A US government auditor has blasted the Treasury for approving high levels of executive pay at firms it bailed out in the financial crisis.
The Special Inspector General for the Troubled Asset Relief Program said that in 2012 the Treasury ignored its warnings on the “excessive” compensation for the top 25 employees each at rescued insurer American International Group, auto maker General Motors, and Ally Financial, the former finance arm of GM.
SIGTARP, the watchdog for the massive rescue of banks and auto companies in the 2008 crisis, said that 69 of those 75 got pay packages worth more than $3 million annually, and 16 of the more than $5 million, all approved by the Treasury.
“Treasury seemingly set a floor, awarding 2012 total pay of at least $1 million for all but one person” out of the 75, SIGTARP said in a report.
Moreover, it said, Treasury ignored its own guidelines and gave raises to the top executives “as requested by the companies,” with more cash and less long-term incentive-based pay.
In doing so, the inspector general said, the Treasury was “effectively relinquishing some of (its) authority to the companies, which have their own best interests in mind.”
It also said the executives themselves, by proposing and obtaining higher pay deals did not recognize that they were working for companies bailed out by US taxpayers, companies whose behavior had deeply damaged the economy.
They “continue to lack an appreciation for their extraordinary situations and fail to view themselves through the lenses of companies substantially owned by the US government.”
The Treasury took AIG, GM and GM’s financial arm over in 2008 to the tune of hundreds of billions of dollars.
It sold off most of its shares in AIG last year, only completing the task in December; it is selling of GM shares, but still controls Ally, which continues to bleed cash.
The SIGTARP report said that it was possible that the Treasury office in charge of the salaries had thought it had kept an adequate ceiling on them, even at the levels reported.
[Image via Agence France-Presse]