AIG's Bonuses: Who Knew What -- and When

March 20, 2009— -- It is not yet entirely clear who know what and when exactly they knew it in the Obama administration and in Congress about the AIG bonuses.

But new details are starting to emerge.

There were a number of people in the federal government who knew about the AIG bonuses before last week, when the administration says President Barack Obama and Treasury Secretary Timothy Geithner were supposedly first made aware.

Geithner was asked about the precise details and the full scale and scope of the bonuses at a public hearing of the House Ways and Means Committee on March 3.

His exchange that day with Rep. Joseph Crowley, D-N.Y., suggested that Crowley knew the precise details of the bonuses as well.

"Just last month, AIG paid 343 employees of AIG FP -- their financial products division that created the financial hole that AIG is in, and in turn a multibillion-dollar bill for American taxpayers -- $56 million in bonuses and are slated to pay an additional $162 million in bonuses to 393 participants in the coming weeks," Crowley said. "And there's more. Further bonus payments totaling approximately $230 million are due to 407 participants at AIG's financial products division in March 2010."

Crowley added that the decision "makes no sense to my constituency," saying, "this company claims to be on the brink of disaster and it's handing out bonuses."

The lawmaker said he wanted to work with Geithner on efforts that would, in part, void future bonuses "as well as claw back $56 million in bonuses already paid to AIG FP employees between December 2008 and 2009, some of whom are not even American citizens but who are living large on taxpayer funds."

Geithner responded: "We are now in the process of designing regulations, guidelines to apply those provisions, and we're going to be as careful and responsive as we can to the concerns you have, [that] so many Americans have, about how these resources have been used."

Geithner added that board members and executives "have a deep responsibility and obligation to make more careful judgments going forward."

Sen. Christopher Dodd, D-Conn., faces criticism for changing a provision in February's stimulus bill that exempted retention bonuses agreed to before Feb. 11 from a ban on such bonuses.

Today, Dodd blasted back against the blame being hurled his way in the bonus flap and said he wished someone at the Treasury Department would have stood up for their actions before Geithner told CNN's Ali Velshi Thursday that his staff worked with Dodd on a provision that paved the way for the bonuses.

Geithner's explanation came after Dodd said the Treasury Department had insisted on inserting language in the bill that created an apparent loophole for AIG to exploit.

"Treasury staff did express concern about whether this provision was vulnerable to legal challenge," Geithner said.

Dodd said today that he regretted his role in allowing the bonuses.

"Had anyone had suggested to me, anyone, in the process of doing this, the design was to protect bonuses for a handful of bonuses at AIG or anywhere else for that matter, believe me when I tell you I would have flatly rejected it," Dodd said today at a news conference in Connecticut. "I am not a newcomer to the issue."

Geithner: Treasury Staff Was Concerned About Lawsuits

Geithner said Thursday that he did not personally talk to Dodd or Dodd's staff about the provision, which exempted employees who signed contracts before February from tough new executive compensation limits that Dodd and others wanted included in the stimulus.

Staffers at the Treasury Department were concerned that the provision would not stand up to legal challenges without the exemption for existing contracts.

"We expressed concern about this specific provision because we wanted to make sure it was strong enough to survive legal challenge," Geithner said in the interview with Velshi. "But we also worked with [Dodd] to make sure we strengthened the overall framework, and his bill has this very important provision we are relying on now to go back and see if we can recoup payments that were made that there was no legal ability to block."

Before Geithner's comments, criticism of Dodd had been severe.

"In the end, politics will take care of itself," Dodd later added. "But I'm not going to spend the next 20 months in a constant campaign. I think people are sick of it, they are sick of the kind of politics of personal destruction.

"They want to hear what ideas you have, what difference you can make in their lives. The big issue of the day is not whether or not I get reelected. The big issue of the day is whether or not our country is going to get back on its feet again or not."

Focus on Dodd

The front pages of the major newspapers in Connecticut Thursday morning pointed the finger at Dodd, the state's senior senator. The Hartford Courant banner headline screamed, "Dodd's Flip-Flop: Admits Role in Bill Changes that Led to AIG Bonuses."

"I did not want to make any changes to my original Senate-passed amendment, but I did so at the request of administration officials, who gave us no indication that this was in any way related to AIG," Dodd said in a Wednesday night statement. "Let me be clear -- I was completely unaware of these AIG bonuses until I learned of them last week."

Dodd told the Courant that it was ironic that he is now getting blamed for the loophole when he alone was the only senator who sought to ban all bonus payments past and future.

"It's somewhat ironic that the people who thought I had gone too far," Dodd said, "are now saying I didn't go far enough."

An administration official told ABC News earlier this week that Treasury had no leverage in the situation because everyone knew the president would sign the stimulus bill. The official said it was up to Congress to decide what to include.

Sen. Max Baucus, D-Mont., chairman of the Senate Finance Committee and an appointed conferee on the stimulus bill, said Tuesday that the bill was written mostly by Senate and Treasury staffers, who were responsible, he said, for changing the language.

"This was a huge bill," Baucus said. "We agreed on structure. Then when staffs and Treasury get in the room and actually write it, that's where it got dropped. And frankly, it was such a rush, talking about the stimulus bill right now, to get it passed, I did not have time, other conferees did not have time to address many of the provisions that were modified significantly. We do the best we can, but we missed that stuff as a result."

ABC News' Z. Byron Wolf and Kate Barrett contributed to this report.