But the reality is a little bit different.

Some background, in case you don’t remember all the payments you made to own 61% of GM. The government placed $6.7 billion in a “contingency fund” in case things got worse for the auto maker. Things seem like they aren’t getting worse, so GM will not need the money. As the Washington Post’s “Economy Watch” analyst Frank Ahrens notes:

GM actually said it is going to start giving back $6.7 billion the government placed in an escrow account for the automaker as a contingency, in case things got worse.

That’s part of the $52 billion the government has plowed into GM, which went through a government-backed bankruptcy earlier this year.

Well, things didn’t get worse — so GM said it could start “repaying” the $6.7 billion contingency fund with a $1.2 billion “payment” in December, and add additional “payments” until the total amount is “paid off” over the next eight quarters.

It is still good news. Our Uncle Sam and his Canadian cousins loaned the money with the provision that repayment be by July, 2015. So not using the money earlier is better than not using it later.

The news headlines will still read “repayment!” because the neat little accounting trick is hidden far down on the “Non-GAAP Managerial Results” press release today:

GM plans to repay the United States, Canadian and Ontario government loans in quarterly installments from escrowed funds, beginning next month with an initial $1.2 billion payment to be made in December ($1.0 billion to the UST [US Treasury] and $192 million to the EDC [Export Development Canada]), followed by quarterly payments. Any escrowed funds available as of June 30, 2010 would be used to repay the UST and EDC loans unless the escrowed funds were extended one year by the UST. Any balance of funds would be released to GM after the repayment of the UST and EDC loans.

I’m glad our new car company is so clever. They would make Frank Abagnale, Jr. smile.

Cross-posted to FrankHagan.com

Who’s this guy?

Meet Kenneth R. Feinberg, the new pay “czar” for the White House. He’s tasked with reigning in the out of control compensation at companies the government helped recently.

I think it should be noted right off the bat that this is tied to executive compensation and bonuses…two pots of money that are so out of step with compensation in the real world it’s obscene. I mean, one year after all of these places went under and they’re giving out billions in bonuses?

Here’s more from Wash Post:

The cuts will affect 25 of the most highly paid executives at each of five major financial companies and two automakers, according to the sources, who spoke on the condition of anonymity because the plan has not been made public. Cash salaries will be cut by about 90 percent compared with last year, they said.

The administration will also curtail many corporate perks, including the use of corporate jets for personal travel, chauffeured drivers and country club fee reimbursement, people familiar with the matter have said. Individual perks worth more than $25,000 have received particular scrutiny.

And here are the companies affected…

The seven companies under Feinberg’s purview are Citigroup, Bank of America, General Motors, Chrysler, GMAC, Chrysler Financial and American International Group. These firms have received a total of about $250 billion in bailout funds from the Troubled Assets Relief Program, adopted last year by Congress, and benefited from hundreds of billions of dollars more in government guarantees and other support.

Personally, I’d like to see executive pay at publicly traded companies capped at a set price with stock options/bonuses only triggering when those folks actually produce provable results. But this “failing up” nonsense that CEOs continue to do decade after decade is ridiculous.

Of course I know this won’t happen because Wall Street firms will continue to claim that these compensation models are key to attracting the right talent, even though there are usually dozens of qualified applicants for every position they have.

Still, one can dream…

I don’t care if these bonuses were contractual or not. New circumstances (you know…like BANKRUPTCY!) could allow them to renegotiate with their employees.

From the AP comes the list…

Citigroup…

Citigroup Inc., one of the biggest recipients of government bailout money, gave employees $5.33 billion in bonuses for 2008, New York’s attorney general said Thursday in a report detailing the payouts by nine big banks.

Bank of America…

Bank of America Corp., which also received $45 billion in TARP money, paid $3.3 billion in bonuses, with 172 employees receiving at least $1 million. Of those, 28 received bonuses of more than $3 million.

