A US auditor for the billions spent saving companies amid the financial crisis condemned the Treasury Wednesday for allowing exceptionally high pay for executives at General Motors and Ally Financial.
Christy Romero, head of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), accused the Treasury of permitting much higher pay for General Motors and Ally executives even though neither company was repaying the money from the TARP program used to bail them out five years ago.
"By 2013 and 2014, Treasury rewarded top 25 executives at both GM and Ally Financial with excessive pay of at least $1 million, average pay of $3 million, pay raises, and higher cash salaries with no recognition that these companies were not repaying TARP," Romero said in a report to Treasury Secretary Jacob Lew.
That left the Treasury to sell the two companies' stock in the market, "incurring taxpayer losses of billions of dollars," Romero said.
The SIGTARP report said the Treasury has steadily moved away from President Barack Obama's own push for reforms to executive pay, after the 2008 crisis exposed extremely high compensation levels at banks and other companies that required government assistance.
It said that in the Troubled Asset Relief Program, which marshalled $475 billion for bailouts, the Treasury allowed pay well above its own guidelines, which included a cap of $500,000 for annual cash salaries.
In 2013, the report said, the Treasury approved cash salaries of more than $500,000 for 16 out of 47 top employees of GM and Ally, GM's former finance arm.
Loosening compensation limits "subjects Treasury to criticism that it is rewarding top executives at companies that are losing taxpayers' money over the interests of the taxpayers already shouldering billions of dollars in losses on those investments," the report said.
"Second, by setting pay further and further away from the president's and Treasury's announced limitations on executive compensation for TARP company officials, Treasury is missing an opportunity for critical reforms to a material cause of the financial crisis and a strong deterrent to future bailouts."
The report pointed out that taxpayer losses on GM, after the government took it over in 2009, restored it to health and then sold all its shares in the automaker last year, amounted to $11.2 billion.
It also said that Ally, now a full bank, has continued to struggle under Treasury control, failing a stress test in March, and that the Treasury has lost $1.8 billion on its shares.
In response to the criticism, TARP head Patricia Geohegan said the agency had originally slashed executive salaries at the two companies by 90 percent, and that it had the discretion to increase them as necessary.
She also said the TARP program overall had deployed $352 billion of public money in the bailouts and had so far gotten back $377.6 billion.