Report: Treasury allowed high executive pay raises at 3 bailed-out firms

The U.S. Treasury Department disregarded its own guidelines by allowing large pay increases for executives at three firms bailed out during the financial crisis, according to a report released today. The special inspector general for the Troubled Asset Relief Program says Treasury approved all 18 requests it received for executive raises at American International Group Inc., General Motors Corp. and Ally Financial Inc. Of those requests, 14 were for $100,000 or more. One raise, for the CEO of a division at AIG, was for $1 million. The three firms together received nearly $250 billion from the bailout fund. Only AIG has fully repaid its $182 billion bailout. 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, the report notes. Christy Romero, the special inspector general for TARP, says the guidelines require that compensation should not exceed the 50th percentile of pay for executives in similar positions at other financially distressed companies. Pay surpassed that level for 63% of the executives whose raises were approved, Romero says. The report says Treasury officials had been warned a year ago that the department needed to reform its procedures to ensure that the pay guidelines be followed. Patricia Geoghegan, the Treasury official who approved the raises, disputes the findings of the report. The full story is here.