Merrill Lynch…

Merrill Lynch, which Charlotte, N.C.-based Bank of America acquired during the credit crisis, paid out $3.6 billion. Cuomo’s office said Merrill Lynch doled out 696 bonuses of at least $1 million for 2008, with 149 of those workers getting bonuses of at least $3 million.

And less offensive are JPMorgan and Goldman Sachs, but it still makes you wonder why they took money in the first place…

JPMorgan, which gave 1,626 employees of at least $1 million, paid back the $25 billion it received in TARP money last month. Goldman, which repaid its $10 billion in government money last month as well, gave 953 workers bonuses of at least $1 million. The two banks each gave more than 200 employees bonuses of more than $3 million.

Yes, they learned nothing from last year. They’re simply taking advantage of the position they put all of us (including the government) in and doing whatever they want. Business as usual.

Amazing.

Not too many people are dancing over the news of GM’s bankruptcy, but opinions are decidedly mixed on what the government ownership of the car company will mean.

Lee Cary, of American Thinker sees the era of Government Motors dawning with coercive attempts to force a Green fleet onto American consumers. This, in Cary’s opinion, will be quickly followed by the unintended consequences, namely a falling market share followed by more government infusions of money, followed by tariffs on foreign automobiles, followed by retaliatory tariffs on American-made goods, followed by economic disaster.

How about Robert Reich, who has routinely applauded the Obama economic agenda? Well, he’s not exactly sunny either. Reich says the government part-ownership of GM will do nothing more than slow its inevitable demise. He accuses the administration of trying to have it both ways by appeasing autoworkers (who want as much bailout as possible) and average taxpayers (who generally oppose the government’s intervention).

So the Obama administration is, in effect, paying $60bn to buy off both constituencies. It is telling the first group that jobs and communities dependent on GM will be better preserved because of the bail-out, and the second that taxpayers and creditors will be rewarded by it. But it is not telling anyone the complete truth: GM will disappear, eventually. The bail-out is designed to give the economy time to reduce the social costs of the blow.

Certainly someone must think things could turn out just fine. Oh sure. There’s Michael Moore. He sees this as a great opportunity for the government to seize American industry in the name of fighting a war against global warming and dwindling oil supplies. He wants massive mass transit, he wants it now and he wants it built in GM factories by GM workers who would, of course, be government workers in Moore’s world.

Feel free to leave your own predictions/desires in the comments. As for me, I’m going to take some more antacid in the hopes of quieting a stomach turning circles over the prospect of a government-owned car company.

All the kings horses and all the bond deals couldn’t keep GM from cracking. As feared, the car giant has filed for bankruptcy. Now what?

The plan is for the federal government to take a 60 percent ownership stake in the new GM. The Canadian government would take a 12.5 percent stake, with the United Auto Workers getting a 17.5 percent stake and unsecured bondholders receiving 10 percent. Existing GM shareholders are expected to be wiped out.

Plus, GM could get an additional $30 billion in federal assistance for its reorganization. That’s on top of the $20 billion the company already received in the form of low-interest loans.

More fallout: the Pontiac, Saturn, Hummer and Saab brands will be terminated or sold. And GM will no longer be listed as part of the Dow Jones industrial average.

Oh, and the majority owner of one of America’s most storied companies will now be the U.S. government – at least for awhile.

Good times. More soon.

I don’t think think this comes as a huge surprise, and it’s certainly disheartening.

From Wash Post:

The government signaled yesterday that its financial rescue efforts may have reached their high-water mark, announcing that the much-anticipated “stress tests” of 19 large banks showed that only one, GMAC, was likely to need additional taxpayer aid and that it would begin to unwind assistance for the healthiest firms.

Despite a deepening recession and projections that banks will continue to lose money, the government will require the firms to increase their combined capital by as little as $9.5 billion. The government will require the banks to further strengthen their capacity to absorb losses by adding $74.6 billion to the portion of their capital that comes from common equity. Banks are likely to raise some of that money from investors and some by converting other forms of capital.

