Dodd Raps Treasury For Letting Him Take the Fall on Executive Pay
Sen. Chris Dodd (D-CT) just spoke to home-state voters about his sudden emergence as the scapegoat for the watering-down of his executive pay amendment to the stimulus bill -- and the Banking Committee chairman was openly angry with the Treasury Department for not owning up to its role in the flap earlier this week.
Dodd defended his role in ensuring that Wall Street compensation limits made it into the stimulus. The senator expressed disappointment that Treasury let him twist in the wind until yesterday evening, when Secretary Tim Geithner admitted that officials from his department requested that Dodd's amendment be changed to grandfather in existing bonus contracts.
We'll have the video of Dodd's comments for you soon, but here's his key quote:
I wouldn't go around and change my own amendment within days of that if I didn't think it was merely technical in nature.And so I'm angry about it and angry that, in a sense, I've been held up as sort of responsible for all of this, when, in fact, I responded to what I thought was a reasonable request at the time [from Treasury] ... it turned out to be far more than that.
But this back-and-forth over the executive pay amendment isn't the only issue that could put Dodd at odds with Geithner and White House economic adviser Larry Summers.
As I mentioned earlier today, Dodd has been openly skeptical of consolidating future financial regulatory power at the Federal Reserve, preferring to run broader regulation out of the FDIC -- and that position may not sit well with Geithner, the former head of the New York Fed, as well as Summers, who is widely tipped to be the next Fed chairman.
Late Update: Here's the video of Dodd.
Josh
Elana
Matt
Eric
Dodd created some of this mess himself, by appearing to deny that he was involved, and then having to walk that back.
He's going to be in trouble next year probably. The state budget is in a shambles, and we're not close to resolving the projected 8 billion deficit. I think the resolution is going to hit a lot of voters in the pocketbook, via more expensive health care, frozen or decreased wages, and the, ahem, "enhanced revenue" that the Democrats in the state legislature refer to.
Add it all up? People are going to be ready for a change by next year, and Dodd's been in DC for a very long time.
March 20, 2009 1:55 PM | Reply | Permalink
Unfortunately, you may be right being from connecticut and all. Dodd seems to be on the ropes big time and has been on the ropes for some time now. Any dems to take the mantle so that maybe dodd retires and turns over the baton? I'd hate to see another r from connecticut.
March 20, 2009 2:58 PM | Reply | Permalink
Richard Blumenthal is routinely mentioned, but he goes through this dance every time a Senate seat might be up for grabs.
Ned Lamont has not said that he will not run again, but I think the discussion was always in the context of Lieberman's seat, not Dodd's.
Lamont vs Dodd in the primary? I don't have a sense in how that would work out. Dodd's ratings are better than Lieberman's, but that's not really saying much at this point.
March 20, 2009 3:03 PM | Reply | Permalink
Thanks for the info.
Well, incidentally the talking heads are back on the aig band wagon. You know I had a bad feeling for some reason about that bonus language being put in the stimulus bill. I always thought that it should have been a stand alone issue. I wonder if it was if we would have had all these problems. They were trying to rush through the stimulus bill for good reason. They shouldn't have put this provision in. It was a political ploy then and it blew up in their collective faces and gave the blabberheads something to get in an uproar. I'm starting to get annoyed with msnbc, they are startig to sound fox like.
March 20, 2009 3:09 PM | Reply | Permalink
The way it's being framed is as if the bonuses wouldn't have been paid out if that amendment wasn't in there. People (ie - the media) seem to forget that there was NO bonus or exec cap restrictions in the Bush-era TARP legislation. Even though the Dodd amendment in its Treasury watered-down version was less than perfect, it was better than nothing. And maybe Treasury's concerns were valid and worth looking into. Who knows. I wish Obama hadn't jumped on the populist bus but since Axelrod and Rahm seem to be getting ripped on from both sides from saying that the bonus crap was a distraction from the larger, more economy threatening issues - and it is - perhaps he had no choice. Sometimes you have to feed the populist beast.
March 20, 2009 3:41 PM | Reply | Permalink
God, I am sick of listening to this bonus crap. I'm sick of it. If I hear one more time, we need to know what he knew and when he knew it, I am going to f'n hurl. It's not like a freaking crime was committed by a member of the government. This is really out-f*cking-rageous. I can't take it anymore.
