Misinformation On The AIG Bonus Issue

By Big Tent Democrat, Section Economy
Posted on Fri Mar 20, 2009 at 08:58:16 AM EST
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At daily kos, Lawrence Lessig writes:

As we all know by now, insurance giant AIG sparked national outrage by paying more than $165 million in executive bonuses after receiving a $170 billion taxpayer bailout. What fewer people know is that AIG gave more than $9 million in campaign contributions to Congress . . . The Number 1 lifetime recipient of AIG money? Senate Banking Chairman Chris Dodd, who received $281,000 (just edging out George W. Bush).

Lessig promulgates a false implication - that Senator Chris Dodd acted as he did because of AIG contributions. It is clear now that in fact Dodd acted as he did at the behest of the Obama administration. In fact, in last week's issue of The Economist (p. 29) (before the AIG bonus scandal broke), the following was written:

Chris Dodd, who faces a battle to retain his Connecticut seat in 2010, inserted tough new restrictions on bankers' pay into the fiscal stimulus package despite the administration's objections.

Lessig's implied narrative is simply false. Whether Lessig's agenda is good or not, using falsehoods to support it is clearly wrong.

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Misinformation On The AIG Bonus Issue | 33 comments (33 topical)

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I agree that is doesn't.... (5.00 / 1) (#3)
by kdog on Fri Mar 20, 2009 at 09:22:05 AM EST

appear that Dodd was being bought, though kinda shady-looking none the less.

The outrage is AIG, a broke-arse zombie corporation, is still paying out money to politicians as if they are still a profitable company. They aren't...all bonuses, all campaign contributions...sh*t free coffee in the cafeteria...it's all gotta stop, the party is over.

iow, its not the campaign contributions, its spending money that isn't yours on superflous sh*t...AIG and the rest of the welfare whores need to get back to basics.

Since the primaries (5.00 / 1) (#6)
by cal1942 on Fri Mar 20, 2009 at 09:35:52 AM EST

we should take anything that comes out of Dailykos with a grain of salt. It's especially galling that some KOS contributors will omit and/or imply most anything to project Obama as pristine.

The implication in Lessig's post is classic Republican style deception and misdirection.

As far as contributions and their impact on elected officials are concerned, what would we have thought in 1932 if we knew that stock market manipulator Joe Kennedy was a heavy FDR contributor.

falsehoods about "falsehoods" (5.00 / 1) (#24)
by lessig on Fri Mar 20, 2009 at 10:27:40 AM EST

so this is the second time through this drill, and there will be many times to come. the first was with Conyers. This time with Dodd. as before, this post confuses two claims: (1) that Dodd took money and then did something because of that money; (2) that Dodd took money in a context that would undermine trust of him, and his institution.

I always, only, and emphatically only, assert #2. It is called "Good Soul Corruption."

: Professor Lessig (5.00 / 4) (#25)
by Big Tent Democrat on Fri Mar 20, 2009 at 10:35:14 AM EST

My view is that while that may have been your intent, the current discussion of the matter lends itself to the implication that Senator Dodd acted BECAUSE of the AIG contributions.
Given the statements from the Obama Administration regarding their requests that Sen. Dodd modify his amendment, the implication, at least to me, is false and unfair to Sen. Dodd.
My view is that your post would have been better and accurate if you had noted these facts.
Thanks for responding.

Your Economist story (none / 0) (#1)
by andgarden on Fri Mar 20, 2009 at 09:11:13 AM EST

is on the web.

Thanks (5.00 / 1) (#2)
by Big Tent Democrat on Fri Mar 20, 2009 at 09:14:29 AM EST

Link added.


Did BTD write this? (none / 0) (#14)
by Militarytracy on Fri Mar 20, 2009 at 10:02:13 AM EST

Write what? (none / 0) (#15)
by Big Tent Democrat on Fri Mar 20, 2009 at 10:04:41 AM EST

The article in the Economist :) (none / 0) (#17)
by Militarytracy on Fri Mar 20, 2009 at 10:08:50 AM EST

Because at the end it quotes someone from the Clinton administration saying that Obama may be risking being the next Jimmy Carter :)


I predicted his Jimmy-Carterness (5.00 / 2) (#21)
by TeresaInSnow2 on Fri Mar 20, 2009 at 10:23:43 AM EST

long before he was even elected. I must have written the article ;-).


