Fannie Mae, Freddie Mac executives get big housing bonuses - Why no protests there?

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    Nov 02, 2011 1:23 PM GMT
    Why no protests at Fannie and Freddie? Maybe the reason is the Democrats have long protected these quasi-government organizations and have shielded them from investigations. Maybe the spotlight should be kept away from guys such as Franklin Raines, an Obama friend who pocketed a cool $90 Million plus bonus.

    http://www.politico.com/news/stories/1011/67292.html

    The Obama administration’s efforts to fix the housing crisis may have fallen well short of helping millions of distressed mortgage holders, but they have led to seven-figure paydays for some top executives at troubled mortgage giants Fannie Mae and Freddie Mac.

    The Federal Housing Finance Agency, the government regulator for Fannie and Freddie, approved $12.79 million in bonus pay after 10 executives from the two government-sponsored corporations last year met modest performance targets tied to modifying mortgages in jeopardy of foreclosure.


    The executives got the bonuses about two years after the federally backed mortgage giants received nearly $170 billion in taxpayer bailouts — and despite pledges by FHFA, the office tasked with keeping them solvent, that it would adjust the level of CEO-level pay after critics slammed huge compensation packages paid out to former Fannie Mae CEO Franklin Raines and others.

    Securities and Exchange Commission documents show that Ed Haldeman, who announced last week that he is stepping down as Freddie Mac’s CEO, received a base salary of $900,000 last year yet took home an additional $2.3 million in bonus pay. Records show other Fannie and Freddie executives got similar Wall Street-style compensation packages; Fannie Mae CEO Michael Williams, for example, got $2.37 million in performance bonuses.

    Including Haldeman, the top five officers at Freddie banked a combined $6.46 million in performance pay alone last year, though a second bonus installment for 2010 has yet to be reported to the SEC, according to agency records. Williams and others at Fannie pocketed $6.33 million in incentives for what SEC records describe as meeting the primary goal of providing “liquidity, stability and affordability” to the national market.

    “Freddie Mac has done a considerable amount on behalf of the American taxpayers to support the housing finance market since entering into conservatorship,” Freddie spokesman Michael Cosgrove, told POLITICO on Monday. “We’re providing mortgage funding and continuous liquidity to the market. Together with Fannie Mae, we’ve funded the large majority of the nation’s residential loans. We’re insisting on responsible lending.”

    A Fannie Mae spokesman said it is currently in a “quiet period” in advance of its third-quarter earnings report and declined to comment.

    Most analysts believe the financial implosion of 2008 was fueled in part by Fannie Mae and Freddie Mac’s zeal in promoting homeownership and their backing of risky loans. And critics say that the mortgage giants’ deep backlog of repossessed homes, and their struggle through government conservatorship, is a staggering weight on a weak economy and puts even more downward pressure on home values.

    “Fannie and Freddie executives are being paid millions to manage losses,” Rep. Patrick McHenry (R-N.C.), a longtime critic of the administration’s programs to rescue the housing market, told POLITICO. “By these same standards, I should be the starting forward for the Lakers. It’s completely absurd.”

    “It is outrageous that senior executives at Fannie and Freddie are receiving multimillion-dollar compensation packages when they now rely on funding from U.S. taxpayers, many of whom face foreclosure or whose homes are underwater,” Rep. Elijah Cummings of Maryland, who has led House Democrats in efforts to ease Fannie and Freddie’s restrictions on restructuring loans or lowering payments for mortgage holders who owe more than their homes are worth, wrote in an email.

    Compensation at Fannie and Freddie is, in fact, 40 percent below pre-government takeover levels, according to the FHFA, though those pay packages before conservatorship involved stock awards, while the current payments are exclusively cash. But compensation at both corporations, in particular Fannie Mae, has been a contentious issue since long before the 2008 financial meltdown, thanks to executives like Daniel Mudd, who earned $12.2 million in base pay and bonuses while heading Fannie, and Richard Syron, Freddie’s CEO, who pocketed $19.8 million in total compensation the year before the organization went into conservatorship.

    Both Fannie and Freddie have long argued that they have to offer Wall Street-size paychecks to compete for the best private-sector talent. House Financial Services Committee Chairman Spencer Bachus (R-Ala.) introduced a bill in April to place the executives on a government pay scale, but it has yet to move out of committee.

