Dodd silent on language in stimulus that allows AIG bonuses
By: Susan Ferrechio
Chief Congressional Correspondent
March 18, 2009
Sen. Christopher Dodd won’t say how a rule he added to the Obama stimulus package ended up allowing AIG to give top executives of the failing company big bonuses.
Dodd spokeswoman Kate Szostak said when the Connecticut senator originally wrote the provision, it did not include the grandfathering of existing bonus agreements such as the ones at AIG. But she declined to say how the language ended up in the final bill — or who wanted it in there.
“Because of negotiations with the Treasury Department” and House and Senate lawmakers who worked on the final bill, Szostak said, “several modifications were made, including adding the exemption, to ensure that some bonus restrictions would be included in the final stimulus bill.”
Szostak said Dodd wanted the bill to allow taxation of the bonuses, but that idea was rejected.
Dodd, she said, “was completely unaware of these AIG bonuses,” and it is “categorically false” to suggest Dodd orchestrated the exception to allow the bonuses to be handed out.
The language was dropped into the $787 billion stimulus bill as part of an executive pay restriction provision crafted by Dodd that aimed to ban bonuses for the highest-paid employees of companies that accepted bailout money from the government.
Under Dodd’s provision, employees who are eligible for bonuses are limited to long-term restricted stock with a value no greater than a third of an employee’s total annual pay.
But the Dodd amendment also includes this line: “There is an exception for contractually obligated bonuses agreed on before Feb. 11, 2009.”
According to AIG officials, who sent a letter explaining the bonuses to Treasury Secretary Timothy Geithner last week, the company was contractually obligated to made the payments, which amounted to $165 million.
Lawmakers fumed over the payments Tuesday but were unaware of the exception provided in the stimulus bill they voted on that makes them perfectly legal.
“That’s the first I’ve heard of it,” Sen Ben Nelson, D-Neb. said.
Senate Republican leaders were also unaware of it, but in the House, at least two GOP freshmen said they were angered by the provision.
“That was a fatal flaw” in the stimulus bill, said Rep. Leonard Lance, R-N.J.
Rep. John Fleming, R-La., complained that members did not have enough time to comb the massive stimulus package before voting on it.
“That’s one little line item I never got to read,” he said when told of the exception provision.
Dodd’s state of Connecticut is home to a large division of AIG, which has given the former Democratic presidential candidate more money than to any other lawmaker. Dodd received more than $101,000 in campaign donations from AIG employees in 2008 and $223,000 since 2003, according to OpenSecrets.org.
