Top executives at General Motors (GM) and Ally Finance (formerly GMAC, GM’s former consumer finance offspring) received “excessive” pay hikes approved by the U.S. Treasury Department, which has monitored and approved executive salaries and bonuses since the companies received $66.7 billion in taxpayer-funded bailout money.
According to a report released Wednesday by the Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP), the Treasury Department allowed total pay packages of at least $1 million for all of the top executives at both companies.
The report also says several GM executives who received a combined $3 million in Treasury-approved pay raises this year have received substantial pay hikes for several years in a row.
“Treasury loosened its own pay restrictions for senior executives at General Motors and Ally Financial year after year, even as taxpayer losses in these companies mounted,” Christy Romero, SIGTARP’s special inspector general, said in a statement.
Ms. Romero said that she repeatedly urged Treasury not to approve the compensation hikes, but her recommendations went ignored. She said, “Treasury could be sending the message that much-needed reforms coming out of the financial crisis are no longer necessary or required in exchange for TARP dollars.”
GM received $49.5 billion in taxpayer-funded bailout relief to float it past its 2009 bankruptcy restructuring. Taxpayers have lost $11.2 billion in that deal so far, according to SIGTARP’s calculations.
The U.S. government took over Ally Financial in 2008 as part of a $17.2-billion bailout deal. SIGTARP says that taxpayers have lost $1.8 billion in Ally. Both GM and Ally have gone public again since the government takeover.
Treasury official Patricia Geoghegan, who approved the pay raises, defended them saying that it has had to seek a balance between capping compensation and approving pay raises to keep pace and remain competitive with executives in similar positions.
GM’s executive pay raises come even when, by its own admission, the company’s leadership became mired in incompetence and neglect, which it blamed for allowing millions of vehicles containing a potentially deadly ignition switch flaw to go unannounced and unrepaired for more than a decade.