A storyline is emerging in Republican circles and throughout media land that Chris Dodd and the Treasury Department secretly inserted a provision into the stimulus bill that allowed AIG to pay its failure bonuses.

There's only one problem with this narrative: it is completely false.

With or without the stimulus bill, AIG would have been allowed to pay its failure bonuses. In fact, at no point in time was there ever a law barring the bonuses.

Given that the bonuses were never illegal, there was never any need to create a new loophole to allow them. They were allowed all along.

What actually happened was that the stimulus bill put new restrictions on bonuses, but only applied those restrictions on bonuses that were given out after the legislation passed.

Early drafts of those new restrictions were retroactive, and would have applied to the AIG failure bonuses, but by the time the final legislation was passed, the retroactive provisions had been eliminated. Chris Dodd, who wrote the restrictions, says he agreed to limit their scope at the request of Treasury.

Figuring out why the new restrictions didn't go far enough is a valuable exercise, but it's also important to get the basic story right, and so far, far too many people are getting the simplest of facts wrong.

Before they go wagging their finger in outrage, they ought to get the story right.