RightChange: Fannie Mae and Freddie Mac Defend $13 Million Bonuses

Normally in the private sector, bonuses are awarded to employees for their quality performance.  In the government, bonuses are awarded to employees regardless of how he or she performs.  In the case of Fannie Mae and Freddie Mac, their executives and employees were awarded $13 million in bonuses after posting the worst quarterly loss of this year.  This outraged members of Congress enough to call the executives to testify at the House Oversight Committee on Wednesday.

The CEO of Freddie Mac, Charles E. Haldeman Jr., said he sympathized with their outrage because we have over 14 million people out of work and millions of families at risk of losing their homes.  However, the executives said these bonuses were necessary to keep their best workers:

"These are challenging jobs and challenging circumstances, and we need to reward the people willing to do them," said Michael J. Williams, the president and CEO of Fannie Mae.”

The agency responsible for approving these million dollar bonuses was the Federal Housing Finance Agency (FHFA) and the executives said the bonuses were necessary as they were losing employees to higher paying jobs because of the uncertain housing climate.  The director of FHFA also supported what the executives think are necessary bonuses:

“Edward DeMarco, the acting director of the FHFA, which regulates Fannie and Freddie, stressed Wednesday that the federal support does not mean the GSEs are government entities.

"Fannie Mae and Freddie Mac employees are not government employees and these are not government agencies. They remain private corporations," he said.”

First of all, Fannie and Freddie posted their worst quarterly loss of this year, which is why they asked for another $6 billion taxpayer bailout.  That is hardly performance worth rewarding.  Second, Fannie and Freddie are absolutely NOT private corporations.  They are GSE’s, which are government-sponsored enterprises.  Now they are a taxpayer-sponsored enterprise because taxpayers bailed them out.  At a time when unemployment is more like 20% than 9% with millions of Americans unable to find a low paying job, it’s safe to say the taxpayers do not justify these $13 million bonuses.

Even the Democrats at the hearing agreed:

"I'm mystified as to why these so called achievements can justify million-dollar bonuses," Rep. William Lacy Clay (D-Mo.) said.”

“Rep. Elijah Cummings (D-Md.), the ranking member on the panel who has repeatedly pressured DeMarco for more homeowner assistance, called current efforts by Fannie and Freddie "woefully inadequate."

The efforts of Fannie and Freddie have been woefully inadequate because of the inadequate policies from the Obama administration that failed to fix the housing crisis.

President Obama signed the Wall Street reform bill, which gave them the bailout in the first place and allowed them to continue down the same dangerous path they had been on for years.  They continued to write bad loans to those who could not afford a home and taxpayers are still going to be bailing them out.  You would think Obama would learn from all of this.  No.  He signed an executive order that made Fannie and Freddie pressure banks to continue to write bad loans to homeowners no matter how underwater they are.

Obama’s policies failed to fix the problem, which is why these mortgage companies are losing money and paying out million dollars to their employees.  The real outrage should be at the Obama administration for being cognizant of the problem and making it worse.

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