Following a ""recent report"":https://themreport.com/articles/watchdog-treasury-approved-excessive-pay-at-bailed-out-companies-2013-01-28 from the ""Office of the Special Inspector General for the Troubled Asset Relief Program (SIGTARP),"":http://www.sigtarp.gov/Pages/home.aspx which charged that ""Treasury"":http://www.treasury.gov/Pages/default.aspx has not appropriately limited compensation for executives at companies bailed out by TARP, a House subcommittee held a ""hearing"":http://oversight.house.gov/hearing/time-to-reform-information-technology-acquisition-the-federal-it-acquisition-reform-act/ on the matter.[IMAGE]
House Representatives heard from Special Inspector General Christy Romero and Acting Special Master for TARP Executive Compensation at the Treasury, Patricia Geoghegan.
""While taxpayers struggle to overcome the recent financial crisis and look to the U.S. Government to put a lid on compensation for executive firms whose missteps nearly crippled the U.S. financial system, Treasury continues to allow excessive executive pay,"" Romero stated in her testimony.
She pointed to flaws in the Special Master's approval process for executive compensation packages and decried the Special Master for not following recommendations from her office or the guidelines set forth by Treasury.
Kenneth R. Feinberg, who previously served as Special Master, set forth in his compensation guidelines, ""base cash salaries should rarely exceed $500,000, and only then for good cause shown, and should be, in many cases, well under $500,000.""
However, both Feinberg and Geoghegan have continued to approve executive pay packages that far exceed this amount.
The Special Master previously approved executive pay at seven companies. Today, the office is responsible for just two companies--Ally Financial and GM.[COLUMN_BREAK]
Most recently, the Special Master approved compensation packages exceeding $500,000 for 23 executives at Ally and GM.
Romero also complained the Special Master ""did not independently analyze the basis for awarding cash salaries greater than $500,000,"" but instead relied heavily on justification from the companies themselves.
""Despite SIGTARP's previous warning that Treasury lacked robust criteria, policies, and procedures to ensure that Treasury's guidelines to curb excessive pay are met, Treasury made no meaningful reform to its processes,"" Romero stated.
Geoghegan defended her office, insisting she and her staff collect and review ""comprehensive submissions from the exceptional assistance companies.""
""In reviewing these submissions, we analyze market data to determine what constitutes competitive marketplace compensation,"" she said in her testimony.
She explained her guidelines include stipulations that pay is not greater than the compensation offered to similar executives at similar companies and that pay packages are heavily stock-based to ensure a vested interest in the long-term performance of the company.
Rep. Jim Jordan (R-Ohio) reiterated Romero's concern, stating emphatically, ""You take information from the very companies you're supposed to be overseeing"" and complained that the Special Master approves ""almost every compensation package [the companies] ask for.""
On the other side of the aisle, Rep. Matt Cartwright (D-Pennsylvania) argued that the $500,000 guideline is not a law.
""You have to pay people that run companies an awful lot of money,"" he said. ""Everybody knows that.""
He argued that with 93 percent of TARP funds already returned, the program has been ""a success story.""
Cartwright and Geoghegan pointed out that the individuals currently holding executive positions at the companies in question were not in those positions leading up to the financial crisis.
Jordan countered that ""the standard still applies."" The guidelines do not include concessions for newly-hired executives.