Taking on Treasury for Protecting Executive Compensation

This week, I asked the Treasury Secretary to account for the government’s delay in meeting the mandate passed by Congress in February 2009, that all participants in the taxpayer-sponsored government bailout of the financial sector meet appropriate standards for executive compensation.

Taxpayers have seen recipients of TARP dollars, like AIG, give out multi-million dollar bonuses and severance payments.  The excuse given by the administration’s Special Master for Compensation, the high-level official responsible for preventing unjustified compensation in companies who relied on bailout dollars to stay afloat, is that his hands are tied because of grandfathering.

What’s not been said is this:  In February 2009, Congress passed a mandate that participants in the Troubled Asset Relief Program, the government bailout of the financial sector, meet appropriate standards for executive compensation.  The legislation included a very controversial insert that protected retention bonuses, and despite the outcry over that carve-out when it was revealed, four months later, the Treasury Department wrote regulations that went further and also grandfathered multi-million dollar severance payments. The effect of what’s been done by the Treasury Department is to protect rather than prohibit more forms of executive compensation.

And, again, the Treasury Department has yet to fulfill the congressional mandate in the February 2009 legislation that all TARP recipients meet appropriate standards for executive compensation.

Click here for a news report about my inquiry.
Click here to see my letter to Treasury Secretary Timothy Geithner.