The announcement at the Treasury Department yesterday culminated a three-month process designed to show that banks are returning to health after a crisis that left much of the industry dependent on federal aid.

Officials said that banks continue to hold vast quantities of ill-considered loans and could suffer losses totaling $600 billion over the next 20 months as the borrowers default. But in showing that the banks can absorb those losses, the administration hopes to restore investors’ confidence. If banks can start raising money again, they can increase lending to consumers and small businesses, a critical piece in the government’s broader strategy for renewing economic growth.

So that’s the bad news. But the good news is that healthy banks will begin repaying the money the federal government gave them…

Nine of the 19 banks were found to have sufficient capital reserves. Firms that repay the government no longer face restrictions on executive compensation.

Applicants will first be required to show that they do not need the shelter of a Federal Deposit Insurance Corp. program that helps banks raise money at lower interest rates. But banks may continue borrowing from the Federal Reserve’s emergency programs, which do not impose pay restrictions.

More as it develops…

Despite all the government assistance and talk of providing more, GM lost $6 billion last quarter with earnings dropping by 47%.

GM executives say car buyers are turning away from GM out of concern the company will end up in bankruptcy and won’t honor its warranties. Could the prospect of bankruptcy help force bankruptcy? To put it dramatically, is GM in a death spiral?

The company has until June to provide the government a restructuring plan. But another quarter like this past one is going to make Americans extremely wary of handing out yet another bailout.

Okay, that’s not really what they said, but it’s certainly the net effect. Because there will be no bailout money forthcoming for this industry.

More from the AFP:

The White House on Monday expressed “concern” and “sadness” over the state of the ailing US newspaper industry, but made clear that a government bailout was not in the cards.

“I don’t know what, in all honesty, government can do about it,” White House spokesman Robert Gibbs told reporters. “That might be a bit of a tricky area to get into given the differing roles.” [...]

“Obviously (President Barack Obama) believes there has to be a strong free press,” the spokesman said. “I think there’s a certain concern and a certain sadness when you see cities losing their newspapers or regions of the country losing their newspapers.”

However, while their may be no help from the White house in the form of loans, there could be a legislative solution on the horizon that would give newspapers special tax exempt status…

A US senator recently introduced legislation aimed at helping US newspapers by giving them tax breaks as non-profit organizations, an arrangement similar to that enjoyed by public broadcasting outlets, which survive on tax-deductible contributions from listeners.

Advertising and subscription revenue would be tax exempt and contributions to support coverage or operations would be tax deductible.

The only catch? Newspapers could no longer editorialize or endorse political candidates. But, honestly, do you really pay attention to newspaper endorsements anymore? I know it’s a time honored tradition, but if I had to pick between survival and subjective political opinion, I’d pick survival every single time.

Simply put, newspapers’ true value is found in their objective coverage of the locale they belong to, and if this legislation gets passed I hope they seriously consider that option.

Between Wells Fargo and this news, doesn’t anybody think that this may put a slight damper on those Tea Parties on Wednesday?

From MarketWatch:

Goldman Sachs Group Inc. said Monday it swung to a profit in the first-quarter compared to the prior period, and announced it has commenced a public offering of $5 billion of its common stock.

Goldman Sachs said net earnings for the period ended in March were $1.8 billion, or $3.39 a share, compared to $1.5 billion, [...] Analysts had been anticipating earnings of $1.64 a share, according to Thomson Reuters data. [...]

Goldman Sachs said in a statement that it intends to use proceeds of the $5 billion offering to help redeem “all of the TARP capital.”

And yes, I think it’s definitely too soon to tell if these institutions are pulling out of the insolvency mess, but I can’t help but think if we’re seeing these kinds of numbers, it’s a relatively good sign that the worst could be behind us.

However, we still have yet to see the fallout from the next batch of toxic assets, but now that we have a system currently in place to deal with the subprime mess, maybe that’ll address any additional problems we face?

