U.S Gives Bailed Out Cos Millions in “Shameful” Bonuses
While American taxpayers bail out failing companies via the $700 billion Troubled Asset Relief Program (TARP), behind the scenes the Obama Treasury Department is awarding their top executives with millions of dollars in raises even though Congress passed a law forbidding it.
It’s an inconceivable scheme that rewards bad behavior with big bucks from taxpayers who have no say in the matter. In fact, the U.S. Treasury was forced by Congress to create rules against it yet a new federal audit reveals the agency repeatedly violates them to enrich the very people responsible for the companies’ failures (and need for a government bailout). The rescued firms include American International Group (AIG), General Motors Corp. (GM) and Ally Financial Inc.
Combined they have received an astounding $135 billion from Uncle Sam, according to government figures, yet the Treasury has approved 18 raises totaling $6.2 million for their top dogs. Half of the pay increases went to executives at GM, which got a whopping $50.2 billion bailout. One chairman at AIG, which is labeled “Systematically Significant Failing Institutions” by the Treasury, got an unbelievable $ 1 million raise. AIG has received $67.8 billion from TARP, according to the audit made public this week by the Special Inspector General for the Troubled Asset Relief Program.
The report is scathing and blasts the Treasury for repeatedly disregarding its own rules to approve fat raises for the heads of these rescued firms. In fact, the agency consistently approved cash salaries in excess of $500,000 for the CEO of each company that asked, the inspector general writes in the report, which says the GM, Ally and AIG executives continue to rake in multimillion-dollar pay packages approved by the Obama Treasury.
“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 report says. It also explains how President Obama quickly implemented prohibitions on excessive pay for executives of bailed out firms after public outrage ensued in 2009 over press reports that TARP recipients paid billions in bonuses.
President Obama called the bonuses “shameful” and responded by setting salary caps for top executives, the audit points out, offering a rambling quote from the commander-in-chief: “In order to restore trust, we’ve got to make certain that taxpayer funds are not subsidizing excessive compensation packages on
Wall Street. We all need to take responsibility. And this includes executives at major financial firms who turned to the American people, hat in hand, when they were in trouble, even as they paid themselves customary lavish bonuses. As I said last week, this is the height of irresponsibility. It’s shameful. And that’s exactly the kind of disregard of the costs and consequences of their actions that brought about this crisis…what gets people upset – and rightfully so – are executives being rewarded for failure, especially when those rewards are subsidized by U.S. taxpayers, many of whom are having a tough time themselves.”
Indeed a powerful statement from the nation’s leader that inspired the Treasury to issue guidelines proposing compensation limits on the same day he delivered it. Of course, the rules are only good for; say picking up dog poop, if they’re not enforced. The rest of the report, which spans 78 pages, is littered with a number of other enraging examples of how the government is rewarding the heads of failing companies that came to taxpayers for a rescue with their tail between their legs.