March 20, 2009 3:54 PM | Reply | Permalink
Michael,
I second that.
March 20, 2009 5:48 PM | Reply | Permalink
U.S. AIG counterparty bailout payments, in billions:
Goldman Sachs 12.9 US
States and Cities 12 US
Merrill Lynch 6.8 US
Bank of America 5.2 US
Citigroup 2.3 US
Wachovia 1.5 US
Morgan Stanley 1.2 US
AIG International Inc. 0.6 US
JPMorgan 0.4 US
Citadel 0.2 US
Yes, infuriating, isn't it, that bankers should be held to account by the public - "We're the masters of the universe" - masters of fraud, more like it.
Did you see the Financial Times UK headline?
"Banker fury over tax ‘witch-hunt’
Alarm over US moves for punitive taxes"
In any case, the scuffle over AIG bonuses is just distraction from the real issue, the counterparty kickbacks, which are 1000 times as large as the bonuses, which we can safely assume represent hush-money to keep the leakers and whistleblowers quiet - otherwise, they'll start dumping documents to the press, like the fellow at Barclays and the Guardian UK:
"Whistleblowers allege Barclays established tax-avoidance arrangements with offshore companies in Luxembourg and the Cayman Islands, the newspaper said."
http://blogs.thisismoney.co.uk/this_is_money_blog/2009/03/barclays-secret-memos-make-interesting-reading.html
It's not just AIG and Goldman Sachs, either - it is also AIG and Societe Generale, AIG and Deutschebank, AIG and Barclays, AIG and HSBC, AIG and Bank of America, AIG and Citigroup... those are just the largest accounts.
Now do you see why Larry Summers was harping on and on about contractual obligations?
March 21, 2009 12:00 PM | Reply | Permalink
Thanks for the reminder. (And the link to the Barclay's debacle - new information for me.)
March 21, 2009 10:20 PM | Reply | Permalink
cred,
as the man said; 'he's tired of hearing about it'.
I know the sharks are in a feeding frenzy but I'm tired of reading aobut it while nothing but righteous indignation is the outcome.
I'm waiting to see something 'happen'. I want to see clawbacks where possible, jail sentences where possible, people's (sharks) names all over the news, and maybe a little violence on some of these cretins.
Rememebr what happened to the little people at ENRON?
Kenny Boy passed on to that giant electric utility in the sky. Skilling, and the Fastows and a few others are in jail. The Accountants at Arthur Anderson who helped the ENRON gangsters lost their positions and hopefully much more, though putting the whole company down was wrong, and Ashcroft should be condemned for that. This is what we need more of.
Now if only we can get Phil Gramm jailed.
March 22, 2009 12:59 PM | Reply | Permalink
Random wishes-
Sheila Bair/Blair for Sec. of Treasury. (what the hell is the spelling? I've seen both in news articles.)
Paul Volcker- for Director of Nat'l Economic Council (Summers' job)
Chris Dodd- for FDIC Chair, since he's (looking) screwed for re-election.
March 20, 2009 1:59 PM | Reply | Permalink
If Obama throws either Geithner or Summers under the bus, that will be the end of his administration
There's so much roadkill under there already it'll be a field day for the liberal whiners and their tacit allies Limbaugh, Hannity, Coulter, O'Reilly, Cantor, McConnell
I hope to see pigs fly first
March 20, 2009 2:22 PM | Reply | Permalink
Maybe, maybe not. Blair is a rare animal- a reasonable, moderate Republican who actually makes sense. Depends on the circumstances (now would not be the ideal time) and the replacement.
March 20, 2009 2:27 PM | Reply | Permalink
I personally didn't know much about Bair, but have read good things on several blogs, so felt fairly trusting...then today I followed a link to a recent story re: Washington Mutual's lawsuit - filed on Friday - against the FDIC. And while I'll admit, I don't know all angles of the issue yet, what I did read...well, Ms. Bair seems to have had some pretty strong ties with JP Morgan Chase...which may have led to some under-the-table dealings that helped JP obtain WaMu for less than $2 billion even though assets were worth substantially more. There's more to the story involving a question of when Bair first contacted JP about the potential WaMu takeover, a question of how the FDIC encouraged WaMu to pump billions into its structure right before Bair did the takeover, a question of whether there was any competitive bidding from other banks when it was put up for sale, etc.