More as it develops…

And there was much rejoicing…

From MarketWatch:

NEW YORK (MarketWatch) — Wells Fargo & Co. said Thursday that first-quarter earnings will surge to a record $3 billion, well ahead of analyst forecasts, as loan losses and provisions dropped from the previous difficult quarter and its mortgage business thrived.

Wells shares jumped 22% as the bank also noted its Wachovia acquisition is exceeding expectations and reported another quarter of double-digit revenue growth.

Wells said first-quarter net income will be roughly $3 billion, or 55 cents a share, after paying dividends on preferred securities, including $372 million to the Treasury Department. Analysts surveyed by FactSet Research expected profits of 31 cents a share on average.

And, according to Credit Writedowns, there could be some money to be made here…

I see financial services companies shedding troubled assets, not marking other assets to market and having an enormous margin spread due to ridiculously low interest rates. To me, this is a huge buy signal. Last week, I thought a small position in out-of-the-money calls on BofA or Wells was a good idea before Wells gapped up this morning (I still think Citi is dead money). This is now less of a good risk-reward opportunity. But, don’t think Wells is alone in expecting a monster quarter here. Could we see the same at JPM or BAC? BAC has a huge tax dodge from its Countrywide acquisition so unless they haven’t finished with monster surprise writedowns, I expect a good number there as well and that looks like the best play in the space right now (despite a 20% rally today).

Still, while profits are all well and good, we still need these banks to start lending again.

This is Danielle Ivory, reporting from the American News Project and Alternet.

Back in February, in the House Financial Service Committee, when asked a question about the value of Citigroup’s assets, CEO Vikram Pandit provided a less-than-clear response: “It’s an extraordinarily difficult question.”

Click the video below to WATCH the exchange between Rep. Louis Gutierrez (D-IL) and Vikram Pandit.

Rob Weissman, director of the corporate watchdog group, Essential Action, and author of a new report called Sold Out: How Wall Street and Washington Betrayed America, said that, in addition to what Pandit said, there’s an additional factor that could fog the test results: off-the-book assets.

“If you don’t include the off-balance sheet assets in the stress test, then it’s not a legitimate stress test,” Weissman said. “It’s pretty plain that the off-balance-sheet operations are a central part of the story of why we don’t know what the banks own.” The Treasury Department declined to comment on whether they would take off-book-assets into account when running the stress tests.

Weissman says that recipients of bailout money, like Citigroup, Bank of America and JP Morgan, have been engaging in “fanciful accounting” of what they owe and what they own by relocating of their less-than-healthy assets off the books, in shadow corporations. Rep. Brad Sherman has described the process as, “apples on one balance sheet and oranges on another.”

According to RGE Monitor, off-balance-sheet operations have skyrocketed over the last 15 years. From 1992 to 2007, on-balance-sheet assets grew by 200 percent, while off-balance-sheet assets grew by 1,518 percent. In 2007, it was estimated that there was 15.9 times more money parked in off-balance-sheet operations than in on-the-book operations. Not all off-book assets are toxic. Some financial institutions might park assets off their books if they are planning, for instance, to sell them. However, in rough economic times, off-balance sheet accounting allows banks to veil their losses from investors, regulators, and even insiders.

“This turns out to be a really important benefit [for a bank] if it happens to be insolvent,” Weissman added. “And many believe that if you total Citigroup’s assets and liabilities, it is insolvent.”

As of July, Citigroup appeared to have the most off-book assets — an estimated $1.1 trillion. But they aren’t alone. As of July 2008, JP Morgan Chase & Co. had more than $400 billion off their books. Bank of America had $48.2 billion off the books before it bought Merrill Lynch. “If you start adding up all the potential exposures, it’s a huge number,” Sam Golden, former ombudsman for the U.S. Office of the Comptroller of the Currency, told Bloomberg. “The banks will say that it was disclosed. Investors are saying, ‘Yeah, but it was cryptic.’”

Disclosure rules for off-balance sheet operations are notably less strict than those for assets on the books. Neri Bukspan, chief accountant for Standard & Poor’s told Bloomberg, “A lot of information tends to disappear.”

