WASHINGTON 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, a report released Monday says.
The Special Inspector General for the Troubled Asset Relief Program said Treasury approved all 18 requests it received for executive raises at American International Group (AIG), General Motors (GM) and Ally Financial (GOM). 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, it notes.
Christy Romero, the special inspector general for TARP, said the guidelines say compensation should not exceed the 50th percentile of pay for executives in similar positions at other financially distressed companies.
But pay surpassed that level for 63 percent of the executives whose pay was approved, according to the report.
The report also said Treasury officials had been warned a year ago that the department needed to reform its procedures to ensure that the pay guidelines are followed.
Patricia Geoghegan, the Treasury official who approved the raises, disputed the 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.
Geoghegan called the 50th percentile "a benchmark." She noted that some pay packages at the three companies exceeded that level in 2012. But she said more than half at AIG were at or below that level, while nearly half at GM and Ally were below it.
The three companies received a total $248.7 billion in the financial bailout in 2008. 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.