CEO’s of Failed Corporations Paid Themselves Huge Bonuses From TARP Funds
Top executives at three major companies that received taxpayer-financed bailouts received excessively generous pay packages last year, in an apparent violation of Treasury guidelines aimed at restricting their compensation, a government watchdog asserted in a report Monday.
The Office of the Special Inspector General for the Trouble Asset Relief Program — which keeps tabs on taxpayer bailouts — singled out for blame ‘pay czar’ Patricia Geoghegan, the Treasury official tasked with reining in excessive pay increases for executives at bailed-out companies.
The SIGTARP report directly questioned Geoghegan’s judgment in ignoring directives set by her predecessor as well as recommendations from a previous report, saying she accepted companies’ own justifications for high executive pay. She ‘is effectively relinquishing some of [her office]’s authority to the companies, which have their own best interests in mind,’ the report said.
In a letter sent to the agency in response to the report, Geoghegan said that her office was ‘not aware of any facts that support … an assertion’ that companies had misused taxpayer dollars to give executives fat paydays. Her office declined a request for further comment from The Huffington Post.
The Office of the Special Master for TARP Executive Compensation, which Geoghegan has led since 2011, has been troubled since its founding in 2009 as part of the law authorizing the Treasury to disburse up to $700 billion to save a select group of automakers and financial companies.
Kenneth Feinberg, who preceded Geoghegan at the post, noted the pay czar was ‘under the constraint that his most important goal was to get the companies to repay and exit TARP” — and often those companies argued limiting executive pay would lead to desertion, delaying the turn-around process. Throughout its tenure, Geoghegan said in her letter, ‘OSM has sought the appropriate balance between these sometimes competing considerations in making all our determinations.’
But the SIGTARP report accuses the agency of tilting more toward the interests of bailout recipients and chides Geoghegan for accepting at face value the notion that executives should be highly paid. One section details Geoghegan’s response when asked to justify having allowed nearly one-third of all executives under her office’s purview to draw salaries over $500,000 in 2012. According to the report, she ‘told SIGTARP that it would be ‘utterly normal” for executives ‘to expect over $500,000 in cash salary.’
Geoghegan is also taken to task for uncritically approving virtually all pay raises under her control.
Executives, the report contends, got pay bumps in 2012 for leading their bailed-out companies in profitable directions. But they also got raises when their units performed poorly: An executive at Ally’s residential mortgage unit saw his paycheck rise in 2012 even though Treasury knew that division of the bank was about to file for bankruptcy. The executive, Treasury said, was deemed ‘critical to successful restructuring.’