The report says Treasury bypassed rules under the 2008 bailout that limited pay. Treasury approved raises that exceeded pay limits and in some cases failed to link compensation to performance, it notes.
Christy Romero, the special inspector general for TARP, said the guidelines say compensation should not exceed the 50th percentile of pay for executives in similar positions at other financially distressed companies.
But pay surpassed that level for 63 percent of the executives whose pay was approved, according to the report.
The report also said Treasury officials had been warned a year ago that the department needed to reform its procedures to ensure that the pay guidelines are followed.