South Financial Cleared for TARP Funds

The U.S. Treasury gave final approval to a $347 million investment in South Carolina's largest bank, leaving unanswered questions surrounding the generous retirement package awarded to its former CEO.

In late October The South Financial Group ( TSFG) announced CEO Mack Whittle was moving up the date of his retirement by two months as it was applying for a federal investment through the Troubled Assets Relief Program, or TARP, which contains provisions aimed at eliminating golden parachutes.

South Carolina Gov. Mark Sanford has written twice to Treasury Secretary Henry Paulson, asking him to look into the issue, which has also attracted at least two shareholder lawsuits and another letter to Paulson from Rep. Bob Inglis (R., S.C.). Sanford sent the second letter Thursday, asking if Treasury was acting on his request.

"We have yet to receive any formal notification from your office regarding our request," Sanford writes. The letter also was sent to New York Fed Chairman Timothy Geithner, President-elect Barack Obama's appointee to fill Paulson's post. Treasury spokeswoman Jennifer Zuccarelli, who told TheStreet.com Nov. 20 the office was reviewing the governor's letter, did not respond to requests for comment. A call to Andrew Williams, New York Fed spokesman, was also not returned.

Whittle said in a letter to Treasury officials last month that he is willing to re-examine his pay package, which is worth at least $12 million. The company received preliminary approval for the $347 million investment on Nov. 14.

Whittle's pay package is one of several examples of what critics have charged is loose federal oversight of the TARP. The Government Accountability Office this week released a report arguing that Treasury "has yet to address a number of critical issues."

The federal government has thus far invested more than $200 billion in 142 institutions, including Bank of America ( BAC), JPMorgan Chase ( JPM), Citigroup ( C), Wells Fargo ( WFC), PNC Financial Services ( PNC) and KeyCorp ( KEY), through the TARP, according to data compiled by ProPublica.org.

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