    FHFA’s acting director, Edward J. DeMarco, told Congress last year that the managers who were at the helms of the mortgage companies during the market collapse were dismissed but also argued that generous pay helps lure “experienced, qualified” executives able to manage upward of $5 trillion in mortgage holdings amid market turmoil.


    DeMarco told lawmakers he’s concerned that suggestions to apply “a federal pay system to nonfederal employees” could put the companies in jeopardy of mismanagement and result in another taxpayer bailout. He said the compensation packages at Fannie and Freddie are part of the plan to return them to solvency while reducing costs to taxpayers.

    A March report by FHFA’s inspector general, however, found the agency “lacks key controls necessary to monitor” executive compensation, nor has it developed written procedures for evaluating those packages.

    An FHFA representative said the agency is installing pay package recommendations outlined in the report. Currently, she wrote, the agency “carefully reviews all executive officer pay requests and considers suitability and comparability with market practice, after consulting with the Treasury Department in certain circumstances.”

    Since both companies’ stock is worthless, bonuses are paid in cash, deferred bonuses and incentive pay rather than stock options. A key factor in determining those bonuses is how Fannie and Freddie performed in the loan modification program created by the administration, in addition to measures tied to financial and accounting objectives.

    For example, Freddie Mac helped a mere 160,000 homeowners change their mortgages “in support” of the president’s Home Affordable Modification Programand contacted only 45 percent of eligible borrowers, according to SEC filings. The company itself has modified 134,282 of its own loans since the start of the program. Those measures determined a significant share — 35 percent — of deferred bonus salary and, to a lesser extent, “target incentives” for Freddie executives.

    Fannie, which was involved in modifying 400,000 mortgages last year, also assessed executive payments based in part on how it administered HAMP.

    President Barack Obama in the past has derided Wall Street “fat cats” for raking in seven-figure bonuses even though their banks and finance companies needed billions of dollars in government bailouts just to stay in business. Yet the White House so far has remained largely silent about comparable bonuses at Fannie Mae and Freddie Mac.

    The congressional criticism over compensation follows other charges that DeMarco has been unwilling to throw a lifeline to homeowners plunged underwater when the market collapsed.

    The government-sponsored firms have essentially filled the vacuum caused by an exodus from private lenders. But critics want the FHFA to embrace “principal write-downs,” in which lenders and, by extension, Fannie and Freddie, would have to forgive a significant portion of
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    Nov 02, 2011 1:30 PM GMT
    1. The President isn't personally involved in such issues as pay bonuses.

    2. The proper place to initiate investigations of issues like this is the House of Representatives. But it's currently Republican. So fat chance we will see anything coming from that body.

    3. So that your question, why no protests, is best laid at the doorstep of the Republican House. No doubt you didn't expect this unintended consequence. Better do your research, hun, before you post here. icon_biggrin.gif
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    Nov 02, 2011 1:31 PM GMT
    But don't you remember, since the whole program was aimed at "helping the poor" and making housing "more affordable" none of this could have possibly been something "bad" or rooted in special interest by politicians eager to make themselves look like champions of those eager to buy homes who can't afford them to begin with.

    Let's blame the banks who simply followed the marching orders while being assured that a gluttonous indulgence in bad loans would have no consequences except for helping the poor.
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    Nov 02, 2011 1:51 PM GMT
    Art_Deco said1. The President isn't personally involved in such issues as pay bonuses.

    2. The proper place to initiate investigations of issues like this is the House of Representatives. But it's currently Republican. So fat chance we will see anything coming from that body.

    3. So that your question, why no protests, is best laid at the doorstep of the Republican House. No doubt you didn't expect this unintended consequence. Better do your research, hun, before you post here. icon_biggrin.gif

    1. Never said Obama was personally involved. Did you think I said that?

    2. House members have made requests regarding the bonuses.

    3. My question of protests was clearly aimed at these so-called "spontaneous" movements that exist in other cities. Your comment is irrelevant.

