Report: Feds OKd high pay at bailed-out firms
A government report Monday criticized the U.S. Treasury Department for approving "excessive" salaries and raises at firms that received taxpayer-funded bailouts during the financial crisis.
The Special Inspector General for the Troubled Asset Relief Program said Treasury approved all 18 requests it received last year to raise pay for executives at American International Group Inc., General Motors Corp. and Ally Financial Inc. Of those requests, 14 were for $100,000 or more; the largest raise was $1 million.
Treasury also allowed pay packages totaling $5 million or more for nearly a quarter of the executives at those firms, the report says.
"We . . . expect Treasury to look out for taxpayers who funded the bailout of these companies by holding the line on excessive pay," said Christy Romero, the special inspector general for TARP.
The report says Treasury bypassed rules under the 2008 bailout that limited pay. Treasury approved raises that exceeded pay limits and in some cases failed to link compensation to performance, it said.
Patricia Geoghegan, the Treasury official who approved the raises, disputed findings of the report. In a letter to Romero, Geoghegan said it's unfair to call the pay excessive. She said Treasury must strike a balance between limiting compensation and approving pay packages that are consistent with executives in similar jobs.
The three companies received a total $248.7 billion in the 2008 bailout. AIG has repaid the $182 billion it received; GM still owes $21.5 billion on the $49.5 billion it received and Ally owes $11.4 billion on $17.2 billion in aid.
In a statement, AIG said it has overhauled its compensation practices to align pay with the company's goal of balancing profit and risk.
GM said it is complying with all restrictions under the bailout rules.
A spokeswoman for Ally didn't immediately return a call seeking comment.