In passing the Obama stimulus plan in February, the Senate voted for language revoking bonuses for companies that had benefited or would benefit from the first $700 billion Wall Street bailout.

In the closed-door House-Senate conference where the final draft of the stimulus bill was written, a provision was substituted, allegedly written by Senator Christopher Dodd, a Connecticut Democrat, that any restrictions on bonuses “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.”

This language was crafted to exempt AIG and other financial giants that had taken money from the first $350 billion doled out under the Bush administration. Dodd, who repeatedly denied authoring the provision, is chairman of the Senate Banking Committee and the largest recipient of campaign contributions from AIG and its employees over the past 20 years.

It is in this context—of brazen corporate looting of public funds and slavish acquiescence by federal officials, both Democratic and Republican—in which Obama’s efforts Wednesday to manage the public relations crisis should be understood.

The initial position of the White House was to flatly reject any effort to revoke the bonuses, on the grounds that they were contractual obligations of AIG that the company was legally bound to honor, a claim reiterated by chief economic adviser Lawrence Summers in several appearances on last Sunday’s television talk shows.