AIG loophole necessary, Geithner says

WASHINGTON, March 19 (UPI) -- Stimulus bill language that shields AIG employee bonuses from federal collection was added due to legal concerns, U.S. Treasury Secretary Tim Geithner said.

"We expressed concern about vulnerability" of the stimulus bill to withstand a legal challenge if language that would have barred the bonuses outright, Geithner said on CNN.

He said his staff worked with the staff of Senate Banking Committee Chairman Christopher Dodd, D-Conn.

In a statement issued Wednesday, Dodd said that during stimulus negotiations, he did change a section on limiting executive pay to include an exemption that permitted payouts of any executive bonuses agreed to by Feb. 11, 2009, ABC reported.

Congressional Republicans have asserted Democrats were responsible for the American International Group bonus scandal because Dodd inserted the language into President Barack Obama's stimulus package that exempted bonuses granted by contract before Feb. 11 from general restrictions on bonus payments.

During floor debate on a bill that would use the tax code to recoup some of the funds, Republicans repeatedly brought up how the language differed in the final bill from the language of the two bills that went into conference to have their differences resolved.

"This language showed up in the dead of night," House Minority Leader John Boehner of Ohio said. "I'm wondering where the language come from? Who wrote it?"

The bonus recovery bill was "a transparent attempt to divert attention that the (Democratic congressmen) and White House made these bonuses possible," Rep. Mike Pence, R-Ind., said.