grassley, R-Iowa, said Wednesday on CNN's "American Morning."

"If it weren't for that, we would not have any leverage on how any individual 
corporation is being run, and we don't pretend to have any leverage on any 
corporation today in the United States that's not seeking federal help," said 
Grassley, the top Republican on the Senate Finance Committee.

AIG, an ailing insurance giant, has received more than $170 billion in federal 
assistance. Taxpayers now own nearly 80 percent of the company.

In a letter to Congress on Tuesday, New York Attorney General Andrew Cuomo 
confirmed that AIG paid 73 employees bonuses of more than $1 million each this 
year after it received federal bailout money.

AIG will have to return the $165 million it paid in executive bonuses to the 
Treasury Department, Treasury Secretary Timothy Geithner said Tuesday.

Grassley and Sen. Max Baucus, D-Montana, on Tuesday introduced a plan that would 
impose a hefty tax on retention bonuses paid to executives of companies that 
received federal bailout money or in which the United States has an equity interest.

Other lawmakers, such as Rep. Charlie Rangel, D-New York, said it would be 
unfair to use the tax code as punishment, but Grassley said it's not a question 
of being fair.

"It's unfair what they did to the taxpayers by paying bonuses when they don't 
have the money to pay bonuses," he said

Rep. Barney Frank, D-Massachusetts, said Wednesday that Congress can't just pass 
a law to abrogate any past contracts because that move would not hold up in 
court. Instead, he argued the executives don't deserve bonuses under the contract.

"We own this company in effect, and we're not asking that these bonuses be 
rescinded because we have lent money to the company. I believe we are saying as 
the owners of the company, we do not think ... we should have paid bonuses to 
people who made mistakes who were incompetent," said Frank, chairman of the 
House Financial Services Committee.

<http://www.cnn.com/2009/POLITICS/03/18/aig.bonuses.congress/index.html>