The use of the off-balance-sheet assets was a core part of the Enron scandal, where they were able to wrap debt inside of debt, using obscure corporations, so no one could track what they owed and what they owned. After the Sarbanes-Oxley Act of 2002 was set in place, there were efforts to address the problems with off-book assets. But after heavy lobbying by two main trade groups, the Securities Industry and Financial Markets Association and the American Securitization Forum, banks were given special exemptions.

In September of 2008 as the financial crisis was coming into full view, the Senate Baking, Housing, and Urban Affairs Committee held a hearing, discussing off-balance sheet operations. Senator Jack Reed recalled Enron: “This phenomenon of moving assets off the balance sheets is eerily familiar. We recall back in the days of Enron that its schemes to manufacture false profits included special purpose entities that conducted transactions off-balance sheet. The goal was to avoid financial reporting. While no one is necessarily suggesting scandals of the Enron kind, we cannot fail to admit the irony. We are dealing with a similar problem yet again, only six years later.”

George P. Miller, Executive Director of the American Securitization Forum, said that moving assets off-book back on to the books would cause dangerous swelling of balance sheets. He added, “There are many other steps that the industry can and should undertake to promote broader and better transparency about risk exposures in these vehicles, whether they are on or off-balance sheet.”

But Donald Young, former member of the Financial Accounting Standards Board countered, “We just had an investment bank [Lehman Brothers] go bankrupt with a fair value balance sheet that showed it had plenty of assets and liabilities. And it almost seems like financial reporting is out of control and not trusted and not believed in. And I think what we do here has got to establish transparency. If the transparency is such that we’re going to bring out some bad news that wasn’t there before, that’s a risk. But I think the benefits of reestablishing confidence in the markets will overwhelm that.”

The Financial Accounting Standards Board (FASB) are revising the rules so some off-book assets will have to be reported on the books. However, the changes won’t be effective until January 2010 at the earliest. In March at a House Financial Services Subcommittee hearing, Rep. Sherman complained about this lag. He told the chairman of the FASB, Bob Herz, “If you guys can’t act quickly and logically, perhaps the regulatory accountants need to act and depart from what is a somewhat illogical and certainly slow process that you’ve got.”

In the meantime, in a recent letter to his employees, Pandit has said Citigroup is having its best quarter since 2007 and the bank had conducted its own internal stress tests with positive results. But Weissman says something doesn’t add up. “Either they’ve done a lot of due diligence in a short amount of time that they hadn’t done before, or the stories are incompatible.”

Crossposted at Alternet.

After months of hand-wringing, bailouts and backlash, new GM CEO Fritz Henderson says bankruptcy is still a very real possibility:

The company, he said, has until June 1 to accomplish changes sought by the government, or it will be in bankruptcy. The 60-day deadline should be enough time, but if it becomes evident that the changes can’t be made by the deadline, GM could go into court sooner, he said.

“It doesn’t have to take 60 days. If it’s quite clear that we’re not able to accomplish what we need to do in terms of operational restructuring, reduction of debt on the balance sheet and what we need to do to accomplish these broad parameters of having a viable business, this will be a management judgment” reviewed by the Obama administration’s autos task force, he said.

Hopefully GM can find a way out of its tailspin, but the company is clearly worried they won’t be able to meet the new guidelines laid out by the Obama administration. Arguably, we should have worked with GM to find a bankruptcy solution months ago, rather than kicking the problem down the road.

By delaying what may be inevitable, we’ve left both GM and the government in awkward positions. The situation should have never gotten to the point where the President of the United States can force the resignation of the CEO of a publically held corporation. While the cries of “socialism” are hyperbolic at best, no one should be happy with the way the government has handled GM.

Perhaps GM can still avoid bankruptcy and the government bailout and meddling will prove to have been a distasteful but necessary step in saving one of America’s key industries. But I can’t help but think that, once again, we allowed a sky-is-falling mentality to prevent us from developing a solution that addressed the core problem.

