The Burlington Record
GOP objects to hefty pay for execs of bailed-out companies
By David Shepardson
03/01/2013

Washington - Republican lawmakers harshly criticized the Treasury Department for approving hefty compensation packages for executives at companies that received large government bailouts, including General Motors Co.

Rep. Jim Jordan, R-Ohio, who chairs a House subcommittee that held a hearing on the issue, called the pay for executives from bailed out companies "egregious." He questioned why the Treasury Department didn't seek more independent analysis of comparable salaries in determining executive pay for companies that received large bailouts under the $700 billion Troubled Asset Relief Program.

"Treasury's failure to protect taxpayers is part of a disturbing pattern in which the administration makes promises to the public but then does not live up to them," Jordan said. "This is about following the law."

Initially, seven companies -- including Chrysler Group LLC, Chrysler Financial, Citigroup Inc. and Bank of America -- were covered by the restrictions. AIG repaid its government bailout in December and is no longer subject to the pay restrictions, leaving just GM and auto lender Detroit-based Ally Financial Inc., under the executive pay restrictions.

Ally is 74 percent owned by the federal government as part of a $17.2 billion bailout.

President Barack Obama in 2009 called high salaries for companies that got big bailouts "shameful" and the "height of irresponsibility" in saying the administration would cap cash salaries at $500,000 for execs at those firms.

But Congress in approving pay restrictions for some bailed-out firms gave Treasury the leeway to go beyond $500,000 in cash salaries.

The Treasury's acting pay czar, Patricia Geoghegan, defended her office's oversight of executive pay. "We continue to limit compensation." Geoghegan told the committee, and "only to permit pay increases that are reasonable under the circumstances."

No one at the hearing defended the executives' pay. Rep. Kerry Bentivolio, R-Milford, criticized the bailed-out firms for "rewarding failure."

Rep. Matt Cartwright, D-Pa., said the bailouts were "hard to stomach, when taxpayers who saved these companies are often struggling to make ends meet," he said. "We held our noses and bailed out these companies so that millions of jobs wouldn't be lost."

Rep. Darrell Issa, R-Calif., chairman of the House Oversight and Government Reform Committee, said that once Treasury exits completely from GM, then it is up to the board and shareholders to set pay at the automaker. "Today, America is a major owner of the company and without the United States Treasury, there would be no General Motors and several other companies," Issa said...

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