Skip to comments.The Dishonest "Blame Dodd" Scheme from Treasury officials
Posted on 03/18/2009 7:50:55 PM PDT by Yardstick
There is a major push underway -- engineered by Obama's Treasury officials, enabled by a mindless media, and amplified by the right-wing press -- to blame Chris Dodd for the AIG bonus payments. That would be perfectly fine if it were true. But it's completely false, and the scheme to heap the blame on him for the AIG bonus payments is based on demonstrable falsehoods.
Jane Hamsher has written the definitive post narrating and indisputably documenting what actually took place. The attempt to blame Dodd is based on a patently false claim that was first fed to The New York Times on Saturday by an "administration official" granted anonymity by Times reporters Edmund Andrew and Peter Baker (in violation, as usual, of the NYT anonymity policy, since all the official was doing was disseminating pro-administration spin). The accusation against Dodd is that there is nothing the Obama administration can do about the AIG bonus payments because Dodd inserted a clause into the stimulus bill which exempted executive compensation agreements entered into before February, 2009 from the compensation limits imposed on firms receiving bailout funds. Thus, this accusation asserts, it was Dodd's amendment which explicitly allowed firms like AIG to make bonus payments that were promised before the stimulus bill was enacted.
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.
Jane's post documents this sequence of events without any possibility for doubt. The debate that took place over limits on executive compensation for bailout-receiving companies only occurred six weeks ago, and it is all documented in the public press. Dodd was the one fighting against the White House in order to apply the prohibition to all bonus payments, i.e., to make the compensation limits retroactive as well as prospective. As but one crystal-clear example that proves this, here is a February 14 article from the Wall St. Journal on the debate over executive compensation limits:
The most stringent pay restriction bars any company receiving funds from paying top earners bonuses equal to more than one-third of their total annual compensation. That could severely crimp pay packages at big banks, where top officials commonly get relatively modest salaries but often huge bonuses.
As word spread Friday about the new and retroactive limit -- inserted by Democratic Sen. Christopher Dodd of Connecticut -- so did consternation on Wall Street and in the Obama administration, which opposed it.
Can that be any clearer? It was Obama officials, not Dodd, who demanded that already-vested bonus payments be exempted. And it was Dodd, not Obama officials, who wanted the prohibition applied to all compensation agreements, past and future. The provision which shielded already-promised bonus payments from the executive compensation limits ended up being inserted at the insistence of Geithner. A spokesperson for Dodd, who is now consumed by these completely unfair attacks, finally confirmed today that these provisions were inserted at the direction of Treasury officials:
Senator Dodds original executive compensation amendment adopted by the Senate did not include an exemption for existing contracts that provided for these types of bonuses. Because of negotiations with the Treasury Department and the bill Conferees, several modifications were made, including adding the exemption, to ensure that some bonus restrictions would be included in the final stimulus bill.
During the debate over these provisions, The Wall St. Journal article identified above reported explicitly that it was Geithner and Summers who were rejecting Dodd's limits on executive compensation as too broad and demanding that already-vested payments be exempted: exactly the exemption that protected the AIG bonuses and which they're now trying to blame on Dodd:
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.
At the same time, The Hill reported that "President Obama and the chairman of the Senate Banking Committee [Dodd] are at odds on how to rein in the salaries of top executives whose companies are being propped up by the federal government" and that "most of the administration's concern stems from the Dodd's move to trump Obama's compensation provisions by seeking more aggressive restrictions." Let's repeat that: the Obama administration was complaining because the compensation restrictions Dodd wanted were too "aggressive."
Yet now, the Obama administration is feeding reporters the accusation that it was Dodd who was responsible for the exemptions that protected already-vested bonuses. The Times article from Saturday that started the Dodd scandal thus contains this outrageously misleading claim:
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.
And yet another New York Times article from today ("Fingers Are Pointed Across Washington Over Bonuses") -- this one by David Herszenhorn -- contains this White-House-mimicking, misleading passage:
But Mr. Reid mostly ducked a question about whether Democrats had missed an opportunity to prevent the bonuses because of a clause in the economic stimulus bill, part of an amendment by Senator Christopher J. Dodd, Democrat of Connecticut, that imposed limits on executive compensation and bonuses but made an exception for pre-existing employment contracts.
That was the exact provision that Geithner and Summers demanded and that Dodd opposed. And even after Dodd finally gave in to Treasury's demands, he continued to support an amendment from Ron Wyden and Olympia Snowe to impose fines on bailout-receiving companies which paid executive bonuses (which was stripped from the bill at the last minute). But now that Treasury officials are desperate to heap the blame on others for what they did, they're running to gullible, mindless journalists and feeding them the storyline that it was Dodd who was responsible for these provisions. And today, during his White House Press Conference, Robert Gibbs advanced this dishonest attack by repeatedly describing the offending provisions as the "the Dodd compensation requirements."
This is working because, as the White House well knows, Dodd is very politically vulnerable. He is a major target of the Right because of his genuinely questionable involvement with various banks, including his Countrywide mortgate, and this story (fueled by the fact that Dodd is a receipient of substantial AIG campaign donations), inflames those accusations. As predictable as can be, right-wing news outlets like Fox, Drudge and others have blown this Dodd story up today into a major scandal -- heaping blame for the AIG payments on Dodd -- and it was all started by Obama officials to ensure that no blame for these provisions was laid where it belongs: at the feet of Geithner and Summers.
I'm not defending Chris Dodd here. As I said, there are all sorts of legitimate (though still unresolved) ethical questions about Dodd's personal financial matters. And if he were responsible for these compensation exemptions, then he ought to be blamed. But he simply wasn't responsible. He opposed them vehemently (The Hill at the time even noted that "Dodd is not backing down" from his opposition to the exemption that Geithner/Summers were demanding, and Jane has much more evidence, including the legislative history, conclusively demonstrating what really happened here). Geithner and Summers obviously thought that the exemption was justified when they were running around protecting those past compensation agreements, and they simply ought to explain why, rather than trying to sink Chris Dodd's political career in order to protect themselves.
The only point here is that what the White House and many journalists are claiming simply did not happen. They're just inventing a false history in order to blame the politically hapless Dodd for what Geithner and Summers did. And they're being aided by a right-wing noise machine that knows Dodd is vulnerable and which views the opportunity to blame the AIG bonuses on him, probably accurately, as a final nail in his political coffin (Media Matters today details today the right-wing falsehoods in the attacks on Dodd by documenting that the claims against Dodd are inaccurate, but they don't say who was actually responsible for the exemption). The next reporter who writes a word about this or listens to anonymous White House officials blame Dodd for these provisions might want to spend a moment reading Jane's post and looking at the evidence showing what actually happened, rather than mindlessly writing down what
Rahm Emanuel these anonymous White House officials are whispering in their ears.
The author is the one who's spinning as much as the other parties. What he is trying to do is shift blame to Treasury because that's what they WANTED.
If voters WANTED Senator X to vote Pro-Choice, would we be saying "It's not HIS fault, he just agreed to vote that way"? No.
The issue is whether or not Dodd agreed to include this in the bill. He did. He may have been just like every senator, who doesn't agree 100% with everything in every bill. But we hold these senators accountable based on their voting records on bills.
Dodd ultimately agreed to put this in. Period. The writer is attempting to save Dodd's bacon or, more likely, come up with an original angle on the story. I applaud the research that shows Treasury is ALSO a part of this, but it doesn't absolve Dodd one bit.
Thanks for posting the article and the follow-ups, this is good stuff to know even though I ultimately disagree with the writer's interpretation.
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