(Via Jane Hamsher) Back in mid-February during the fight over the stimulus package, Senator Chris Dodd was pushing for retroactive restrictions on bonuses paid to employees of financial companies receiving bailout money. This measure, which would have applied to AIG bonuses, was opposed by both Wall Street and the Obama administration:
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.
Both Larry Summers and Tim Geithner personally asked Senator Dodd to remove the retroactive provision, because they thought it meant banks would give the government its money back:
The administration is concerned the rules will prompt a wave of banks to return the government's money and forgo future assistance, undermining the aid program's effectiveness. Both Treasury Secretary Timothy Geithner and Lawrence Summers, who heads the National Economic Council, had called Sen. Dodd and asked him to reconsider, these people said.
Word of the bonuses last week stirred such deep consternation inside the Obama administration that Treasury Secretary Timothy F. Geithner told the firm they were unacceptable and demanded they be renegotiated, a senior administration official said.(...)
The administration official said the Treasury Department did its own legal analysis and concluded that those contracts could not be broken. The official noted that even a provision recently pushed through Congress by Senator Christopher J. Dodd, a Connecticut Democrat, had an exemption for such bonus agreements already in place.
Don't forget that Chris Dodd is the most endangered Democratic Senate incumbent in 2010, as he currently trails his Republican challenger Robert Simmons. Hard to imagine how Dodd's re-election chances will be helped by a senior White House source telling the New York Times that Dodd is to blame for the AIG bonuses.
Last month, Senator Chris Dodd proposed legislation that would have stripped the bonuses in the past, present and future.
Tim Geithner and Larry Summers both personally asked Chris Dodd to drop that legislation. He refused.
The legislation was dropped during the conference report anyway.
Tim Geithner claims that, after looking into it for months, he determined there was no way he could have stopped the bonuses. Larry Summers agrees.
A senior White House source tells the New York Times that Geithner is ourtaged by the bonuses. However, the source notes that Geithner's analysis concluded that Chris Dodd, the most vulnerable Democratic Senator in 2010, is to blame for this because he wrote an exemption for AIG into recent legislation. This is even though Geithner and Summers both personally asked Dodd to drop legislation that would have retroactively stripped the AIG bonuses.
Now, some elements inside the administration have reached the point where they are placing blame for something Geithner and Summers did--block legislation that would have stripped the bonuses--on the person who wrote the legislation that would have stripped the bonuses. And that person just happens to be the most vulnerable Democratic Senators in 2010.
Glad to see that some senior administration officials value Geithner and Summers more than either Democratic Senate seats, or even more than honesty. There is a serious problem inside the Obama administration on this matter, and dismissals are needed to solve it.
In a related development, Republicans tied Democrats in the congressional generic ballot in one poll today, and took the lead in the other. I guess the new "Geithner uber alles" strategy isn't working out to well for Democrats.
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