The giant stimulus package that cleared Congress Friday includes a last-minute addition that restricts bonuses for top earners at firms receiving federal cash -- including those that already received it -- more severely than the Obama administration's previous pay limits.
The most stringent pay restriction bars any company receiving funds from paying top earners bonuses equal to more than one-third of their total annual compensation. That could severely crimp pay packages at big banks, where top officials commonly get relatively modest salaries but often huge bonuses.
As word spread Friday about the new and retroactive limit -- inserted by Democratic Sen. Christopher Dodd of Connecticut -- so did consternation on Wall Street and in the Obama administration, which opposed it.
Senator Christopher Dodd Chairman of the Senate Banking Committee.
President Barack Obama called AIG reckless and greedy during a blistering attack in which he pledged to try to block the insurance giant from handing its executives millions of dollars in bonuses after taking billions in federal aid.
Wait a minute President Obama. You were the one who opposed the inserted cap by Democrat Sen. Christopher Dodd. You were the one who sent both Treasury Secretary Timothy Geithner and Lawrence Summers, who heads the National Economic Council, to ask Sen. Dodd to reconsider his proposal and he did as you asked.
You see Obama and his administration was concerned the rules would prompt a wave of banks to return the government's money and forgo future assistance, undermining the aid program's effectiveness. President Obama knew if there were bonus limits on executive pay, they would not accept the stimulus money. Just like when the Ford company found out about the strings attached to their money.
President Obama signed the stimulus bill despite his concerns about the bill's vague and open interpretation. So AIG interpreted it could pay out bonuses. Now Obama is trying to cover his ass.
President Barack Obama called AIG reckless and greedy during a blistering attack in which he pledged to try to block the insurance giant from handing its executives millions of dollars in bonuses after taking billions in federal aid. The White House, Obama, Geithner and Summers, says it’s trying to put strict limits on the next $30 billion installment in taxpayers’ money for American International Group Inc amid questions about whether the Obama administration responded fiercely enough to revelations of executive bonus payments.
Why didn't the Administration first listen to Christopher Dodd? I can see that they don't want to listen to Republicans but your top banking guy, does not make sense. Tim Geithner and Larry Summers who openly criticized Dodd's proposal at the time and insisted that those limitations should apply only to future compensation contracts, not ones that already existed. The exemption for already existing compensation agreements -- the exact provision that is now protecting the AIG bonus payments -- was inserted at the White House's insistence and over Dodd's objections.
President Obama, just admit you miss this one and the future $Billions$ will be different.
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President Obama Slams AIG