Washington (CNN) – Democratic leaders scrambling to strip AIG executives of bonuses are having a hard time answering a key question – why didn't Congress act to prevent the bonuses in the first place?
"There's always more we can do, and hindsight is 20/20," was all Senate Majority Leader Harry Reid would say Tuesday.
But the reality is that when lawmakers did move to prevent bonuses in the stimulus bill last month, they actually made an exception for pre-existing contracts, effectively exempting AIG.
Senate Banking Committee Chairman Chris Dodd, D-Connecticut, who originally proposed the executive compensation provision, did not include the exemption clause, which said new rules "shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before Feb. 11, 2009."
In an interview with CNN, Dodd denied inserting that exemption at the 11th hour, and insisted he doesn't know how it got there.
"When I wrote the language there was no such language like that," Dodd told CNN Tuesday.
Multiple Senate Democratic leadership sources also deny knowing how the exemption got into the bill.
The mystery isn't just how what was effectively a protection for AIG was put into the stimulus bill - it's also how a provision intended to prevent AIG from giving executive bonuses, was taken out.
The Senate passed a bipartisan amendment proposed by Sen. Olympia Snowe, R- Maine, and Sen. Ron Wyden, D-Oregon, that would have taxed bonuses on any company getting federal bailout dollars, if the company didn't pay back the bonus money to the government.
But the idea was stripped from the stimulus bill during hurried, closed-door negotiations with the White House and House of Representatives.
Senate Finance Committee Chairman Max Baucus, D-Montana, who is now pursing a similar bonus tax idea in the wake of outrage over AIG, said it was a mistake to drop it from the stimulus bill. He made a stunning admission.
"Frankly it was such a rush - we're talking about the stimulus bill now - to get it passed, I don't have time and other conferees didn't have time to address many of the provisions that were modified significantly," said Baucus.
"We shouldn't be here. That should have passed, but it didn't," he said.
Snowe chastised colleagues for expressing outrage about AIG's bonuses, when just last month they did away with her amendment intended to prevent it.
"We tried. It simply didn't happen, and that's a tragedy, given what's happened today," Snowe told CNN in an interview.
Majority Leader Reid would not directly answer a question from CNN about whether that was a mistake.
From CNN Politics
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Dodd needs to be fired now and take Barney Franks with him.
Pardon me... when the hell was this all started? Didn't Bush set this up way back in September? Yeah, I think so! Why are we suddendly implying that this is Obama and the Democratic Congress' problem. I just love it win the media plays along with the GOP like they are actually relevant about the present situation.... when they are the bozos who got us... put us... in this mess! The stench is revolting! Come on, CNN, don't keep up this farce... you KNOW that this if Bush's mess... and he set it up last fall just before the election! Why? So Obama would have to deal with the fall out.... and his wall street fat cat buddies could walk away with stuffed pockets! I hope Obama taxes them the entire amount of these balloon bucks!
this sounds like a bunch of bull. How convenient that it worked out that way im sure no one has any ties to aig or owed favors. i wonder when the taxpayers are actually going to see something other than big business taking advantage again.
Harry Reid is about Stupid. Why did they not read the Stimulus bill before trying to push it down our throats as fast as they could. This is Obama's fault as well .
America is going to Hell fast.
I feel that people have to learn that Obama is the president and in that he knows best. People in different areas just dont want to give him his dues. First ir was gas then Obama now this peoples just need something to fight about. I think this bill is a perfect idea people of all family are suffer from this lost in different companys.
I am disgusted with the AIG bonuses. (Some of the recipients, I understand are not even working at AIG at this time.) If this is the type of regulation we can expect with the stimulus package,I am totally against the Federal government handing any of the packages they propose. They may as well divide the money up among the people who have lost their jobs. Maybe then they can make mortgage payments and this, in turn, could help the banks.
I am scared what is happening to our country. I hope Obama can be flexible and will make adjustments if the stimulus package is not working.
Why should congress impose only 35% excise tax and 35% IT; make it 55% excise tax and 35% IT so that they can would take less than 10% of the bonus money they were wrongfully given
Okay folks, now do you see that BOTH parties are corrupt. You can't trust any of them.
