WASHINGTON — The case of the missing AIG bonus limits has become a tale of political intrigue and Democratic infighting that could threaten the re-election chances of a top senator and the credibility — if not the career — of one of Pres
WASHINGTON — The case of the missing AIG bonus limits has become a tale of political intrigue and Democratic infighting that could threaten the re-election chances of a top senator and the credibility — if not the career — of one of President Obama’s top advisers.
As the House passed new legislation March 19 to crack down on the outrage-inspiring bonuses, Sen. Chris Dodd of Connecticut, the Banking Committee chairman, and Treasury Secretary Timothy Geithner engaged in finger-pointing about who was responsible for Congress’ failure to prevent them in the first place.
Dodd, a five-term senator, was already facing a tough re-election contest in 2010. He says the Obama administration insisted he modify his proposal to rein in bonuses at companies getting billions of dollars in financial bailouts so that it would only apply to payments agreed to in the future — thus clearing the way for the AIG payouts.
It was that or have his executive pay limits dropped altogether from the $787 billion stimulus measure that passed last month, Dodd says.
He agreed to the changes “in order to preserve the amendment,” Dodd told reporters. “They sought it; I didn’t. They asked for the changes … and so we agreed to those changes.”
Geithner said last week that his staff merely pointed out that without the change, the government risked being sued by executives in line to get big bonuses from bailout recipients.
“What we did is just express concern about the vulnerability of a specific part of this provision, the legal challenge, as you would expect us to do. That’s part of the legislative process,” he told CNN.
The treasury chief also appeared to back away from the administration’s previous assertion that Geithner first learned of the bonuses last week. Interviewed on CNN, Geithner said only that he “learned of the full scale and scope of these specific” bonus payments at that point.
Both men had positive things to say about each other despite the dispute over who watered down the bill.
“He has the president’s support and backing, and he has mine at this point,” Dodd said of Geithner.
Geithner told CNN that Dodd “has played an enormously important leadership role in this, and he’s doing the right thing.”
The situation has Dodd on the defensive even as party strategists tag him as the most politically vulnerable sitting Democratic senator.
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In photo: Treasury Secretary Timothy Geithner testifies on Capitol Hill in Washington, Tuesday, March 24, 2009, before a House Financial Services Committee hearing on AIG.
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