Dodd goes back and forth

Our chattering and governing classes are working themselves into a mutual lather over a matter that is at best of tangential significance to the present world financial crisis: the $165 million in bonuses that AIG appears to owe to some of its employees and former employees.

On Monday, Senator Grassley suggested the US import the Japanese tradition of hari-kari in reaction to this outrage. Most of the press reported on this remark in a jolly spirit -- oh what a state of jesters is Iowa!

It is in this climate that Senator Christopher Dodd, chairman of the Banking Committee, has just executed a rapid flip-flop on the question of how language that seems rather receptive toward the payment of those bonuses found its way into the stimulus legislation enacted last month.

Here's the key language: "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, as such valid employment contracts are determined by the Secretary or the designee of the Secretary."

Even without knowing what clause (i) says, you can see that this is a grandfather clause, protecting certain bonus payments from a prohibition that might otherwise have applied.

But the Dodd flip-flop is the neat thing here. He has gone from (Tuesday) adamantly rejecting the notion that he could have drafted such a clause to an explanation that he had to do it because otherwise the section limiting bonuses would have been "lost entirely" and an apology (Wednesday) over "if we had some confusion">.

In that CNN clip to which I've linked you, Wolf has some nice language at about 5:00 and shortly thereafter about the above quoted clause, which he calls a "mysterious loophole that was added at the last minute."

Dodd keeps it mysterious, containing that administration officials asked him to make the modifications, and refusing to name them, "someone at the staff level."

Great material. Leno and Letterman's writers are working on this stuff, I'm sure. But tangential to the real problems. And $165 million? To you and I, reader, that is real money. But on the scale of TARP or of the stimulus bill? Peanuts.