The Treasury Department is once again in the hot seat for relaxing federal guidelines in order for top executives at bailed-out companies like General Motors and Ally Financial to rake in “excessive pay” topping more than $1 million each.
That’s according to a new report from the Inspector General for the Troubled Asset Relief Program (TARP), which revealed that the top 25 executives at these firms each made at least $1 million in 2013—with the average pay reaching $3 million—an increase of 28 percent since 2009.
Related: TARP Pay Czar Pressured on Exec Pay
In the wake of the bailout, President Obama established a cap of $500,000 for senior executive compensation at companies receiving TARP money, in most cases. But this report reveals that the cap was not respected.
“Treasury loosened its own pay restrictions for senior executives at General Motors and Ally Financial year after year, even as taxpayer losses in these companies mounted,” said TARP IG Christy Romero. “By loosening restrictions on pay at these TARP companies, despite SIGTARP’s repeated recommendations not to do so, Treasury could be sending the message that much-needed reforms coming out of the financial crisis are no longer necessary or required in exchange for TARP dollars.”
The IG faulted the Treasury for not having a comprehensive policy in place to measure how much executives at these companies should be paid. The problem has persisted since the bailout began. Last year, for example, TARP’s IG issued similar criticism –saying that the Treasury had approved pay packages of $3 million or more for 54 percent of the 69 executives at three companies whose pay was subject to government oversight. At the time, all but one of the 69 executives received $1 million or more.
Related: The High-Stakes Fight Over How to Measure Executive Pay
The Treasury Department, for its part, defended its practices. Treasury official Patricia Geoghegan said in a statement that the department "has fulfilled its obligation to balance limiting executive compensation with allowing companies to repay taxpayer assistance.” The Treasury says it has structured executive pay so that the majority is paid in stock so that the executives are more likely to avoid short-term risks, as The Wall Street Journal noted. The top 25 compensation packages at Ally Financial, for example, are 17 percent cash and 83 percent stock, according to the Treasury Department.
The report comes as the federal government winds down the massive bailout. In late December of 2013, the government sold off its last shares in GM. According to government estimates, the GM bailout ended up costing taxpayers around $11.2 billion. Meanwhile, the government is still selling off its stock in Ally. It currently owns roughly 14 percent of the company.
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