So it’s pretty apparent people are upset that there are different rules for the automakers and banks. Well, I’m not sure what to tell you except the entire economy isn’t leveraged against the health of the Big 3. Yes, they’re vitally important and I think we should continue to help them out, but they don’t come anywhere close to the problems we face in the financial markets. Not by a long shot.

And so GM was offered some additional short term help with strings attached. And they took it. You can argue that Wagoner was forced out, but he had a choice. Just like the banks have to submit themselves to stress tests. And all of these CEOs know what the right thing to do is given that they’ve screwed up big time.

But it’s not just the businesses being asked to change. Big Labor is being put through the wringer too:

A key ingredient is getting the UAW to agree to an entirely new labor contract, including major reductions in health-care benefits, according to several people involved in the matter. “That’s the No.1 wildcard here,” one of these people said Monday.

Under this plan, the “good” GM would not be expected to hold the tens of billions of dollars in retiree and health care obligations that hurt the auto maker in recent decades. Instead, those obligations would be transferred to an “old GM,” made up of less-desirable brands like Hummer and Saturn, and underperforming plants and other assets. This part of GM would likely sit in bankruptcy much longer while a buyer is sought for the parts or it is wound down. Proceeds from the sale of old GM would go to pay claims to various creditors, including GM retirees.

“That is the plan, to the extent it comports with the bankruptcy laws,” said one person familiar with the matter.

What I don’t understand about all of the chatter today is I thought this is exactly what critics wanted last year. And yet all I’m reading today is how “socialist” this is. So yeah, color me puzzled.

By the way, that WSJ article is fantastic. Do try to read the whole thing.

And after the AIG mess, I say we give it to him. How we allowed one company to take down the entire system still feels unreal to me. How on earth could we allow that to go down? Crazy, crazy, crazy.

But it did happen and we are suffering massive fallout as a result, so we have to make absolutely sure we’re protected. And, like it or not, the only way to do that is give the government more power.

From Bloomberg…

The authority would allow the Treasury, in collaboration with the Federal Reserve, regulators and the president, to step in and more easily combat problems at systemically important institutions on the verge of failure, said the official, who spoke on the condition of anonymity. AIG has received $182.5 billion in government bailout funds, according to the Government Accountability Office.

“We must ensure that our country never faces this situation again,” Geithner is expected to say according to excerpts of his testimony obtained by Bloomberg News. “To achieve that goal the administration and Congress have to work together to enact comprehensive regulatory reform and eliminate gaps in supervision.”

The expanded powers, which require Congressional approval, could help monitor risk and detect problems across an array of financial-services firms to prevent shocks to the global economy such as the one caused by the collapse of Lehman Brothers Holdings Inc. in September. [...]

It would also ensure proper accountability when taxpayer funds are provided to institutions in extreme circumstances, like AIG, which is now 80 percent owned by the government. The authority would provide the government with various tools including the ability to break contracts on executive compensation commitments, like those at the center of the furor over the insurance-giant’s $165 million in bonuses.

More transparency and more accountability.

What’s not to like about this?

And remember, since global commerce is so tied to our banking system, we have a responsibility not only to our taxpayers, but also the rest of the world. Because don’t kid yourself by thinking that China’s public calls to consider replacing our currency in the reserve basket didn’t come as a direct result of letting firms like AIG overleverage themselves to the point of insolvency.

The bill would levy a 90 percent tax on bonuses paid to employees with family incomes above $250,000 at companies that have received at least $5 billion in government bailout money.

Leaving aside whether or not his is an appropriate or necessary move, the whole situation has hit the farcical stage. Our Congress hands out billions of dollars with too few strings attached and then acts shocked — shocked! — when the money is misused. Their solution, of course, is to act punitively in a show of staged populism.

All this while many larger problems go unaddressed or ignored.