Some pretty complicated stuff, granted, and again, I just started reading about it, but...if true...wow. Pretty dicey and potentially damaging.
March 21, 2009 10:31 PM | Reply | Permalink
You may be right, but Geithner is the Rumsfeld of this administration. Sooner or later the cost of keeping him on will become greater than the cost of throwing him under the bus.
March 20, 2009 2:39 PM | Reply | Permalink
Well that doesn't make a whole lot of sense does it
Because if I am right, as you suspect I am, then the Obama administration and the Democratic agenda are kaput and if he doesn't throw Geithner under the bus as you contend Sooner or later the cost of keeping him on will become greater than the cost of throwing him under the bus
Does the term Non-sequitur mean anything to you
There is no way in hell Obama's going to fire Geithner
March 20, 2009 2:44 PM | Reply | Permalink
There is no way in hell Obama's going to fire Geithner.
Next week? You're right. Year or two down the road? We'll see.
March 20, 2009 2:59 PM | Reply | Permalink
Geithner is Rumsfeld? If that's what most of you think then I'm definetly on Geithner's side. That is just nuts!
March 20, 2009 4:10 PM | Reply | Permalink
liberal whiners and their tacit allies
Look, just take that shit over to redstate.com where it belongs, ok?
March 20, 2009 7:44 PM | Reply | Permalink
I agree about Geitner, but I would love to see Summers gone. He's part of creating the problem, and his public personna doesn't help the Administration craft the solution.
He's a legend in his own mind.
March 20, 2009 10:50 PM | Reply | Permalink
Summers is a disaster, a complete tool of the financial lobby - both he and Geithner should resign, and Henry Paulson should be hauled before Congress and forced to testify in his role in setting up the bailout as well, and to what extent his political connections with Goldman Sachs played a role.
The bonuses are nothing - only 1/1000th the size of the real bonuses, the 100 billion in kickbacks to Goldman Sachs, Barclays, Deutschebank, Societe Generale, HSBC, Citigroup, Bank of America, etc.
That appears to be why AIG was chosen for largesse - they were able to serve as a front group for dispersing taxpayer money to the very institutions that played the starring roles in the economic collapse, and that was due to their "contractual obligations" with said companies.
In other words, a deliberate fraud has been perpetrated on the American people, one carried out with bipartisan support that involved cooperation of Bush and Obama Administration finance officials.
That's why Geithner and Summers have to go - they participated in the scheme, along with Paulson. They continue to promote it in the press - that's why Summers was so adamant about contractual obligations - he was aping the Goldman Sachs PR line:
" NEW YORK (Dow Jones) -- Goldman Sachs' Chief Financial Officer David Viniar said Friday that the firm rejected overtures from American International Group to settle trades with the troubled insurer at a discount, instead holding the company to the letter of its contracts."
http://money.cnn.com/news/newsfeeds/articles/djf500/200903201221DOWJONESDJONLINE000717_FORTUNE5.htm
March 21, 2009 12:10 PM | Reply | Permalink
Either Dodd is spineless because Treasury's analysis was correct or too dumb to be in the Senate because, as is the case, Treasury was correct
The contracts were valid and fully performed by the promisors
Ex post facto, bill of attainder
March 20, 2009 2:14 PM | Reply | Permalink
The House passed a bill putting 90% taxes on bonuses over $250,000 at bailed-out banks.
They could have done that for all compensation at bailed-out bank.
They still could, if they wanted to.
March 20, 2009 3:16 PM | Reply | Permalink
According to the logic that Congress can't change a contract, if someone has a contract to work for $5/hour, and Congress raises the minimum wage to $6/hour, then he doesn't get a raise.
The idea that the right-to-contract exceeds the power of Congress was rejected during the FDR years.
March 20, 2009 3:18 PM | Reply | Permalink
Ex post facto, bill of attainder
Bzzt. United States v. Carlton, 512 U.S. 26 (1994)
Try again.
March 20, 2009 7:37 PM | Reply | Permalink
1. Ex post facto bill of attainder: You're assuming ALL legal minds agree it can be applied to this situation in a way that would make the proposed tax illegal. Me thinks that is not the case, as I've heard many legal minds arguing both sides.
