The deputy special inspector general for the TARP Troubled Asset Relief Program has criticized former pay czar Kenneth Feinberg for not curbing executive pay enough at companies the federal government bailed out during the recession.
In 2009, President Barack Obama said the Treasury Department would cap yearly cash salaries at $500,000 for executives at companies that took TARP funds, the Detroit News reported. However, since the salary cap was not required by law, the seven large recipients of the bailout loans – General Motors Co., Chrysler Group LLC, Ally Financial Inc., AIG, Bank of America Corp., Chrysler Financial Services Inc. and Citigroup – pushed back against Feinberg, the Detroit News reported.
Feinberg allowed five executives to earn salaries that exceeded the $500,000 limit, the report from Deputy Special IG Christy Romero said, according to the Associated Press. Feinberg also approved compensation packages worth $5 million or more, including stock and other perks, for 49 executives.
“Companies pressured him to let the companies pay executives enough to keep them from quitting, and Treasury officials pressured him to let the companies pay executives enough to keep the companies competitive and on track to repay TARP funds," the report said, according to CNN Money.
The report cites one case in which Feinberg caved into demands from Ally Financial that one of its executives be compensated $1.5 million a year, including $1 million in salary, the AP reported.
“This individual is in their early 40s, with two kids in private school,” Ally Financial CEO Michael Carpenter told the auditors, according to the AP. “We were concerned that these people would not meet their monthly expenses due to the reduction in cash.”
Feinberg, who served as pay czar for 14 months, told the AP today that his job was to cut pay but not so much that companies would lose executives who could help them repay their bailout loans. The law creating his position “was extremely conflicting and extremely ambiguous,” he said.
Treasury's Office of the Special Master for TARP executive compensation also defended Feinberg, CNN Money reported. The office noted that Feinberg cut average compensation for the top 25 CEOs at banks that received TARP loans by more than 50 percent.
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