Fannie, Freddie To Pay $210M In Bonuses

Government-Controlled Mortgage Giants Say They Must Pay Out To Retain Top Talent

(AP)  Mortgage finance giants Fannie Mae and Freddie Mac plan to pay more than $210 million in bonuses through next year to give workers the incentive to stay in their jobs at the government-controlled companies.

The bonuses for more than 7,600 employees were disclosed in a letter from the companies' regulator released Friday by Sen. Charles Grassley of Iowa, the senior Republican on the Senate Finance Committee.

"It's hard to see any common sense in management decisions that award hundreds of millions in bonuses when their organizations lost more than $100 billion in a year," Grassley said in a statement. "It's an insult that the bonuses were made with an infusion of cash from taxpayers."

The two companies, hobbled by skyrocketing loan defaults, were seized by regulators last fall and operate under close federal oversight with new chief executives installed by the government. Since the takeover, Fannie Mae has received $15 billion in federal aid, while Freddie Mac has received nearly $45 billion.

The companies' federal regulator, James Lockhart of the Federal Housing Finance Agency, defended the bonuses in a March 27 letter to Grassley, noting that the collapse of the company's stock prices "destroyed years of savings for many" workers. The companies' stocks now trade below $1, down from more than $60 in fall 2007.

More than 70 percent of new loans in recent months have been backed by Fannie and Freddie. They own or guarantee almost 31 million mortgages worth about $5.5 trillion, more than half of all U.S home loans.

Keeping the companies "operating at full speed was best for the housing markets and best for the economy," Lockhart wrote. "That would only be possible is we retained the Fannie and Freddie teams."

But many lawmakers have little sympathy for that argument amid a public outcry over roughly $165 million in bonuses paid out last month by bailed-out insurance giant American International Group.

Earlier this week, the House passed a bill that aims to keep bailed-out financial institutions from paying their employees hefty bonuses after lawmakers had second thoughts about their vote two weeks ago to tax the bonuses away. The bill would allow the bonuses if the Treasury Department and financial regulators determine they are not "unreasonable or excessive."

Initially after the AIG flap, President Barack Obama had said he would "do everything we can to get those bonuses back." But the White House later backed down as it worked to ensure any restrictions on bonuses didn't alienate the banks and investors needed to help clean up the financial mess.

[timetrips1]

More BS. There are plenty of folks out of work willing to take their place if the leave. There is absolutely no need for bonuses to be paid to retain employees. In good times when there is competition for talented employees it is one thing but not now.

I'm off to write my congressmen and senator's about this outrage. We may not have been able to do anything about the AIG bonuses but I doubt these bonuses are contractually obligated.

[payasyougo]

"Fannie, Freddie To Pay $210M In Bonuses
Government-Controlled Mortgage Giants Say They Must Pay Out To Retain Top Talent"
----
This explains why Obama and friends wanted to tone down the rhetoric on the AIG bonuses.

[bumpedoff1]

They were so outraged at the AIG bonuses Now that Bareny's firends are geting them
NOTHING

[horse3farm]

I didn't vote for Obama. If it weren't so tragic, I'd be laughing and saying "I told you so."

[horse3farm]

I didn't vote for Obama. If it weren't so tragic, I'd be laughing and saying "I told you so."

[sjc_1]

"to give workers the incentive to stay in their jobs..."

If it goes to workers that is one thing, executives it is another. The job market is the pits right now, where the heck are they suppose to go? There are millions of people with business degrees that would take the jobs with no bonuses.

[cjs_cnet_xyz]

It is time we found new talent if this is the kind of talent we are looking to retain. Instead, the 210 million should go towards the construction of a prison to house and retain this type of talent.

[emperorlotku]

Everyday the citizens of these United States should be bitterly complaining to our elected officials, beauracratic officials, and all those who are public servants. We should remind them every day that they work for us, are public SERVANTS, and can be removed every election cycle. The taxpayers of this society should wipe out all incumbents this next election cycle, both Democrat and Republican, and install a government that understands their role of working for the people and not the corporations. This government backed payout to the banks and corporations is just a payout quid pro quo for the 5.2 `billion they spent purchasing the loyalty of our politicians in the last ten years. Taxpayers should ourn't pay any bonuses to any employee of any failed institution nor should we pay any raises for any representative of a failed congress.

[incog-nito]

Corporate execs give themselves huge bonuses simply because THEY CAN. There are no laws in place that restricts executive compensation. As long as they can continue to do this, the U.S. economy will continue to suffer. Make no mistake, this is NOT what the free market system is about. For it to work, people should be rewarded ONLY when they perform well AND their company prospers. And they must suffer the consequences of their incompetence.

When you have executives getting huge bonuses even as their company flounders, then you have a perversion of the free market system. Their goal is no longer the welfare of the company, but to enrich themselves as much as possible before the ship goes down. This is the mentality that leads to globalization and outsourcing and the gutting of the U.S. manufacturing base. Who cares if it led to job loss and the decline in real wages for regular people, if they themselves are richer because of it.

[socialdarwin]

I had the same reaction as many other folks here when I heard the news about the bonuses. Giving a bonus to someone to incent them to stay with a company in this economy??? Only in a taxpayer funded company that doesn't need to be competitive or face the reality of the current economy! I am sure some of the 600,000+ folks that got laid off in March would gladly take these jobs without the bonus.

In my company (and many others that are doing what is necessary in this economy) we are not taking 2008 bonuses and not getting any raises for 2009. It really stinks when the government cant pass a budget (CA of course) and can't pay my tax refund but they can pay millions in bonuses to the employees of a defunct company that needed billions in bailout money!