Geithner Confirms Treasury Asked Dodd For Bonuses Loophole

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March 19, 2009 11:55 am
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Treasury Secretary Tim Geithner has confirmed that his department did press Sen. Chris Dodd (D-CT) to water down the executive-bonus limits included in last month’s stimulus bill, delivering a boost to the beleaguered Dodd — but at a greater potential cost to his own damaged credibility on Capitol Hill.

In an interview set to air later today on CNN, Geithner took “full responsibility for the situation” and said “calls for resignation are part of the job,” according to an early report on the network’s website.

Late Update: The full exchange between CNN’s Ali Velshi and Geithner is posted after the jump. It’s notable how rapidly the media has become fixated on this change to the Dodd amendment … considering that most mainstream news outlets were fudging the truth on it just days after it became law.

VELSHI: Let’s just talk a little moment again about those payments and the legal ramifications of doing anything about it. Senator Dodd says that he had a clause that was put into the stimulus bill that basically allowed these payments to be made to people at AIG in this particular unit and he says that somebody at Treasury asked him to put it in.

GEITHNER: Let me just start by saying that Chairman Dodd has played an enormously important leadership role in this and he’s doing the right thing in trying to make sure that the assistance we provide don’t go to benefit people that shouldn’t benefit from these things. And I am enormously impressed by the importance of what he’s trying to do in this case.

VELSHI: But somebody – have we figured out who told him to put this clause in?

GEITHNER: This provision? We expressed concern about this specific version. We wanted to make sure it was strong enough to survive legal challenge. But we also worked with him to strengthen the overall framework and his bill has this very important provision we’re relying on now to go back and see if we can recoup payments that were made that there was no legal ability to block.

VELSHI: But inadvertently might somebody at Treasury have told Senator Dodd to do something that has now resulted in these payments not being able to …

GEITHNER: No, again, what we did is just express concern about the vulnerability of a specific part of this provision, the legal challenge, as you would expect us to do, that’s part of the legislative process, but again, his bill also has this very important provision that allows us to go back and see if we can recoup these payments and we’re going to explore that, but in any case we’re going to make sure that the American people are compensated for any payments we can recoup.

VELSHI: Do we know who in Treasury had this conversation with whomever on the banking committee?

GEITHNER: Treasury staff were working Senator Dodd’s staff throughout this process. Again, that’s part of the legislative process.

VELSHI: But you weren’t involved in that directly?

GEITHNER: I did have with other officials some conversations with Chairman Dodd as he was going through this process but other provisions.

VELSHI: So not about this particular one. It wasn’t you telling …

GEITHNER: No, but I’m not sure that’s relevant because Treasury staff did express concern about whether this provision was vulnerable to legal challenge.

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