In a complete reversal, Senator Chris Dodd (D-Conn.), the chairman of the Senate Banking Committee, now admitted he inserted an exemption that allowed the American International Group (AIG) bonuses and other bonuses a free pass in executive pay limits he wrote. Sen. Dodd, however, said he did not know about the AIG bonuses at the time and did not change the bill with AIG in mind.

Last month, Sen. Dodd wrote an amendment to the stimulus bill creating strict executive compensation limits on certain companies receiving bailout money. However, the final version of that bill exempts bonuses for contracts entered prior to February 11, 2009.

Sen. Dodd said on Tuesday he did not know who softened the Dodd amendment.

“I can’t point a finger at someone who was responsible for authoring the language that put those dates in,” said Sen. Dodd. “I can tell you this much, when my language left the Senate, it did not include it. When it came back, it did.”

That sparked a round of finger pointing from Treasury, to lawmakers, Democratic leadership and even the Obama Administration. After his Tuesday denial, Dodd admitted the next evening that he watered down his own amendment -- exempting billions in bonus payments from the executive compensation law he wrote. 

Dodd said he weakened the bill over legal concerns from the Obama Administration.

“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,” Senator Dodd wrote in a statement issued Wednesday night. “Let me be clear -- I was completely unaware of these AIG bonuses until I learned of them last week,” he wrote.

“When you’re sitting there, wanting to retain as much as you can of our language, and the implicit suggestion is you might not get anything unless there’s some modifications, it’s not an uncommon practice to say, well, OK, this seems relatively innocent a month and a half ago and so the modification was accepted and that’s what was written into the bill,” said Senator Dodd to FOX News.