2. The initial Dodd provision had nothing to do with taxing bonuses and everything to do with limiting compensation and salaries from the outset. How does that make him stupid? Ex post facto bill of attainder doesn't even apply in this circumstance.
Regards to you.
March 21, 2009 10:45 AM | Reply | Permalink
The bonuses are probably best understood as hush money for upper managers with inside knowledge of the scale of the fraud that has been committed.
For example, the top British beneficiary of the U.S. taxpayer bailout/ripoff via AIG is Barclays (also ExxonMobile's #1 investor), and an irate whistleblower leaked a collection of memos that reveal $16 billion in possibly illegal tax dodge/money laundering activities - specifically, $16 billion was funneled from Swiss/Cayman accounts into the U.S. home loan market by Barclays, with the original source of the money likely being inflated oil prices (one would hope it's not cocaine cartel cash, but hey! any port in a storm...).
http://www.techcrunch.com/2009/03/21/how-barclays-ensured-that-everyone-would-see-their-confidential-tax-avoidance-documents/
So, that's the deal on the bonuses - take care of your people, and they will take care of you - unless they are facing 20 year mandatory prison sentences, in which case they will sing and dance all day long...
"The lawyers never seem to get the fact that some things just aren’t that interesting until they try to force people not to talk about them."
True - far better to pay them off.
March 21, 2009 12:28 PM | Reply | Permalink
Dodd screwed up himself. From when people starting talking about his bill he should have just come forward and said that Treasury wanted the language changed for fear of litigation. It could have been as simple as that.
March 20, 2009 2:18 PM | Reply | Permalink
Actually, that's not true. It wasn't fear of litigation as the reason why the Treasury officials and the WH officials opposed the retroactive bonus limits---it was the excuse at the time that the banks would refuse to take the bailout money, or return back the bailout money if the limits had been placed on the bonuses.
March 20, 2009 2:39 PM | Reply | Permalink
Thanks for stating. Exactly right, as reps from Treasury were quoted as saying exactly that when Dodd's provision was first being reported. Only now because it's political dynamite to admit to this, the Treasury is changing its tune. Fear of litigation? Are you kidding? Like the Tresury doesn't have hundreds of lawyers on its staff to deal with stuff just like this?
(Shades of "Iraq has weapons of mass destruction" morphing into "We never made the claim we were going into Iraq because we thought they had WMDs...No, it was because...because...OK fellas, what can we come up with this time?")
March 21, 2009 10:20 AM | Reply | Permalink
Interesting... Dodd said he responded to what he thought was a reasonable request at the time.
March 20, 2009 2:21 PM | Reply | Permalink
Dodd needs to mind his tongue
When you're in a hole, stop digging
March 20, 2009 2:24 PM | Reply | Permalink
Dodd is a piece of work. He created the problem himself by LYING to the press in the first place. Sen. Snowes amendment was also taken out of the bill BUT once she announced that, she did not go on a blaming spree trying to bring the spolight on herself about the good work she tried to do. Unlike Dodd, she has self respect.
March 20, 2009 2:25 PM | Reply | Permalink
No one tried to claim Snowe deserved all of the blame for this. Anonymous Treasury officials have spent the last few days trying to do that to Dodd.
March 20, 2009 2:36 PM | Reply | Permalink
Anonymous Treasury officials could be REPUBLICANS. Chris Dodd is too self-centered to realized he is being PLAYED by the press and the GOP.
March 20, 2009 2:55 PM | Reply | Permalink
Anonymous Treasury officials could be REPUBLICANS.
Could be.
But then again, who's got the incentive to leak - career employees with civil service protection, or political appointees already under significant heat?
March 20, 2009 3:15 PM | Reply | Permalink
You're joking right? Do you remember the term burrowing? Where political appointees are given civil service jobs. So there could be a possibility that some sabotage been going on. But your dislike of Geithner has clouded your judgment that you overlook the possibility.
March 20, 2009 4:21 PM | Reply | Permalink
Geithner = toast.
I remember not so long ago Dodd was a librul hero around here. What happened?
Sure, his original provision might or might not have been as strong as he claims, but it's well known that Geithner 'n Summers (the Tweedledumb and Tweedledweeb or handing out money to rich people) were opposed to substantive pay limits.
