WASHINGTON, (Reuters) – In a capital always looking for someone to blame, a powerful U.S. Democratic senator has a big bull’s-eye on him in the firefight over taxpayer-funded bonuses for executives at insurance giant AIG.
Christopher Dodd, chairman of the Senate Banking Committee and one of the more prominent faces of the Democratic Party, is scrambling to explain how a loophole ended up in legislation that allowed the roundly condemned bonuses to go forward.
At issue is a clause in the $787 billion economic stimulus plan approved by Congress in February that capped bonuses for executives at companies getting federal bailout aid.
A one-paragraph provision tucked into the thick bill modified the cap to apply it only to future bonuses, not those that might have already been legally contracted.
This had the effect of allowing the $165 million in American International Group Inc bonuses to go forward. Dodd, who is running for re-election in 2010, ac-knowledged on Wednesday he played a role in developing the legislation after CNN quoted a Treasury Department official as saying Treasury had talked to Dodd about such a clause, while not explicitly recommending it.
But Dodd said he acted at the behest of the Obama administration, although he would not say who made the request — injecting an air of mystery into this week’s political feeding frenzy over the AIG bonuses.
“I did not want to make any changes to my original Senate-passed amendment 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.
“Let me be clear — I was completely unaware of these AIG bonuses until I learned of them last week.”