    Don't bring a rubber knife to a gun fight. I have purposely avoided commenting about your stories exaggerating your self-importance, but don't tempt me.
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    Nov 02, 2011 2:01 PM GMT
    We know where it got last time this was tried

    http://www.nytimes.com/2003/09/11/business/new-agency-proposed-to-oversee-freddie-mac-and-fannie-mae.html

    and then this



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    Nov 02, 2011 2:16 PM GMT
    No time now, but if you google McCain speech on Senate floor regarding Fannie and Freddie, pretty illuminating. Democrats have continuously shielded them.
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    Nov 02, 2011 2:26 PM GMT
    freedomisntfree saidWe know where it got last time this was tried

    http://www.nytimes.com/2003/09/11/business/new-agency-proposed-to-oversee-freddie-mac-and-fannie-mae.html

    and then this





    Anyone who is remotely familiar with the history behind who was actually pushing to "deregulate" (more accurately encourage fannie and freddie into greater bad loan acquisition) will know that it was the democrats, primarily, who rooted for it. Bush, however, as well as other republicans are culpable because they went right along with it and actually embellished some of the measures. If they hadn't, the democrats would be still harping about how republicans aren't interested in helping people to afford homes or wanting to help the poor. How they discriminate, how they don't want to help create home ownership diversity, blah blah blah. It was a losing game for conservatives right from the start.

    If this forum were having a discussion prior to the housing crisis (which we now look at in retrospect) on the kind of policies we should implement regarding home-ownership, the liberals on here would UNDOUBTEDLY be in favor of the more lax regulations (responsible for the housing crisis) for the purpose of achieving some type of non-discriminatory home-ownership "inclusiveness" and as a government intervention to help low-income people "afford" homes.
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    Nov 02, 2011 2:42 PM GMT
    socalfitness saidI have purposely avoided commenting about your stories exaggerating your self-importance, but don't tempt me.

    I have no self-importance. If you're referring to my gay community involvement, challenging me there would be very unwise.

    My name is engraved on the lobby wall for the very highest level of contributors of our Pride Center, one of the largest in the US. My picture appears everywhere, in gay rags, in sites for HIV/AIDS charities, anyplace gay movers & shakers are shown.

    I'm sorry you're so jealous. And so uninvolved with the gay community.

    I post here what my partner & I do in order to encourage others to do the same, not to "exaggerate" myself. You reveal more about your empty self by that comment than you do about me, though I doubt you would comprehend the irony.

    So I won't tempt you -- I challenge you. Tell me what you do for the gay community, and I will tell you what I do. And if you surpass me, then good, because the winner is our community, neither you nor me. When you understand that, you will understand me. icon_biggrin.gif
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    Nov 02, 2011 3:18 PM GMT
    mocktwinkie said
    freedomisntfree saidWe know where it got last time this was tried

    http://www.nytimes.com/2003/09/11/business/new-agency-proposed-to-oversee-freddie-mac-and-fannie-mae.html

    and then this





    Anyone who is remotely familiar with the history behind who was actually pushing to "deregulate" (more accurately encourage fannie and freddie into greater bad loan acquisition) will know that it was the democrats, primarily, who rooted for it. Bush, however, as well as other republicans are culpable because they went right along with it and actually embellished some of the measures. If they hadn't, the democrats would be still harping about how republicans aren't interested in helping people to afford homes or wanting to help the poor. How they discriminate, how they don't want to help create home ownership diversity, blah blah blah. It was a losing game for conservatives right from the start.

    If this forum were having a discussion prior to the housing crisis (which we now look at in retrospect) on the kind of policies we should implement regarding home-ownership, the liberals on here would UNDOUBTEDLY be in favor of the more lax regulations (responsible for the housing crisis) for the purpose of achieving some type of non-discriminatory home-ownership "inclusiveness" and as a government intervention to help low-income people "afford" homes.



    I'll do it this way.

    As I've said many time, there was plenty of blame to go around including the millions of home owners using that illusionary home equity as an ATM to buy that great big SUV. And then when gas prices went way up in 2007 and up further in 2008 it became a choice - $150 fill up or pay their mortgage.

