While Secretary of the Treasury Timothy Geithner was packing up his office making way for the next puppet of the banks and Wall Street, Jack Lew, the top executives of major companies that were bailed out by the tax payers were getting their pay-offs.
The Office of the Special Inspector General for the Trouble Asset Relief Program — which keeps tabs on taxpayer bailouts — singled out for blame “pay czar” Patricia Geoghegan, the Treasury official tasked with reining in excessive pay increases for executives at bailed-out companies. [..]
Executives, the report contends, got pay bumps in 2012 for leading their bailed-out companies in profitable directions. But they also got raises when their units performed poorly: An executive at Ally’s residential mortgage unit saw his paycheck rise in 2012 even though Treasury knew that division of the bank was about to file for bankruptcy. The executive, Treasury said, was deemed “critical to successful restructuring.”
Another executive, at GM, saw a $50,000 pay increase not because of good performance, Geoghegan is quoted in the report as saying, but because “GM wanted to retain the employee and ‘do a little extra for him.'”
At AIG, which had by far the best remunerated executives of the three companies in 2012, the top 25 earners made nearly $108 million combined. CEO Robert Benmosche’s pay was $10.5 million. (AIG repaid its government loans in late 2012 and is no longer under Treasury oversight.)
The SIGTARP, which keeps tabs on taxpayer bailouts, is supposed to keep a lid on excessive pay for the CEO’s. Ms. Geoghegan relinquished her authority to the companies involved to determine the size of pay increases. The result was that all but one of the 69 companies SIGTARP oversees received an annual payout of at least $1 million, and nearly a quarter received pay packages in excess of $5 million.
And the Treasury Department has sone nothing to fix the economy because under Timothy Geithner it was too busy bailing out Wall Street and the banks:
(T)he economy has already lost more than $7 trillion in output ($20,000 per person) compared with what the Congressional Budget Office projected in January of 2008. We will probably lose at least another $4 trillion before the economy gets back to anything resembling full employment. And millions of people have seen their lives turned upside down by their inability to get jobs, being thrown out of their homes, or their parents’ inability to get a job. And this is all because of the folks in Washington’s inability to manage the economy.
But the Wall Street banks are bigger and fatter than ever. As a result of the crisis, many mergers were rushed through that might have otherwise been subject to serious regulatory scrutiny. For example, J.P. Morgan was allowed to take over Bear Stearns and Washington Mutual, two huge banks that both faced collapse in the crisis. Bank of America took over Merrill Lynch and Countrywide. By contrast, there can be little doubt that without the helping hand of Timothy Geithner, most or all of the Wall Street banks would have been sunk by their own recklessness.
There is one other hoary myth that needs to be put to rest as Timothy Geithner heads off to greener pastures. The claim that we made money on the bailout is one of those lines that should immediately discredit the teller. We made money on the loans in the same way that if the government issued mortgages at 1 percent interest it would make money, since the vast majority of the mortgages would be repaid.
The TARP money and other bailout loans were given to banks at way below market interest rates at a time when liquidity carried an enormous premium. Serious people know this, and the people who don’t are not worth listening to. It was a massive giveaway, as the Congressional Oversight Panel determined at the time.
Meanwhile, states are refusing to raise minimum wages to keep the many workers from falling deeper into poverty.