Democrats stirred up populist outrage over the bonuses paid by AIG to its executives to keep them around while their Financial Products division gets shut down. Perhaps a bonus paid by the actual “villains” at AIG-FP might garner some more accurate anger. AIG-FP execs coughed up over $160,000 in 2006, while the division made the decisions that would lead to AIG’s collapse, to help re-elect Chris Dodd and get him locked into the chair of the Senate Banking Committee:
As Democrats prepared to take control of Congress after the 2006 elections, a top boss at the insurance giant American International Group Inc. told colleagues that Sen. Christopher J. Dodd was seeking re-election donations and he implored company executives and their spouses to give.
The message in the Nov. 17, 2006, e-mail from Joseph Cassano, AIG Financial Products chief executive, was unmistakable: Mr. Dodd was “next in line” to be chairman of the Senate Banking, Housing and Urban Affairs Committee, which oversees the insurance industry, and he would “have the opportunity to set the committee’s agenda on issues critical to the financial services industry.
“Given his seniority in the Senate, he will also play a key role in the Democratic Majority’s leadership,” Mr. Cassano wrote in the message, obtained by The Washington Times.
Mr. Dodd’s campaign quickly hit pay dirt, collecting more than $160,000 from employees and their spouses at the AIG Financial Products division (AIG-FP) in Wilton, Conn., in the days before he took over as the committee chairman in January 2007. Months later, the senator transferred the donations to jump-start his 2008 presidential bid, which later failed.
Now, two years later, Mr. Dodd has emerged as a central figure in the government’s decision to let executives at the now-failing AIG collect more than $218 million in bonuses, according to the Connecticut attorney general – even as the company was receiving billions of dollars in assistance from the Troubled Asset Relief Program (TARP). He acknowledged that he slipped a provision into legislation in February that authorized the bonuses, but said the Treasury Department asked him to do it.
Before 2006, Dodd had already collected $78,000 from AIG employees over his career. The “bonus” came at a critical time for AIG. With their friend Dodd in charge of the committee after the Democratic takeover of the Senate and House, they could be sure that Dodd would keep the government off of their backs. And he did — right until AIG had to beg for over $150 billion in taxpayer money to keep from crashing the financial system.
Cassano didn’t leave anything to chance. His letter asked employees to make copies of their $2100 checks from both themselves and their spouses — the legal limit — and send the copies to his office. It seems few missed the threat in that message, which was that anyone not contributing to Dodd was obviously not on the same team as the boss. Bottom line: the $4200 was job insurance, and it only took six weeks for Cassano’s protection racket to raise $160,000 for Dodd.
The FEC may want to look into this for another reason. Not only does this sound like a threat, but it could also have been a straw-man mechanism. Why did Cassano need copies of the checks? To ensure compliance, to be sure, but it could also have been to arrange reimbursements. That’s flat-out illegal, and if AIG set up such a mechanism, then the execs who participated should be prosecuted for campaign-finance fraud.
In either case, it demonstrates the sleazy connections Dodd had with financial companies that he was supposed to oversee. The Democrats will never in a million years actually hold Dodd accountable for his ethics, but hopefully the voters of Connecticut will in 2010.
Update: Jim Geraghty has a couple of historical items of interest on this story. First, 84% of AIG-FP donations went to the Democrats. Second, Dodd had built a government bailout for AIG in 2002 in case of a terrorist attack — to the tune of $100 billion. Read both posts.