Hey, I called him the cowardly lion once (5.00 / 1) (#22)
by Militarytracy on Fri Mar 20, 2009 at 10:26:16 AM EST

Oh, that's not the same :)


: I actually compared him (none / 0) (#26)
by TeresaInSnow2 on Fri Mar 20, 2009 at 11:42:05 AM EST

to Jimmy Carter. So I'm special ;-)

Ah (none / 0) (#19)
by Big Tent Democrat on Fri Mar 20, 2009 at 10:17:38 AM EST

Dodd (none / 0) (#7)
by bocajeff on Fri Mar 20, 2009 at 09:43:35 AM EST

"inserted tough new restrictions on bankers' pay into the fiscal stimulus package despite the administration's objections."

Except for the AIG bonuses and that AIG gives him more money than anyone else. And that he outright lied about it this week and was forced to fess up....

He could have just, like ya know, not done it.

Dodd's amendment (none / 0) (#9)
by Big Tent Democrat on Fri Mar 20, 2009 at 09:46:27 AM EST

would have prohibited the AIG bonuses (for good or ill.)

Geithner admits he wanted it watered down and Dodd obliged him.

It is true he could have told Geithner "go f*ck yourself."

But that is hardly to the point of this post, which posits that Dodd acted as he did because of AIG contributions.

You would agree, I assume, that that is not true correcT?


But you miss the bigger point (none / 0) (#16)
by bocajeff on Fri Mar 20, 2009 at 10:06:02 AM EST

All this finger pointing is great in terms of proving who did what. The problem is that it doesn't fix anything and distracts from the main issue...I tell my employees all the time that I don't care who is right or wrong, I just want the thing fixed.

Dodd and Geithner knew what was in the bill. Obama signed the bill. The outrage is B.S. We need to hold these guys and gals accountable about the major issues.

I could care less about the type of shoes Oswald was wearing when he shot Kennedy. You can argue about it, debate it, but in the end you're kind of missing the bigger issue.


Well (none / 0) (#18)
by Big Tent Democrat on Fri Mar 20, 2009 at 10:17:23 AM EST

that is a different point.


: But connected (none / 0) (#33)
by jondee on Fri Mar 20, 2009 at 01:23:42 PM EST

This is what Mr. MT said before leaving (none / 0) (#20)
by Militarytracy on Fri Mar 20, 2009 at 10:18:42 AM EST

and we were discussing this with the laptop in my lap and I've had about two hours of sleep. You are entering into a crisis situation and your expert tells you you need 450,000 boots on the ground to reestablish order amidst lawless chaos while at the same time you have a self professed expert, happy, lucky, his time at the helm has come, cutting corners and taking the shortcuts CEO who insists you can do it with 150,000 and reestablishing structure as immediately as possible for the welfare of all isn't that big of a deal. We really need to learn something from our mistakes.


more finger pointing, please (none / 0) (#29)
by ding7777 on Fri Mar 20, 2009 at 12:21:55 PM EST

The finger pointing within this little crack may open up to more finger pointing and we will find out why the Obama administration supports tax-payer money to be given to AIG who booked more insurance than it could possibly pay out


so just to be clear (none / 0) (#8)
by nycvoter on Fri Mar 20, 2009 at 09:44:34 AM EST

I don't have time to sort through all the news, and I trust your analysis, you reaffirm all you said about Dodd's involvement, that he pushed for restrictions and the Administration (treasury and Obama) pushed back against the retroactive restrictions. Dodd's "involvement" and "lie" were limited to him rewriting the amendment that limited some bonuses but allowed the loophole for those already granted.

Am I right? And the republicans see this as an extra way to get rid of Dodd so they are pushing the narrative that it's Dodd's doing to begin with and the willing media and the populist sentiment is helping them to accomplish this.

the "lie" (5.00 / 1) (#10)
by Big Tent Democrat on Fri Mar 20, 2009 at 09:47:46 AM EST

was Dodd's office saying he did not change his amendment. He clearly did, at the behest of the Obama Administration.