    No one escapes blame.



    http://www.nytimes.com/2003/09/11/business/new-agency-proposed-to-oversee-freddie-mac-and-fannie-mae.html

    NY Times

    New Agency Proposed to Oversee Freddie Mac and Fannie Mae

    By STEPHEN LABATON

    Published: September 11, 2003The Bush administration today recommended the most significant regulatory overhaul in the housing finance industry since the savings and loan crisis a decade ago.

    Under the plan, disclosed at a Congressional hearing today, a new agency would be created within the Treasury Department to assume supervision of Fannie Mae and Freddie Mac, the government-sponsored companies that are the two largest players in the mortgage lending industry.

    The new agency would have the authority, which now rests with Congress, to set one of the two capital-reserve requirements for the companies. It would exercise authority over any new lines of business. And it would determine whether the two are adequately managing the risks of their ballooning portfolios.

    The plan is an acknowledgment by the administration that oversight of Fannie Mae and Freddie Mac -- which together have issued more than $1.5 trillion in outstanding debt -- is broken. A report by outside investigators in July concluded that Freddie Mac manipulated its accounting to mislead investors, and critics have said Fannie Mae does not adequately hedge against rising interest rates.

    ''There is a general recognition that the supervisory system for housing-related government-sponsored enterprises neither has the tools, nor the stature, to deal effectively with the current size, complexity and importance of these enterprises,'' Treasury Secretary John W. Snow told the House Financial Services Committee in an appearance with Housing Secretary Mel Martinez, who also backed the plan.

    Mr. Snow said that Congress should eliminate the power of the president to appoint directors to the companies, a sign that the administration is less concerned about the perks of patronage than it is about the potential political problems associated with any new difficulties arising at the companies.

    The administration's proposal, which was endorsed in large part today by Fannie Mae and Freddie Mac, would not repeal the significant government subsidies granted to the two companies. And it does not alter the implicit guarantee that Washington will bail the companies out if they run into financial difficulty; that perception enables them to issue debt at significantly lower rates than their competitors. Nor would it remove the companies' exemptions from taxes and antifraud provisions of federal securities laws.

    The proposal is the opening act in one of the biggest and most significant lobbying battles of the Congressional session.

    After the hearing, Representative Michael G. Oxley, chairman of the Financial Services Committee, and Senator Richard Shelby, chairman of the Senate Banking Committee, announced their intention to draft legislation based on the administration's proposal. Industry executives said Congress could complete action on legislation before leaving for recess in the fall.

    ''The current regulator does not have the tools, or the mandate, to adequately regulate these enterprises,'' Mr. Oxley said at the hearing. ''We have seen in recent months that mismanagement and questionable accounting practices went largely unnoticed by the Office of Federal Housing Enterprise Oversight,'' the independent agency that now regulates the companies.

    ''These irregularities, which have been going on for several years, should have been detected earlier by the regulator,'' he added.

    The Office of Federal Housing Enterprise Oversight, which is part of the Department of Housing and Urban Development, was created by Congress in 1992 after the bailout of the savings and loan industry and concerns about regulation of Fannie Mae and Freddie Mac, which buy mortgages from lenders and repackage them as securities or hold them in their own portfolios.

    At the time, the companies and their allies beat back efforts for tougher oversight by the Treasury Department, the Federal Deposit Insurance Corporation or the Federal Reserve. Supporters of the companies said efforts to regulate the lenders tightly under those agencies might diminish their ability to finance loans for lower-income families. This year, however, the chances of passing legislation to tighten the oversight are better than in the past.

    Reflecting the changing political climate, both Fannie Mae and its leading rivals applauded the administration's package. The support from Fannie Mae came after a round of discussions between it and the administration and assurances from the Treasury that it would not seek to change the company's mission.

    After those assurances, Franklin D. Raines, Fannie Mae's chief executive, endorsed the shift of regulatory oversight to the Treasury Department, as well as other elements of the plan.

    ''We welcome the administration's approach outlined today,'' Mr. Raines said. The company opposes some smaller elements of the package, like one that eliminates the authority of the president to appoint 5 of the company's 18 board members.

    Company executives said that the company preferred having the president select some directors. The company is also likely to lobby against the efforts that give regulators too much authority to approve its products.

    Freddie Mac, whose accounting is under investigation by the Securities and Exchange Commission and a United States attorney in Virginia, issued a statement calling the administration plan a ''responsible proposal.''

