Special Inspector General Christy Romero. (File photo)
The US Treasury Department has provided “excessive” pay for executives tied to the bailed-out corporations rescued from the financial crisis, a new report shows.
The Office of the Inspector General for the Troubled Asset Relief Program (TARP) released a report on Monday accusing the Treasury Department for approving 18 executive pay raises and other extravagant packages to bailed-out companies including General Motors, Ally Financial and AIG.
The executives “continue to rake in Treasury-approved multimillion-dollar pay packages that often exceed guidelines,” according to the statement released by Special Inspector General Christy Romero’s office.
The watchdog criticized the government agency for pushing through pay packages worth more than USD 5 million, while also allowing extra pay packages worth over USD 3 million for executives at Ally Financial “despite knowing that the subsidiary was planning to file for bankruptcy” weeks later.
Experts recommend that the government monitor executive salaries and slash pay based on performance to prevent a worsening of the current financial crisis.
“One lesson of this financial crisis is that regulators should take an active role in monitoring and regulating factors that could contribute to another financial crisis, including executive compensation that encourages excessive risk-taking,” Romero concluded.
The report also revealed that General Motors has requested Treasury Secretary Timothy Geithner to remove executive pay restrictions for the automaker.
This comes as Geithner formally notified Congress last month that the country has reached its USD 16.4 trillion debt ceiling, with the National Debt continuing to increase at an average rate of USD 3.83 billion per day since September 28, 2007.
The debate over the debt limit resembles the disagreement between the Democrats and the Republicans over the “fiscal cliff,” where an agreement was finally reached in the last few hours of the January 1 deadline.
The financial disputes have left rival American political leaders and lawmakers with no definitive strategy as to how to deal with what is likely to emerge as a persisting bitter clash over the country’s economic crisis.