My speculation is Dodd did not want to point the finger at the Obama Administration and, well, lied about it.

Very stupid of all involved.


: Wasn't just his office (none / 0) (#27)
by gyrfalcon on Fri Mar 20, 2009 at 11:47:31 AM EST

Dodd himself blathered and sputtered on and on in a hallway interview I saw about how he had no idea who took the provision out, when it was done, had tried to find out but couldn't, somebody did it in the dead of night, the provision was there, then it disappeared, he had no idea how it happened, blah, blah, blah.
He flat-out lied, and anybody who thinks he was trying to protect the Obama administration, I have a nice bridge I'd love to have you take a look at.

And, if you look at the contributions (none / 0) (#11)
by TeresaInSnow2 on Fri Mar 20, 2009 at 09:53:38 AM EST

$103,000 went to Dodd.
$101,000 went to Obama.
Then they were next most generous to McCain at $59,000

I don't read DailyKOS anymore, but I assume in their utmosed true and unbiased writing about events, they didn't forget to mention that Obama and McCain were about tied in contributions? If you're going to say the bonuses were about payback, they are certainly both to blame, aren't they?

: What further the point is (5.00 / 1) (#13)
by Big Tent Democrat on Fri Mar 20, 2009 at 09:56:34 AM EST

AIg is a CT company and Dodd is a Senator from CT.
It is hardly surpising that he was a top recipient of contributions from AIG-related persons. They mostly live in Connecticut.

: Oops (none / 0) (#12)
by TeresaInSnow2 on Fri Mar 20, 2009 at 09:54:10 AM EST

I meant Obama and Dodd were tied....

Dodd may be getting unfairly hammered (none / 0) (#23)
by Green26 on Fri Mar 20, 2009 at 10:26:52 AM EST

on this narrow point, but I don't care because I think his views and handling of the executive comp limitations have been short-sighted on wrong.

In Dodd's recent flip-flop, he said Treasury had expresed concerns about the legality of the broad provision (apparently inserted by him in the bill and written by his staff) because he didn't want to lose the whole provision.

"DODD: The alternative was losing, in my view, the entire section on executive excessive compensation. Given a choice, this is not an uncommon occurrence here, I agreed to a modification in the legislation, reluctantly." CNN interview.

Here's what Gaithner said:

"In an interview today with CNN's Ali Velshi, Treasury Secretary Tim Geithner said, "Treasury staff were working with Sen. [Christopher] Dodd's staff throughout this process."

Geithner's comment came in response to a remark by Dodd, D-Conn., saying that the Treasury Department had insisted on inserting language in the bill that created a loophole for AIG to exploit.

"Treasury staff did express concern about whether this provision was vulnerable to legal challenge," Geithner said.

Geithner said he did not personally talk to Dodd or Dodd's staff about the provision, which exempted employees who signed contracts before February from tough new executive compensation limits that Dodd and others included in the stimulus. Staffers at the Treasury Department were concerned that the provision would not stand up to legal challenges without the exemption for existing contracts.

"We expressed concern about this specific provision because we wanted to make sure it was strong enough to survive legal challenge," Geithner said in the interview with Velshi. "But we also worked with [Dodd] to make sure we strengthened the overall framework, and his bill has this very important provision we are relying on now to go back and see if we can recoup payments that were made that there was no legal ability to block."

Dodd did not have to go along with them (none / 0) (#28)
by BobTinKY on Fri Mar 20, 2009 at 12:02:17 PM EST

and for doing so I put his already dubious re-election prospects at about 30%.

With his young family I hope he decides to call it a career and let Blumenthal or DeLauro run. Better for everyone at this point. After his sweetheart mortgages, move to Iowa and this, well that is three strikes and fair or not he is likely going to be out.

I say this as someone who voted for him twice.

