Executive pay at bailed-out companies subject of D.C. hearing
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Christy Romero is an independent watchdog within the Treasury Department tasked with overseeing the results of the taxpayer-funded bailouts. Photo credit: BLOOMBERG |
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WASHINGTON -- A congressional subcommittee plans to hold a hearing Tuesday on executive pay at companies, including General Motors and Ally Financial Inc., that the federal government bailed out about four years ago.
The House Oversight Committee’s panel on economic growth, job creation and regulatory affairs will hear testimony from Christy Romero, the special inspector general for the Troubled Asset Relief Program, or TARP.
Her office, an independent watchdog within the Treasury Department tasked with overseeing the results of the taxpayer-funded bailouts, recently put out a report that sharply criticized the Treasury’s treatment of compensation at bailed-out firms, which also included insurance and finance giant American International Group Inc.
“While taxpayers struggle to overcome the recent financial crisis and look to the U.S. government to put a lid on compensation for executives of firms whose missteps nearly crippled the U.S. financial system, the U.S. Department of the Treasury continues to allow excessive executive pay,” the January report said.
The department authorized a combined $5.2 million in raises for 17 executives at GM and Ally during 2012, the watchdog report says. They ranged from $30,000 to $800,000.
Patricia Geoghegan, the acting special master for executive compensation under the TARP program, also will testify Tuesday.
Upon the release of the watchdog report, Geoghegan said her office fulfilled its responsibility by cutting the average pay of executives at bailed-out firms by 50 percent and by more than 90 percent for the top 25 executives.
Treasury officials also ordered pay freezes in 2011 and 2012 for the chief executives of GM and Ally.
The government has been trying to recoup the $49.5 billion it used to bail out GM during its taxpayer-sponsored U.S. bankruptcy reorganization in 2009. It raised $13.5 billion from GM's public stock offering in November 2010. GM bought back another $5.5 billion in company stock from the Treasury in December.
The Treasury Department also announced a plan in December to sell its remaining stock in GM, then a 19 percent share of the company, within 12 to 15 months. The Treasury also owns 74 percent of Ally, which owes $14.6 billion for the bailout of the company formerly known as GMAC Inc.
No corporate executives are scheduled to testify at Tuesday’s hearing.
The Detroit News reported on the plans for the hearing on Friday.
You can reach Gabe Nelson at gnelson@crain.com.
