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Are still paying for bailed -- executives to get paid big bugs my next guest says the government approved big raises but didn't raise any big questions.
Any questions actually about whether those folks should get the big paid and that could create an incentive for other companies.
To seek -- -- expenses.
Crystal are here to explain our inspector general very good to have you explain what's going on in.
Thanks -- it's my pleasure to be hair.
Well it's this is very simple concept when taxpayers -- out these companies we did it to protect ourselves.
Because ultimately we were told that the -- the entire financial system would go down one -- -- bail out.
But we certainly didn't do it to line the pockets of executives and that's what's been happening.
So -- -- take some of the the worst offenders with the bailouts companies like AIG and GM and GM AC which is now -- And what we found is is that treasury is action who actually sets the pay packages for the top employees at these companies.
Is giving excessive pay and that exceeds their own guidelines and that's in the in the multi million dollars.
Now the argument for this bump up -- -- I think actually began with what -- must say when he took over.
And -- remember it is -- -- have to pay my people more.
And so they just said in order to keep people lair you need to best people to turn things around how -- went too far I guess what you're side.
So there has to be -- you want ultimately get these companies to repay TARP but you gotta bounce it because it can't be excessive pay.
Taxpayers can't subsidize excessive compensation -- treasury came up with a set of standards.
They're pretty basic.
Don't pay cash over 500000.
And keep the keep that the pay packages right in the middle at the fiftieth percentile.
And use part of pay that's this stock that's tied to the long term performance of the company C and that's tied to the company actually repaying repaying TARP some -- Now in other words some of the current -- is a secret terror would be getting the money back to taxpayers before we even think about paying you.
You know a boatload of money.
Absolutely I mean also -- want each person to have some incentive -- personal stake in the company repaying TARP.
And still making part of the compensation dependent upon that.
Was a really important measure that what special master Feinberg determined who worked at treasury was the right way to address some of the problems with compensation.
That actually contribute to the financial crisis.
And so we expect to -- out that I'm uncertain it is looking at this I'm wondering if all good insurgents go bad right the idea first as we said at the outset to pay these guys more so than it is stick around -- turnaround incentivized.
Smarter better -- -- players to come and help lead this turnaround.
But I do see your point that we could.
-- could this could -- you know degraded to -- there's no punishment for screwing up.
I'm I'm I'm still paid a lot.
And I'll be incentivized all the more -- just keep the lights on.
-- look it's -- to be comfortable.
For your pay when you're in TARP right it's helpful to be look at -- -- that's in any broker Fred so lets anyone of the banking industry.
Whether rescued or not they're used to getting well.
Well it's not business as usual if -- -- business as usual they can pay their executives anything they want.
But -- taxpayers O'Neal it's not business as usual so really -- they really that the important question becomes what's the amount of pay that's appropriate.
You know taxpayers onion and how should that -- be structured so we don't go back to the same situation we have before aware that with the compensation actually.
Played a role in causing the financial crisis distributor of -- suggestion don't go live to financial -- say if you don't mind that's.
Shouldn't I think you're saying all right but with the governor had -- TARP was a waste of time when all was enough and -- -- the rescues and everything that is it an arm and all the abuses balancing all out.
Well I think it's it's certainly along with other government efforts and not just by itself -- did help.
Stave off the economic collapse of our financial system but there are still many costs that come of that.
There's a dollar cost there's the moral hazard.
This and this leads to moral hazard you know you've got these companies who if there's if there really protected from the risk that they take.
By getting paid even if their bailed out it's another form of moral hazard and the other side of that is is crime and we found crime.
Related to -- been in our investigations have resulted in criminal charges against a 121 people.
-- we're actually putting people in jail for this so there's some very very serious consequences.
Related to the bailout.
All right TARP special inspector general Christian -- -- -- having.
It's great to be here thank you.