Congress is IGNORANT.
These Congressmen are not knowledgible enough for their jobs. I'll bet most of them don't even know what "mark-to-market" means nor what the implications are for conservative financial accounting / management.
Anytime we even joke about electing someone like "Joe-the-Plumber", it is clear that we have not set our standards high enough.
Congress can no longer hide behind its "outrage" AFTER THE FACT. The Public is OUTRAGED that they repeatedly attempt to close the barn door AFTER the horse has left .... usually a horse that they are too STUPID to know was even in the barn.
They are lazy and don't take the time to even perform the due diligence that the public EXPECTS & DEMADS for their 6-figure salaries. If they can't do it, they should at least hire professional business and engineering / technology counsel to digest these complex issues and spoon-feed them the salient points.
This is the age of YouTube, Facebook, Twitter, etc. Unlike in years past, these types of knowledge related screwups won't be forgotten come election day.
Our tax dollars, hard at work. Thanks Obama and team. Thanks.
Too little too late , nah, It is another fait accompli
Why is everyone so pre-occupied with the blame game? There is a problem to solve. Typical Republicans. Instead of blame, how about just get to the solutions. I'm so sick of hearing the Republicans jump on every thing that happens trying to place blame...they're to blame too. And leave Geitner alone. Just another trick up the ole Republican sleeve to cause trouble. I say in 2010 vote out every Republican we can!
People on Capitol HIll should all just shut up and get some work done to solve problems. We're all just as disgusted with all the bickering between parties as we are with AIG. And it's about time the Republicans should get work done instead of running their mouths off! Who care what SHOULD have been done...we've never had this crisis before. Oh sure, take the heat off AIG and start shifting it to Geitner and Congress???? Absolutely not...AIG was criminal in their actions...I think AIG committed fraud against the American public. And Bush was just as guilty in not scrutinizing the bailout during his term...so ENOUGH of the blame game.
I say Obama and his administration are doing a fantastic job all things considered what was dumped in his lap. Everyone should back off him! Why not support him so this country gets confidence back. And if the Republicans keep up their antics, no one will want them in 2010
It will be interesting to find out which Congressman took a payoff from AID to insert that clause in the bailout bill. My bet is that it was a Republican.
Oooops, AIG, sorry.
Well someone's got to say it – Maybe if they actually READ the thing before they decided to shotgun it through congress overnight...
Well, here we go.....let's play the blame game. Let's see the reps rip the dems up on this one, frankly so.
Smart guys, really smart. We'll get to the bottom of who did it. In the meantime, the Dems need to clean their own house.
Why was something this important overlooked or stripped from the bill? I believe the people really want answers and accountability from those in charge of this.
Why wasn't this very important part of the package in there, and with highlight! I see so many who should be unemployed as a result of all this. I know how things can go wrong when it is done way to quickly and either deliberately omited or overlooked. There are no excuses for doing anything this way...EVER!!
Stupidity like this should be painful!!
I am a Libertarian and I think this is time in our history that an indipendent way should be found to investigate to find out the WHOLE THRUTH behind this whole AIG mess.
If it leads to the GOP fine.
If it leads to the Dems fine.
If it leads to both (that is my bet BTW) fine.
Then we PROSECUTE THEM for FRAUD. Any and ALL OF THEM.
Who wrote the TARP look up the New York Times late last year to see the authors (all you Bush haters might be surprised who was involved during that administration)
Look up for yourselves which politicians received monies from AIG for their coffers (numbers one two and three are interesting TO SAY THE LEAST)
Can you say conflict of interest?
WHO KNEW WHAT WHEN?
This is why Americans are so worried about the stimulus. It was rushed through congress so fast people didn't even know what they were signing. Lord only knows what else was crammed in the bill with out any one noticing. The public only hears about what the media decides is a big enough deal to make news. Which is why there is a checks and balance system in our government. Unfortunatly it's hard for the system to work with a dem controlled house, senate, and president. I'm a democrat, but I'm not nieve enough to blindly trust politicians to do the "right thing". My guess is some one is in AIG's pocket and slipped the omission in the bill under the radar.