AIG's bonus babies: Did Geithner coddle them?
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Senate Banking Committee chair Chris Dodd insists that the Obama Administration asked him to insert into the stimulus package a proviso that meant that bonuses already given to execs at AIG and other bailout recipients were to be honored.
Bloomberg's Ryan J. Donmoyer reports this morning that Dodd "had wanted to limit executive compensation at companies that got money from the government's financial-rescue fund." The story notes that AIG has gotten $173 billion (so far) and adds:
"I did not want to make any changes to my original Senate-passed amendment" to the stimulus bill, "but I did so at the request of administration officials, who gave us no indication that this was in any way related to AIG," Dodd said in a statement released last night. "Let me be clear — I was completely unaware of these AIG bonuses until I learned of them last week." He didn't name the administration officials who made the request.
Uh-oh. If what Dodd says is true — if he isn't just passing the buck — then there's a clue in a New York Times story this morning about who in the administration pushed it. And that points to Geithner or his minions.
The Times's Jackie Calmes doesn't get into that at all in this morning's "A Defining Moment for Treasury Secretary." But the last grafs of her mostly lame story, which doesn't even mention the Dodd angle, are revealing:
Once A.I.G. was under the Fed's control, its compensation plans hardly came up, according to officials. In December, an initial $55 million in bonuses went out with hardly a stir.
Administration officials Mr. Geithner's instincts are that government should not dictate compensation issues to businesses. As Treasury secretary, however, Mr. Geithner since has developed executive compensation limits, which Congress in turn toughened.
"Involved in the Bush-era bailouts." Hmmm. "Mr. Geithner's instincts are that government should not dictate compensation issues to businesses." Double-hmmm.
If it was Geithner or his aides/allies who pushed for this change that Dodd is talking about, then Geithner may be on his way out. If the Obama team decides, however, that getting rid of a Treasury secretary so soon after taking over would further destabilize things or would make Obama look bad, then Geithner wouldn't be thrown to the wolves. He'd just get an ass-chewing and would lose his influence on the most important policy decisions.
If, on the other hand, it turns out that Obama or his top aides pushed for the honoring of AIG's dishonorable bonus contracts, then the administration is really in deep trouble and would have a harder time pushing its agenda through Congress. Not to mention that such a situation would tax Obama's oratorical skills in convincing the public that he's in charge and is doing all he can.
You can read Greta Van Susteren's Fox News story — "AIG Bonuses: What Did Geithner Know and When?" — if you want, but as a nattering nabob talking head for Fox who wouldn't miss a chance to blast the Democratic administration, she has even less credibility than Geithner.
On the other, other hand, however, she could very well be right on this one.
