$95.4M in Bonuses at Fannie and Freddie
Yesterday it was disclosed that the top five corporate executives at Fannie Mae and Freddie Mac made $95.4 million in lucrative bonuses over the last three years.
What makes this exceptionally outrageous is that they are the two companies most responsible for the Great Recession of 2008 and YOU paid for those bonuses through your taxes.
And those bonuses were given a federal stamp of approval.
Even under the best circumstances no executive deserves that much in bonus pay in this economy; but the ones at these two companies least of all.
Some of them deserve jail time instead of bonuses for what they’ve done.
The Case Against Fannie and Freddie Executive Bonuses
Corporate executives at Fannie and Freddie should not get bonuses for many reasons:
- $169 billion in bailouts already given them since September 2008
- $7.8 billion more in bailouts requested by Fannie Mae just last Thursday
- $6 billion more in bailouts requested by Freddie Mac less than two weeks ago
- $132 million already spend defending Fannie and Freddie executives in court
- $210 to $317 billion is the final taxpayer bailout total estimated by the CBO
- $54 billion in individual toxic home mortgage loan losses in TARP
- $909 billion in toxic loans forced on The Fed
- Most of those costs will never be recovered
Fannie Mae and Freddie Mac are already responsible for $1.1 trillion in taxpayer debt and the tab just keeps getting bigger.
The Bonus Justification
Edward DeMarco, acting director of the Federal Housing Finance Agency, defended approving executive pay and bonuses saying:
Taxpayers. . . would not be better off if we provoke a rapid turnover of senior management by further slashing compensation
He added those executives “risk tarnish to their reputations” just by working at Fannie and Freddie and that pay cuts could “increase the risk of higher losses”.
DeMarco made his remarks Tuesday in testimony before the Senate Banking Committee.
Higher losses!?? How much worse can it get than it already is now?
What’s the Deal? Why us?
As government sponsored enterprises (GSEs) U.S. taxpayers are held accountable for Fannie Mae’s and Freddie Mac’s enormous debts. We are like their cosigners.
Fannie and Freddie are the two home mortgage lending giants at the heart of the housing bubble collapse.
Under the guise of providing low interest home mortgage loans to low income Americans they approved all the toxic loans that built the bubble whose collapse brought down the entire economy.
They approved them because corporate executive bonus pay depends on the number of loans they approve. The more loans approved, the bigger the executive bonuses. Going overboard was pure greed.
Fannie and Freddie have been in government receivership since their collapse in September 2008.
Edward DeMarco is the government authority who now approves their executive salaries and bonuses.
To its credit the Congressional House Financial Services Committee voted 52-4 on Tuesday to cap salaries for top executives at Fannie and Freddie.
Committee Chairman, Congressmen Spencer Bachus (R-AL) said:
The taxpayer-funded bailout of Fannie Mae and Freddie Mac is the biggest bailout in history
Adding insult to injury, the top executives of these failed companies receive multi-million dollar pay packages, all courtesy of American taxpayers who are having a difficult time making ends meet these days. These lavish compensation packages and bonuses are unfair, unreasonable and unjust to the taxpayers whose assistance is the only thing keeping Fannie and Freddie afloat.
Even Representative Barney Frank (D-MA), a hard-core supporter of Fannie and Freddie, voted to restrict compensation saying:
I hoped that they would use restraint on their own. (It is) a slap in the face
Yes, Wall Street got taxpayer bailouts. Yes, Wall Street is deserving of our scorn.
But Wall Street has paid back every penny and taxpayers are now making a profit off them… a $20 billion profit when all is said and done.
However, the main corporate criminals in the 2008 financial crisis, Fannie and Freddie, got off scot-free.
Those two companies deserve the wrath of the Occupy Movement more so than any anyone else, yet most occupiers have never even heard of them.
Fannie Mae and Freddie Mac symbolize all that is wrong both in government and in corporate America.
Hey… Occupy Wall Street protestors… Listen up!…
Since you got kicked out of Zuccotti Park…
Forget Wall Street… Occupy Fannie and Freddie.
How about setting up camp on that great big beautifully manicured lawn out in front of Fannie Mae’s expansive colonial style corporate headquarters in suburban Washington DC?