While I’d like to think this fiasco will once-and-for-all stop the kind of chicken-little attitude that allows poor bills to become law, I doubt that’s the lesson everyone will take away. In fact, I have a feeling many in Congress feel the bill passed today proves they are doing their job. Except, their job was getting the legislation right the first time.

The AIG bonus plot thickens, but only slightly.

Because while it appears that people in the Treasury department knew about the bonuses, they didn’t think it was necessary to inform their new boss about them?

From TIME:

“Treasury staff was informed about the new bonuses in a Feb. 28 memo that the March 15 [bonus-payment] date was upcoming,” a Federal Reserve source tells TIME. A Treasury Department source, speaking on background, confirmed the e-mail memo and its contents, saying, “Everybody knew that [AIG] had a retention issue.”

The New York Fed even went so far as to warn Treasury staffers that the bonuses were a hot-button issue. In the past, the memo says, the “retention,” or bonus, issue has drawn the attention of both Capitol Hill staffers and the media. The New York Federal Reserve forwarded further details of the plan to Treasury on March 5 and even more specifics in a March 9 memo, which Treasury officials had previously said was their first detailed warning of the bonus trouble.

The Treasury Department official says the fault appears to lie with career staffers at the department who failed to report the imminent bonus deadline up the chain to Geithner. This failure may be a by-product of the difficulty Geithner has had staffing up at Treasury. But he still has personal vulnerability on the issue. It was Geithner, as head of the New York Federal Reserve, who negotiated the AIG bailout last September. At that time, he could have sought to get bonuses repealed as part of the massive government loan.

As I’ve stated before, the bonuses are obviously extremely bad form and people have a right to be mad. Hell, I’m mad too.

But Americans need to be cautious about getting too angry over something that’s relatively small potatoes because the only thing that can stop the fixes we need in this financial crisis is exactly this type of disproportionate populist rage.

Senate Banking Committee Chair Chris Dodd has had better days. Looks like the AIG bonus scandal just found a political whipping boy:

Dodd just admitted on CNN that he inserted a loophole in the stimulus legislation that allowed million-dollar bonuses to insurance giant AIG to go forward – after previously denying any involvement in writing the controversial provision.

“We wrote the language in the bill, the deal with bonuses, golden parachutes, excessive executive compensation that was adopted unanimously by the United States Senate in the stimulus bill,” Dodd told CNN’s Wolf Blitzer this afternoon.

“But for that language, there would have been no language to deal with this at all.”

Dodd had previously said that he played no role in writing the controversial language, and was not a part of the conference committee that inserted the language in the bill.

I like the “But for that language” part of the quote. If Dodd thought the language was good, he wouldn’t have hid from his involvement in it. He’ll have a hard time defending his role now. Sure, a lot of people voted for the bill, but the “I didn’t read that part” excuse is better than the “I wrote that part and then denied and am now hoping it all goes away” excuse.

AIG’s decision to pay out bonuses despite the financial company’s massive troubles has angered a lot of people. Place the president in the angry category.

Joining a wave of public anger, President Barack Obama blistered insurance giant AIG for “recklessness and greed” Monday and pledged to try to block it from handing its executives $165 million in bonuses after taking billions in federal bailout money.

“How do they justify this outrage to the taxpayers who are keeping the company afloat?” Obama asked. “This isn’t just a matter of dollars and cents. It’s about our fundamental values.”

It’s unknown what Obama can or will do about the bonuses, but he’s asked the Treasury Department to pursue every legal avenue.

While the president’s statement is obviously meant to keep the bailout backlash from damaging the White House, he’s right that this is not just a matter of money but of values. AIG had no business rewarding employees after many of them helped make the disastrous decisions which would have doomed the company if not for massive government assistance. While I’m sure there are employees at AIG who are competent and, in any other situation, worthy of a bonus, the company proved, yet again, that senior management is out of touch with the reality of the situation.

This is yet another example of how TARP’s rush to approval left a lot of gaping holes. Nevertheless, AIG deserves the public outcry.