It appears that when the government was handing out TARP funds and bailing out ailing financial firms, the “special master for compensation” Patricia Geoghegan approved $6.2 million in raises for General Motors, Ally, and AIG. These are the findings of Christy Romero, special inspector general for TARP in her new report.
Surprise, surprise. Sheila Bair documents this preferential treatment for fat-cat executives in her book, Bull by the Horns. From Treasury Secretary Tim Geithner to Presidential Advisor Larry Summers, you can count on high-level government officials with ties to Wall Street time and again to look after their friends first before the American taxpayer.
When these bonuses were being bestowed on the industry icons, Treasury’s Compensation Chief Kenneth Feinberg (and former NCL Trumpeter Honoree), was appointed to a special oversight post created during the crisis. He scolded the companies for what he called “ill-advised” payouts to executives and vowed to curb lavish pay. Treasury nonetheless allowed seven firms to bypass pay restrictions from 2009 to 2011, according to this latest report from Christy Romero’s office. Romero said that “Treasury made no meaningful reform to its processes. Lacking criteria and an effective decision-making process, Treasury risks continuing to award executives of bailed out companies excessive cash compensation without good cause.”
That says it all. We can only hope that the new Treasury Secretary-designee, Jacob Lew, if he’s confirmed, will take a different tack. Forbes Magazine columnist Robert Lenzner has high hopes. He says in a recent column about Lew, “It’s a relief to have a man who is not in the hip pocket of the big banks, who is not part of the pin-striped old boys club, who’s likely to put the interests of his former brethren high on the priority list.” That’s a hopeful sign.