WASHINGTON -- The most famous piece of legislation passed by the 111th Congress may have nothing to do with health care or energy. It could be the Dodd amendment, also known as the Geithner amendment, or perhaps the low-level-anonymous-staffer-everyone-can-safely-blame amendment, reading in part:
"The prohibition required under clause (i) shall not be construed to prohibit any bonus payment required to be paid pursuant to a written employment contract executed on or before February 11, 2009 ... "
AIG executives were foolish to use this loophole to "retain" employees, some of whom nearly destroyed the American financial system. But the company did not act with deception or secrecy.
AIG's November SEC filing set out its intention to provide more than $469 million in "retention payments" to employees, eliciting a smattering of congressional protest. Concerns on the broader compensation issue were serious enough to ensure unanimous Senate passage of an amendment to the stimulus bill sponsored by Sens. Olympia Snowe and Ron Wyden that penalized bailout bonuses in excess of $100,000.
But the Snowe-Wyden amendment disappeared into the misty bog of a House-Senate conference committee, only to be trumped by language that grandfathered AIG's retention bonuses. At first, this seemed to be an example of immaculate legislation -- miraculously fatherless. After explicitly denying responsibility, Senate Banking Committee Chairman Christopher Dodd eventually admitted including the exception under pressure from the administration. But it doesn't sound like there was much of a fight. Administration input came from unnamed staffers at the Treasury Department, not high-level officials. Dodd said he viewed these as "innocent modifications."
The lack of focus, judgment and competence on the part of Congress and the administration has explanations -- for those dealing in trillions, millions must seem like dirty pennies on the street. But the hollow outrage and blame-shifting from Congress and the administration are inexcusable.