The real problem is the secrecy of the (none / 0) (#30)
by MyLeftMind on Fri Mar 20, 2009 at 12:33:34 PM EST

conference committee meetings and the rush to pass the stimulus package. The Wyden-Snowe amendment that would have barred bailout-fund recipients from paying huge executive bonuses was successfully passed the U.S. Senate, but was stripped in committee. We still don't know who killed it, which is a big problem because 1) Obama's promise of transparency is undermined, and 2) Republicans can point to the last minute finagling as proof that our side cheats (which it does, but I'd rather know who instead of handing them an automatic anti-Democrats sound bite.)

Meanwhile Obama's stand against abuse of bailout money is contradicted by the Obama team's apparent watering down of the Dodd amendment. Treasury Sec Geithner may be the short term fall guy to insulate Obama and Dodd, or the reality could be that he raised these issues simply in terms of expediency. The stimulus bill already contains provisions requiring Geithner to review bonuses and negotiate with TARP recipients regarding appropriate levels of compensation. Did he try? Does the stimulus package have enough teeth for "negotiating" or is it just giving lip service to the problem of abuse?

I think people like Dodd would be much more likely to act in our interests (such as combining his amendment with Wyden & Snowe, and demanding more time to prevent that late night secret lobbying before the rushed vote on the stimulus package) if our election system wasn't so dependent on donations and big money. Even if congress critters aren't being bought off,

Simply put, we need campaign finance reform and transparence in Congress.

Did Dood make the changes because (none / 0) (#32)
by coast on Fri Mar 20, 2009 at 01:22:26 PM EST

of campaign donations....no way. Does it look bad that AIG gave him a bunch of money, then his amendment happend to allow the payment of the bonuses. Sure it does, but that does not mean a thing. Insurance is the largest employer in Conn, so I would expect some of his largest donors to be insurance carriers.

I do have several problems with this whole mess though.

Why did Treasury think there would be a legal issue with the original language of the bill. Did someone know that there were companies receiving bailout money who had contracts for bonuses outstanding? So far the answer seems to be that no one knew, but why did they question the language. Does Treasury think that there won't be suits over what has been done to correct the original error?
Why is everyone blaming their staffs? Who runs the show up there. Wasn't one of the arguements over the passage of the bill was that no one really knew what was in the thing?
If Congress and the administration want to manage these companies, which is exactly what this clawback of the bonuses is, use something other than the tax code to do it. We, the people, own 80% of AIG. Why doesn't the government take control of the Board and replace management with managers they believe can do a better job than the ones currently there.

Last thought, why is Congress and the administration so upset with what AIG did. Did they break the law, did they lie to Congress or the administration....no. What did Congress expect from a company that has run itself into the ground? Here is billions of dollars, we're sure you'll responsible this time.

Surely, it was commonly known (none / 0) (#35)
by Green26 on Fri Mar 20, 2009 at 06:17:31 PM EST

that some of the 150 or so TARP companies to be covered by the comp limits in the bailout bill had existing employment contracts that included future bonus payments.

Most employment contracts include bonus payments.

I would guess that a majority of these 150 or so companies had at least some employment contracts.

Public companies have to file (with the SEC) copies of employment agreements and compensation plans that cover their senior executives. These are publicly available.

The media had discussed bonus plans, including for AIG I believe, and upcoming bonus payments for multiple companies.

I believe I read that AIG made $55 million of bonus payments under the retention plan in December 2008. However, there was no furor over that.

Is it not intuitive to some of you that passing retroactive laws might not be constitutional?

Is it not intuitive that taxing passing a punitive tax on a small group of people, including people who already received their money, might be unconstituional?


: The constitutionality of the tax is (none / 0) (#36)
by coast on Fri Mar 20, 2009 at 07:35:28 PM EST

kind of where I was heading. I'm not lawyer, so I haven't a clue. Wasn't the President a constitutional law professor?

Obama Admin was concerned about legality (none / 0) (#34)
by MSS on Fri Mar 20, 2009 at 04:59:36 PM EST

The quotes I've seen today (at MediaMatters? DailyKos?) say that the Obama administration was concerned that the language Dodd initially had in the legislation might be subject to being legally overturned, and substituted language that allows them to go back to the initial approvals for funding and overturn them, if new legal grounds are discovered later.