Hearing the official outrage coming out of “Warshingtun” this week, I found it hard to take it seriously. I mean, yeah, they’re right. The AIG bonuses are absurd. But where were guys like Senator Dodd or President Bush when AIG was using credit default swaps like credit cards under their watch? For that matter, why was Senator Tom Harkin’s Derivative Trading Integrity Act of 2009 sent to committee to slowly die of asphyxiation?
Well, they were soaking up insurance industry moolah, including generous helping of AIG contributions. If you follow the links, poke around and see how the various Congressional committees on finance, insurance, and commodities are funded. It will just make you more cynical, I suppose, but I had fun.
A word about Dodd: the right wing blogosphere has taken as Gospel an erroneous report by FOX Business.com that Dodd inserted language to protect the very bonuses that we are all upset about now. DailyKos and Media Matters debunk this, so I want to stress that my criticism of Dodd is not an allusion to this misinformation. There is plenty to criticize both parties in how they have cozied up to the financial services and insurance industries (AIG has donated equally to both parties over the past two decades), but using false information to do it is stupid and counterproductive.
So, of course, Michelle Malkin is all over this. She’s like a weather vane for untruth.
UPDATE: Senator Dodd has confessed his role in inserting language “grandfathering” exemptions for the kinds of bonuses AIG handed out and that subsequently pissed us all off. As the above-linked Media Matters article rightly notes, Dodd’s amendment as introduced seriously limited executive compensation. The grandfather clause is the result of conference committee negotiations between the Senate and House versions of the bill. Dodd admits that he put in the loophole during negotiations. It is noteworthy that the House version had no executive compensation limits as suggested by Dodd — so, in effect, were it not for Dodd’s amendment, there would be no limitations on bonuses whatsoever, and more tax-payer dollars would go to outrageous executive compensations.
But does that let him off the hook? Or is Malkin right to call him a “lying crapweasel“? When AIG’s biggest benefactor confesses to putting in a loophole that benefits AIG, his explanation that he only did so because “because others [i.e., the Obama administration, the Treasury] were insistent” seems pretty weak. Obama’s acceptance of blame seems only more like damage control. The fact is our entire government is compromised by corporate special interests. We should be seeking campaign finance reforms and serious limitations on lobbyist influence, as well as stronger regulations of the finance and insurace industries — all causes psuedo-populists like Malkin and Limbaugh have little interest in.
UPDATE #2: ABC News reports that Dodd’s confession is also (no surprise) a defensive posture:
Dodd told the Courant that it was ironic that he is now getting blamed for the loophole when he alone was the only senator who sought to ban all bonus payments past and future.”It’s somewhat ironic that the people who thought I had gone too far,” Dodd said, “are now saying I didn’t go far enough.”
He has a point. As I said above, had he not put in the rule limiting compensation at all, things would be much worse. Moreover, pointing the finger at Dodd misses the larger picture: TARP is the original sin. It has been flawed from the beginning because stabilizing the banking system, a worthy goal, has been compromised by the corporate cronyism in the SEC, the Treasury, the White House (both Bush and Obama administrations) and Congress. They won’t let the so-called “talent” fail. They refuse —even now, even when acolytes of Ayn Rand are advocating it— to nationalize the banks. Politicians like Dodd have been enthralled by the cult of the money-men for so long, they forgot that these guys are greedy, self-serving bastards who have been building a Ponzi scheme just as bad as the one that has landed Bernie Madoff in jail.
I give credit to Dodd for actually recognizing that there should be limits on executive compensation for banks receiving TARP funds. But he and the rest of the political class are blinded by a faith in legitimacy of their donors. The same mentality that now argues that “a contract is a contract” — which should be forced into renegotiation — is the same that allows “grandfather loopholes,” because, gosh, they seem so reasonable.
No, they aren’t reasonable. They are a sign that our government is not being hard enough on the corporations that created an economic system that is inflicting serious damage on our society.