Trying to foist all the blame on Dodd because he's in a weak spot was classless. Moreover, even a weakened Dodd is something to be reckoned with.
IMF Tim is in way over his head, and keeps digging deeper.
March 20, 2009 2:35 PM | Reply | Permalink
That is the difference between liberal and conservative. Libs may have many faults but blind faith is not one of them. However conservatives just have GWB for better or worse but always faithful.
March 20, 2009 4:42 PM | Reply | Permalink
Dodd is TOAST........he is showing a complete lack of judgement
March 20, 2009 2:56 PM | Reply | Permalink
There's an irony in this Dodd story.
For years he's put the Bankers, Wall Street and the Corporate boys ahead of the public's as a way to garner big campaign contributions that keep him in office, and staying in office is the politician's paramount goal. And the irony is that his pandering to the monied interests may be what causes him to lose his seat.
I'm waiting for the shoe to drop on Schumer next.
The way this guy has pandered to the moneychangers over the years makes this guy the Phil Gramm of the Democratic Party.
March 20, 2009 3:35 PM | Reply | Permalink
Most Senators are like that, because the party committees (DNC, RNC, DSCC, etc.) accept donations up to $28,500.
The average person can't give that much. Someone who makes a lot of money on Wall Street can.
If we lowered the maximum donation to party committees, then Senators would care more about what average people think.
March 20, 2009 3:47 PM | Reply | Permalink
Summers as the next Fed Chairman? God help us!
March 20, 2009 4:13 PM | Reply | Permalink
As I said on another thread, Dodd was in trouble before this AIG mess and the Republicans intend to bury him with it. I believe he is a fool to come out against Obama's administration. His big hope to win re-election is with a lot of Obama's support. He looks desperate and ill-advised.
My hope is the GOP keep hitting this until most become tired of hearing about it. In my opinion, the pols and the media jumped the shark on this two days back. Mass hysteria can only last so long and then people get weary and move on with their life. Let's move on already.
March 20, 2009 4:23 PM | Reply | Permalink
Dodd has not come out against the Obama administration. Dodd has been attempting to get a properly focused story out which Treasury has been slow to help develop after initially contaminating the time-line description. Dodd is facing a difficult re-election and could have used all of the Obama administration's support available. Conversely, what exists to stop Dodd from placing a few torpedoes under the adminstration's keel and totally destroying the recovery program if his doing so will demonstrably help his re-election bid? Are you saying that Dodd should just take one for the team because, because, because of what?
March 20, 2009 8:36 PM | Reply | Permalink
This is a really disappointing story so soon out of the gate. We have a new administration promising change, but it is just the same old thing. We all saw Obama react to taxing this money back last night and we know he is not going to let it happen. These AIG people are really nothing more than bank robbers. The only differece between them and people we send to prison for robbing banks is they have the power, influence, and access to make their behavior legal. What that really means is everyone here is just wasting their time trying to influence change. Americans have overwhelmingly stated that we should take this money back and our representatives aren't even listening. That is because we really do not have access to any of them. After all, can any of you imagine letting a bank robber keep the cash?
March 20, 2009 4:32 PM | Reply | Permalink
I still like Dodd. It's ancient and irrelevant history now, but he was the only Dem Presidential candidate talking about rolling back the vast expansion of the Executive perogatives that went with Bushco's Unitary theory.
I don't fault him for not reflexively throwing Geithner under the bus. Geithner unfortunately did not return the favor.
March 20, 2009 4:53 PM | Reply | Permalink
Dodd also championed, along with Russ Feingold, the telecom/FISA/illegal wiretapping thing. Which is, unfortunately, more than you can say about Obama, as the upcoming presidential candidate reversed positions on it during the campaign, no doubt because he was afraid of being seen as "weak on terrorism." Result: He reneged on an earlier-made promise.
Dodd kept his word on that one. Spoke out adamantly. No small thing.
March 21, 2009 10:31 AM | Reply | Permalink
"No small thing."
Exactly!
March 21, 2009 1:49 PM | Reply | Permalink
Okay...Let me get this straight. Dodd attacks NOW??? Geithner just said he took responsibility for this. This is a day late and a dollar short of an attack.
