Fannie Mae/Freddie Mac executive bonuses slammed in House report

House Oversight and Government Reform Committee Chairman Darrell Issa yesterday released a new report titled: “Government-Sponsored Moguls: Executive Compensation at Fannie Mae and Freddie Mac,” a congressional study that examines the Obama administration’s contradictory rhetoric on bonuses and how a Fannie Mae executive obtained $1.7 million non-performance based signing bonus.

 

Several highlights contained in the report include:

 

•Assessments of controversial executive compensation decisions approved or allowed by the Obama administration including the decision to award a $1.7 million non-performance based “signing bonus” to a recruited executive.

•An examination of Obama Administration rhetoric on executive compensation for the private sector and decisions on compensation for Fannie Mae and Freddie Mac executives.

•FHFA Inspector General criticisms of Fannie and Freddie executive compensation practices.
 

“While taxpayers are saddled with billions in losses, executives at Fannie Mae and Freddie Mac are being rewarded with millions for their efforts to pursue public policy goals of the Obama administration,” said Chairman Issa. 

 

Executives from both Fannie Mae and Freddie Mac continue to defend the pay practices that garnered them millions. The executives argued the compensation packages at the housing finance firms are necessary to retain and attract qualified staff.

 

“This report examines and explains fundamental criticisms of executive compensation decisions for Fannie Mae and Freddie Mac -- decisions made under an administration that excoriates private companies for big bonuses on the backs of taxpayers but looks the other way when our own federal entities heap cash on their executives for a job left undone.”

 

Rep. Issa (R-CA) often reminds the public about President Barack Obama's harsh criticisms of private sector executives often calling them "fat cats," "jet setters," and other derogatory terms.

 

A bill to block the big salaries and bonuses at both Fannie Mae and Freddie Mac has already been approved by the House Financial Services Committee on Tuesday in a 52-4 vote. The full House must still vote on the measure. A similar bill was introduced in the Senate, as well.

The two money-losing firms have been propped up by about $169 billion in federal aid since they were rescued by the government in 2008.

"In the private sector -- for example, Wall Street brokerage firms -- bonuses are performance-based. Freddie and Fannie are economic basket-cases," Baker pointed out,

"In testimony before a U.S. House of Representatives committee, the executives said cutting compensation at their firms would be disruptive and limit their ability to attract skilled management. How much skill does it take to bankrupt a corporation? It's the taxpayers being bilked, yet where's the Occupy Freddie and Fannie movement?" Baker quipped.