Chris Dodd Amendment Permitted AIG to Hand Out Millions of Bailout Dollars in Bonuses

Cross posted on Grizzly Groundswell

  It is well known by now that AIG received a total of $173 billion in taxpayer funded bailout money, $150 billion of which came from President Bush, with President Obama handing out the other $23 billion. President Bush gave AIG our money with basically no stipulations on how it was to be spent and no oversight. That was President Bush’s second mistake, his first being to hand out this corporate welfare at taxpayer’s expense in the first place thus thrusting  America down a path to socialism and government intervention that President Obama is all to willing to continue and expand.

  It is equally well known that AIG then proceeded to pay some of it’s executives bonuses with our money to the tune of $165 million. Normally I am someone who doesn’t believe in government intervention at all (which is why I don’t think we should have given them a bailout in the first place), I don’t care how many millions a company hands out in bonuses to it’s employees. A private business is just that, private. How they conduct their business is their business. But on this issue I am torn because the company was handed out my money, money I didn’t want to give AIG in the first place and money that taxpayers shouldn’t have had to spend on this business. The government (taxpayers) now owns a stake in the company. They have relinquished part of their soul to the devil and that devil is government control. Once they accept government money they have to play by government rules.

  This is nothing but an abuse of taxpayer money, or is it?  Was AIG actually doing the right thing by paying out these bonuses? I mentioned that there were basically no stipulations put on AIG when it came to how they would spend their money, that was President Bush’s fault, but he is not alone in blame when it comes to this issue. And in fact he may not even be the main culprit behind this fiasco, Chris Dodd had a major roll in this also.

  When the stimulus bill was being put together Chris Dodd (who was the largest recipient of AIG campaign contributions by the way) added a stipulation, which Obama knew about and dubbed the Dodd amendment, that put a limit on executive pay for companies that accepted federal (taxpayer) money but the amendment provides an “exception for contractually obligated bonuses agreed on before Feb. 11, 2009.” This amendment exempted AIG from the executive pay caps that Dodd put in place in the stimulus bill as AIG is claiming that those bonuses were contractually obligated.

  Chris Dodd is denying that he put the dates of the exemption in, he claims that there were no dates in his amendment but when the bill came back and was voted on the dates  were already added by someone else but it doesn’t matter. I guess we will have to take the Democrat senator at his word and believe that he didn’t exempt AIG in return for the $103,100 they donated to his campaign. (And whose largest office is located in his home state.)

  If AIG was following the rules that Dodd wrote and Obama agreed to when he signed the stimulus bill (even though he didn’t read it) and they are obligated to pay the bonuses they did than the government should have no recourse here. The government screwed up, as it always does when it interferes where it has no business.

  The president was not all that upset about the bonuses that AIG payed out until he began to feel the heat from the people. In fact he was resigned to it because he knew about the Dodd amendment from the beginning but he signed the bill anyway. However with outrage growing the president realized that he had to take a firm stand even though there probably is no legal way that he can stop AIG from paying out the bonuses. He just had to pretend that this was the first he heard about the bonuses.

  But the bonus plan that AIG had in place was made public one year ago and was not a considered a problem for them in receiving the bailout money. To pretend outrage now is disingenuous and a nothing more that a political ploy now that the heat is on and the public is upset. President Obama knew about the bonus plan, as did all of the other politicians, when he increased the bailout to $173 million, evidently he didn’t have a problem with the plan at that point.

  Now politicians on both sides of the aisle are trying to out-outrage each other to the point where Republican Senator  Chuck Grassley even said that the AIG executives that paid the bonuses should kill themselves. However the truth is that they knew that not only was this bonus payout a possibility, it was a certainty because these bonuses were contractually obligated by AIG and under the Dodd amendment they were guaranteed.

  But maybe I am giving these politicians too much credit, maybe they didn’t realize these bonuses were guaranteed under the Dodd amendment in the stimulus bill because none of the politicians who voted for the stimulus bill actually read what they were voting for. So maybe their outrage now is merely a cover up of the embarrassment they feel for signing something that they didn’t read. Maybe they should be outraged at their own stupidity.

  Now the government is trying to make up for their own stupidity by doing what they do best- raising taxes. The new plan is to tax the bonuses that they themselves guaranteed to the AIG executives in a publicity stunt designed to show us how much they care about us. While this is being done to a company that made the deal with the devil and took taxpayer money I can’t feel sorry for them, they are reaping what they sowed, but I am concerned that it will not stop here and that this will eventually carry over to companies who have not accepted federal funds as the government looks to expand control over private companies and how much money their employees can make.

  This is what happens when government sticks its nose in where it doesn’t belong and this is probably only the beginning. This is just the first controversy to come out of the bailout/stimulus fiasco, I am sure there will be much, much more to follow. This is a perfect example of why I am for small, limited government.

Update: President Obama is now claiming that he didn’t know about the AIG bonuses until two weeks ago. Still, where was the outrage back then?