March 20, 2009 5:29 PM | Reply | Permalink
Sincere question: So what does "taking responsibility" actually look like? In other words, what is Geithner DOING differently as a result of "taking responsibility"? How are any of his POLICIES now different? Any of his PLANS? Any of his LIASIONS? Because if nothing has changed here...how is that "taking responsibility"?
Please, enlighten. I'm open.
March 21, 2009 10:12 AM | Reply | Permalink
Sure. Correct me If I am wrong, but the administration realized that the executive pay was a bigger issue than they thought and they are now going to implement stricter standards. That's a change AFTER the fact.
Dodd should have attacked Geithner prior to his incomplete statements. It was cowardice that he did not. He only does so after the fact to try to blame Geithner even more for his own political purposes.
March 22, 2009 1:12 AM | Reply | Permalink
"...Dodd has been openly skeptical of consolidating future financial regulatory power at the Federal Reserve, preferring to run broader regulation out of the FDIC -- and that position may not sit well with Geithner, the former head of the New York Fed, as well as Summers, who is widely tipped to be the next Fed chairman..."
Well, call me stupid or something, but doesn't pole-axing on of your endangered US Senators just about guarantee that Dodd must probably push for a FDIC regulated regime because the Fed Reserve has shown just how feckless it is? Dodd must be furious (and with good cause) and selecting the FDIC option is just, oh, so much easier now. This blunder alone would call into question the fitness of Geithner and Summers. Dodd will need to do it to prove his bona fides as he goes into next year's donnybrook in CT.
March 20, 2009 8:27 PM | Reply | Permalink
First: An outstanding, and I do mean outstanding summary of the whole Wall Street/Federal Reserve/AIG bailout mess, written in language anyone can understand:
http://www.rollingstone.com/politics/story/26793903/the_big_takeover
Second: That summary clearly outlines this goes much deeper and is waaaaay beyond just the exec compensation thing.
Third: To those who feel like what's been unfolding is just a small thing and why in the world are we focusing so much on this witchhunt anyway and of course we should all just "move on" and "give it time"...I support your choice to do so. However, I would respectfully ask you to give me that same freedom as I choose to take a different path by seeking out newer information that unravels and sheds light on what I'm now realizing have been egregious policies that smack of near mafia-like set-ups within our financial systems/economic systems/political systems.
Finally: With this latest info re: Dodd wanting regulation going through the FDIC rather than the Federal Reserve...wow. I mean wow. My guess is, someone(s) trying to "take him down" politically. Someone(s) affilated with Goldman, Merrill, JP, or any of the other mega-wealthy banks that pretty much control the Fed. They've got a lot to lose if he prevails. Similar to what a mafia ring would lose if suddenly all of their well-used routes re: extortion and blackmail were blocked.
Personally, I trust Dodd on this one. And never thought it made a wit of sense for him to offer a provision addressing exec salaries and bonuses, come out in the press to pitch it, then suddenly reverse course completely. Huh? I can see in the new wording of that provision - wording the Treasury wanted - he may have thought he was getting almost the same thing by giving the Secretary the power to intervene if/when the exec thing got out of hand. Unfortunately, what he learned: Geithner doesn't see seven and eight figure "bonuses" as out of hand.
I wish everyone well.
March 21, 2009 10:00 AM | Reply | Permalink
Dodd may now be forced into selecting the FDIC option. The Fed Reserve has not demonstrated any street smarts whatsoever over this AIG dust-up, particularly because they've known about the details on the bonus provisions for a much longer time than any of the political players. This political assassination attempt on Dodd will force him to argue hard against the Fed Reserve option in order to try to recover lost political position in CT. Whoever thought trying to take down Dodd was a good idea clearly didn't think the whole situation through with a sober head.
March 21, 2009 1:27 PM | Reply | Permalink
It's completely irrational to demand AIG doesn't pay these bonuses in the first place. It's going to be hard enough to get this company back on its own two feet as it is; forcing all of the talent away that could save AIG billions of dollars is only going to make it harder if not impossible.
In short, Dodd is an idiot for even feigning anger over these bonuses; and Barney Frank is even worse for demanding pay caps on executives in general.
How would you like the federal govt. to tell you exactly how much you can be paid for a year's work? That's the next logical step.
March 21, 2009 10:56 AM | Reply | Permalink