Homeowners suffering the consequences of the crash should take a deep breath, and consider what the CEO of one of the biggest recipients of a taxpayer bailout considered a hardship.

Michael Carpenter, chairman of Ally Financial, formerly known as GMAC, bridled at the notion that the federal government expected that one of his valued executives could get by on $500,000 a year, rather than the $1.5 million the person received before the collapse.

"This individual is in their early 40s, with two kids in private school, who is now considered cash poor," Carpenter is quoted as telling a federal auditor.

The individual's plight is described at the end of a federal audit, released without great fanfare last week, into the Obama administration's effort to cap executive pay at seven large recipients of federal bail-outs.

Suffice it to say, the effort didn't work as promised.

"It's a cautionary tale about tough talk," said Philip Mattera, research director for the labor-friendly nonprofit, Good Jobs First, in Washington, D.C. Too often, he said, the administration has "given into the big banks."

Promises made three years ago certainly were bold. President Barack Obama wanted the compensation of top executives capped at $500,000, quite a change from the millions and tens of millions paid out in the go-go days before the housing bubble burst in 2007 and 2008.

"For top executives to award themselves these kinds of compensation packages in the midst of this economic crisis is not only in bad taste – it's a bad strategy – and I will not tolerate it as president," Obama declared in 2009, a few weeks after his inauguration.

Many news accounts reflected skepticism. The publication American Banker, for one, summed up the effort with this headline: "Bank Exec Pay Limits: More Lip Than Teeth."

There also were headlines such as this one from USA Today: "Wall Street feels wrath of man on street; seven bailed-out firms' top execs see pay slashed."

The Treasury Department claimed it was seeking to limit pay at the largest bailout recipients: American International Group, Bank of America, Citigroup, Ally Financial Inc., Chrysler Financial Services, Chrysler Holding and General Motors.

But the official overseeing the compensation, Kenneth R. Feinberg, had only limited authority to oversee pay for the 25 highest paid executives at each company.

Feinberg faced pressure from company executives and from the Obama administration to keep pay competitive, according to the audit by the special inspector general overseeing the Troubled Asset Relief Program.

Treasury officials worried that if Feinberg failed to approve competitive salaries, top executives would find other jobs, leaving management voids and threatening the companies' ability to repay the billions in bailouts.

The audit said Treasury's "overriding goal" was to get TARP recipients to repay the bailouts, and that gave companies leverage to negotiate for "excessive pay packages based on historical pay."

Feinberg was able to limit some raises and impose some cuts. But the Treasury Department also approved pay packages worth $5 million or more between 2009 and 2011 for 49 individuals, the audit said.

Auditors found that there was no exodus of executives. As it happened, four of the seven companies have repaid their debt, and their salaries are no longer subject to federal oversight. The feds still own three-fourths of AIG and Ally, and a third of General Motors.

Robert Benmosche was among the executives who was gummed rather than bitten by the restrictions. Benmosche, chief executive officer of AIG, the largest bailout recipient, was paid $10.5 million a year in 2009, 2010 and 2011.

"You bet your life I was influenced" by Treasury and the companies, Feinberg, a Washington lawyer, told me by phone from New York.

In his view, Congress felt a need to appear to be responding to public outrage. But his authority to cap executive pay was limited. While he did limit some compensation, "nothing is going to limit pay more than free market forces," Feinberg said.

"I don't know if it is absurd, but it was symbolic," he added.

The audit doesn't say what came of the unnamed executive whose kids were in private school and was expected to survive on $500,000.

But Carpenter, the Ally CEO who worried about executive's plight, has done well, receiving pay of $9.5 million.

The audit came out on the day before Obama gave his State of the Union speech last week. In that address, the president announced yet another task force to root out and prosecute malefactors from the financial crisis.

Perhaps Obama's newly minted task force will bring justice. That would be good. But the president also said he wouldn't tolerate multi-million-dollar pay packages for bailout recipients. He certainly seems to have gotten past that issue.

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