Government Control of Business
- As of June 30, 2014, GM has issued 45 recalls in 2014, which have involved nearly 28 million cars worldwide and over 24.6 million in the United States. Those hard working executives get a pay raise from the government.
(ABC News) - The U.S. Treasury Department continued to approve "excessive" pay raises for top executives at General Motors and its former consumer finance arm, both of which received taxpayer-funded bailouts during the financial crisis, a new government report says.
The government watchdog that oversees the $475 billion bailout said Treasury approved cash salaries exceeding $500,000 last year for 16 of the 47 top executives at General Motors Corp. and Ally Financial Inc. Treasury allowed total pay packages, including company stock, of at least $1 million for every top executive at the two companies, according to the report released Wednesday by the special inspector general for the Troubled Asset Relief Program.
It said the government approved $3 million in pay raises, from 4 percent to 20 percent, for nine GM executives, most of whom had previously gotten raises several years in a row. The government sold its last shares of GM in December.
"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, the special inspector general, said in a statement. By doing so despite her office's repeated urgings not to, Romero 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."
A report issued in April by Romero estimated that taxpayers lost $11.2 billion on the bailout of GM, up from a previous estimate of $10.5 billion. The automaker needed the $49.5 billion in aid to survive its bankruptcy restructuring in 2009. GM went public again in November 2010.
GM has faced intense scrutiny this year over its failure to correct an ignition-switch defect in small cars for more than a decade, even as it learned of fatal crashes. The company recalled 2.6 million older small cars this year to replace the switches. It has been under investigation by Congress and the Justice Department.
Detroit-based Ally, formerly called GMAC Inc., was the auto loan and mortgage arm of GM until it was taken over by the government in 2008 in the bailout. Ally has repaid about $12 billion of the $17.2 billion in aid it received. The company went public again in April in an initial public offering in which Treasury sold a chunk of its stock and raised $2.38 billion.
The government currently owns a 17 percent stake. The new report estimates that taxpayers lost $1.8 billion on Ally.