Democratic Sen. Christopher Dodd on Monday criticized the bonuses given to executives of American International Group Inc. and suggested that the government could tax the recipients to recoup some or all of the payouts.
But it was Dodd who inserted language — known as the Dodd amendment — in the $787 billion stimulus bill that allowed all bonuses awarded before February 11, 2009, to be paid to AIG executives. That very amendment, which is now law, is now the chief hurdle to government officials who want to recover that money.
The amendment was meant to restrict executive pay for bailed-out banks, but it also included the exception for "contractually obligated bonuses agreed on or before Feb. 11, 2009."
Dodd is the largest single recipient of 2008 campaign donations from AIG, with $103,100, according to the Center for Responsive Politics. That was more than presidential candidates Barack Obama and John McCain got, and nearly three times the $35,965 Sen. Hillary Clinton received.
Dodd's amendment in the stimulus bill is a "prohibition on what the president is now talking about," Virginia Rep. Eric Cantor, the House minority whip, told Fox News, referring to regaining the money through taxation or other means.
But Dodd is telling reporters that his original language was changed in committee and he is not to blame.
"When the language went to the conference and came back, there was different language," he told Fox News. "I can tell you this much, when my language left the Senate, it did not include it (the exception). When it came back, it did."
Early Thursday evening, though, Democrats were at a loss to explain how and why the Dodd amendment was altered. Much of the stimulus bill was rushed through Congress with little opportunity to read or study exactly what was in it, despite frequent GOP requests to do exactly that.
AIG lost $61.7 billion in the fourth quarter of 2008, the biggest quarterly loss in corporate history, and has received $173 billion in federal aid. But the company is paying $450 million in bonuses to employees of its financial products unit.
Dodd, chairman of the Senate Banking Committee, thundered on Monday: “This is another outrageous example of executives — including those whose decisions were responsible for the problems that caused AIG’s collapse — enriching themselves at the expense of taxpayers.”
Incredibly, Dodd has now demanded a full briefing from the Federal Reserve and the Treasury on why “clauses weren’t attached to the four AIG bailouts to halt bonuses,” according to the New York Daily News.
“Why wasn’t the Fed putting conditionality four different times they provided resources to AIG?” Dodd asked.
Meanwhile, the News is reporting that New York Attorney General Andrew Cuomo said his office will investigate whether the bonus payments are fraudulent because they were promised when AIG knew it wouldn’t have the money to cover them.
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