The provision was the subject of new attention this week because, had it survived, it would have prevented AIG from granting $165 million in bonuses to employees of its financial products division.
"I'm the one who has led the fight against excessive executive compensation, often over the objections of many," said Dodd, the chairman of the Senate Banking Committee. "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."
He added: "Let me be clear: I was completely unaware of these AIG bonuses until I learned of them last week."
Dodd did not name the administration officials in his statement, which came a day after he told CNN that he had nothing to do with the change in the provision. In his statement Wednesday, Dodd said he was referring to action to protect AIG.
"When I saw that my comments had been misconstrued, I felt it was important to set the record straight - that this had nothing to do with AIG," he said.
Over the years, Dodd has been the top recipient of campaign contributions from AIG employees. During 2007-2008, when he ran for president, he received nearly $104,000 from AIG employees and their families, according to the Center for Responsive Politics, a nonpartisan group that monitors money in politics.
While the House and Senate reconciled their different stimulus bills last month, the Treasury Department expressed concern with a Senate restriction on bonuses, noting that if it applied to existing compensation contracts it could face a legal challenge.
Dodd told CNN on Wednesday that rather than lose the entire section on executive excessive compensation, he reluctantly agreed to modify the legislation.
An administration official said Treasury made Dodd's staff aware of the potential for litigation but did not demand that the provision be removed from the final bill. The official spoke on the condition of anonymity because he was not authorized to discuss the matter in public.
The legislation does include a provision that allows Treasury to examine past compensation payments to determine if they were "contrary to the public interest." Treasury Secretary Timothy Geithner on Tuesday said he was using that provision to determine whether the government could somehow recoup the AIG bonuses.
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