Chris Dodd to Wall Street: Drop Dead

Chris Dodd, as a U.S. Senator from Connecticut and a former presidential aspirant in the Democratic primaries in 2008, is an important figure in our national politics. Tragically for our country, he is a real menace to our well-being.

He has long sought to improve U.S. relations with Hugo Chavez, the socialist thug in charge of Venezuela who is doing his best to make himself dictator.

He received low interest rate mortgages from Countrywide in a "Friends of Angelo" program to provide politically important figures attractive mortgages, in a program named for Countrywide's CEO Angelo Mozilo. Countrywide had an extensive relationship with the failed mortgage giants, Fannie Mae and Freddie Mac, providing Friends of Angelo loans to key executives there while Fannie and Freddie were buying Countrywide mortgages.

And why would Dodd get such favorable treatment? Because he sat on the Senate Finance committee that regulates the financial services industry in general, and Fannie and Freddie in particular. Suffice to say, he presided over the massive expansion of mortgage lending by Countrywide/Fannie/Freddie that has helped cause our current financial crisis.

And now Dodd has pulled another caper, worthy of this distinguished record. At the last minute, he inserted to the recent "stimulus" bill a provision that limits bonuses to a broad number of top executives at future and previous recipients of TARP money. It is so destructive, even the Obama administration is opposed to the measure. The measure:

• Encourages TARP recipients to increase salaries, since only bonuses are limited, to offset the reduction in compensation. More compensation will be fixed, rather than performance-based as bonuses provide.

• Motivates employees of TARP firms to leave for financial firms that are not TARP recipients, where these restrictions don't apply. This "brain drain" will increase the likelihood that TARP firms continue to struggle and be unable to repay the government for the money invested in them.

• Provides incentives for TARP recipients to repay the government investment sooner, and discourage potential future TARP recipients from accepting such funds. While this has some positive aspects to it, it is important to recognize that the Treasury Department under both President Bush and Obama want to encourage firms to accept TARP money to strengthen the financial system.

• Violates the principle that ex post facto laws are wrong, since existing TARP recipients didn't realize when they accepted TARP funds that this restriction would be applicable. Recall that the government twisted the arms of some firms to accept TARP money so as to minimize the stigma for the weaker firms for receiving TARP money. The financial sector gets tarped again.
  

This is quite a record for the dear Senator.