Barney Frank drops a bombshell: How a shocking anecdote explains the financial crisis

[merrily]

27. Also, bonuses for Executives involved in TARP, incl. AIG:

President Barack Obama said, &quot I)t’s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. How do they justify this outrage to the taxpayers who are keeping the company afloat?" and "In the last six months, AIG has received substantial sums from the U.S. Treasury. I’ve asked Secretary Geithner to use that leverage and pursue every legal avenue to block these bonuses and make the American taxpayers whole."[3][4]

BUT:

Initially, Senator Chris Dodd was identified by Treasury Department spokesmen as being responsible for the inclusion of the provison exempting such bonuses from the executive pay limits clause of the TARP. However, on February 14, 2009, the Wall Street Journal published an article, Bankers Face Strict New Pay Cap,[61] discussing a retroactive limit to bonus compensation inserted by Chris Dodd into the TARP bill that passed in the Senate.

The same article went on to mention that Treasury Secretary Timothy Geithner and Lawrence Summers "had called Sen. Dodd and asked him to reconsider". When the bill left conference, Dodd's provision had been removed and replaced with the explicit exemptions lobbied for by Geithner and Summers.

As Dodd explained in his March 18 interview on CNN,[62] at Geithner and the Obama Administration's insistence he removed the language he had himself inserted and replaced it with Geithner and Summers' loophole, which thus allowed the bonuses which formed the basis for the AIG scandal.

Dodd retreated from his original statement that he did not know how the bill was changed [63] Dodd was criticised by many in the Connecticut media for the apparent flip-flop.[64][65] In a March 20, 2009 editorial the New Haven Register called Dodd "a lying weasel" [66] The same day, Hartford Courant columnist Rick Green called on Dodd not to seek re-election in 2010.[67]

http://en.wikipedia.org/wiki/AIG_bonus_payments_controversy