Wednesday, March 18, 2009

Who Are the AIG Bonus Babies?

Well, mostly politicians. As someone else has noted (P.J. O'Rourke? Mark Steyn?), when politicians control buying and selling, the first things to be bought and sold are polticians.

Which is why we are not surprised that Sen. Chris Dodd’s (D-Countrywide) fingerprints are all over the AIG bonus payment issue? Given the weekend's festivities, Dodd is now pointing fingers at the administration and the conference committee, and of course those folks are pointing right back.

I'm not sure why anyone is surprised by this. After all, some part of Congress went to great lengths to make sure that the bonus payments were protected in the legislation. And Obama signed the bill. It's almost like there was a big rush to failure, and nobody could take the time to read the thing before voting on it or signing it.

Of course AIG management shouldn’t be getting performance based bonuses. Frankly, they shouldn’t have jobs, and the company should have been shoved into bankruptcy rather than having the taxpayer funnel billions into this wreckage. Thus avoiding this entire problem, and setting an example for others.

But that’s not how Bailoutistan works. In Bailoutistan, the only procedure seems to be to take money from the taxpayer and funnel it to the politically connected.

The AIG bonus payments of $150 million or so are only about ½ of 1% of the $30 billion the Government just gave them. Why not just consider it part of the “ stimulus” package? The federal government wastes more than $150 million without giving it a thought. Barney Frank has already done more than $150 million dollars of damage to Fannie Mae and Freddie Mac, and he still has a job.

But back to Dodd. Marc Ambinder toils manfully to extract Dodd from this mess, but just can’t quite get the job done (See Update below; Ambinder's post has been "overtaken by events"):

In conference -- Dodd was not a conferee -- the following clause was added to reconcile differences between the Senate and House bills:

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.

Dodd, the chair of the banking committee, agreed to this language because most all of the stakeholders - including the administration - wanted it. But the original bill passed by the Senate contains Dodd's compensation limits without the carve out the exemption for bonuses. So there is no evidence that Dodd bowed to pressure from his contributors or that he was the author, the force of nature, behind it.”

If this is the best attempt to get Dodd out of this mess, Dodd’s in big trouble.

Dodd is the Chairman of the Senate Banking Committee. The idea that he wasn’t consulted on the change seems far fetched, and in any event, he agreed to the language.

And if we’re going to go after the AIG folks to either return their bonus checks, or tax them away at 100% rates, why don’t people like Dodd the campaign contributions they received from AIG campaign over to the Treasury?

Congress has been getting “bonus” payments from AIG for years. For that matter, so has Obama.

Update: Chris Dodd pretty much admits to lying about his role in insuring that the AIG bonuses secured by the stimulus bill. What a weasel.

Ambinder's hung out to dry on this one; don't look for him to go to bat for Dodd again anytime soon.