    The stocks of Freddie Mac and Fannie Mae fell while the prices of their bonds generally
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    Nov 02, 2011 3:32 PM GMT
    Art_Deco said
    socalfitness saidI have purposely avoided commenting about your stories exaggerating your self-importance, but don't tempt me.

    **Pointless self-importance rant deleted for sanities sake


    You miss the point, Art. These kids are protesting big business making tons of profits at the expense of the little people, yet here is a government agency who is ultimately responsible for the meltdown, who received tons of money in bailouts, AND who helps regulate the mortgage industry, receiving millions in bonuses, yet the OWS movement which stands against all these things is no where to be seen!

    Its further proof that the movement is bogus. They dont care about facts or about what is going on in the world, they just care about being part of the hip thing to do.
  • CuriousJockAZ

    Posts: 19133

    Nov 02, 2011 4:38 PM GMT
    Chainers said
    Art_Deco said
    socalfitness saidI have purposely avoided commenting about your stories exaggerating your self-importance, but don't tempt me.

    **Pointless self-importance rant deleted for sanities sake


    You miss the point, Art.


    No, not Art...Get outta town!!!
  • Posted by a hidden member.
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    Nov 02, 2011 4:42 PM GMT
    Chainers said
    Art_Deco said
    socalfitness saidI have purposely avoided commenting about your stories exaggerating your self-importance, but don't tempt me.

    **Pointless self-importance rant deleted for sanities sake


    You miss the point, Art. These kids are protesting big business making tons of profits at the expense of the little people, yet here is a government agency who is ultimately responsible for the meltdown, who received tons of money in bailouts, AND who helps regulate the mortgage industry, receiving millions in bonuses, yet the OWS movement which stands against all these things is no where to be seen!

    Its further proof that the movement is bogus. They dont care about facts or about what is going on in the world, they just care about being part of the hip thing to do.

    and not demonstrating against an organization that has long been allied with the Democratic Party
  • GQjock

    Posts: 11649

    Nov 02, 2011 4:55 PM GMT
    Fannie Freddie Freddie Fannie Freddie Fannie Freddie Fannie
    Freddie Freddie Fannie Fannie Freddie Fannie Freddie Freddie Fannie
    ........ sigh Fannie Freddie Freddie Fannie Freddie Fannie Fannie Freddie
    Freddie Fannie Freddie Fannie Freddie Fannie Fannie Freddie
    icon_biggrin.gif


    you need a more verbose trolling vocabulary
  • Posted by a hidden member.
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    Nov 02, 2011 6:15 PM GMT
    GQjock saidFannie Freddie Freddie Fannie Freddie Fannie Freddie Fannie
    Freddie Freddie Fannie Fannie Freddie Fannie Freddie Freddie Fannie
    ........ sigh Fannie Freddie Freddie Fannie Freddie Fannie Fannie Freddie
    Freddie Fannie Freddie Fannie Freddie Fannie Fannie Freddie
    icon_biggrin.gif


    you need a more verbose trolling vocabulary


    Red%2BHerring.gif
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    Nov 03, 2011 2:12 AM GMT
    Contains McCain's speech attempting to reform fannie and freddie. Also noted is the favorable treatment received by Dodd and Obama. This is a very good read and remains highly relevant today.

    http://hotair.com/archives/2008/09/17/mccains-attempt-to-fix-fannie-mae-freddie-mac-in-2005/
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    Nov 04, 2011 5:30 AM GMT
    http://politics.blogs.foxnews.com/2011/11/03/mccain-calls-ouster-regulator-responsible-fannie-freddie-bonuses
    Sen. John McCain blasted the regulatory agency responsible for overseeing government-backed mortgage giants Fannie Mae and Freddie Mac, calling for the ouster of its head, Edward DeMarco. The Arizona Republican said Thursday that he is prepping legislation to prevent future bonuses like the $12.8 million paid to 10 executives of the two government-sponsored enterprises, money approved by DeMarco, a move McCain called "unconscionable."

    "It's been proven time and time again that Fannie and Freddie are synonymous with outright corruption and fraud and the federal regulator has the audacity to approve $12 million in bonuses to people who make $900,000 per year," McCain charged, as Freddie Mac on Thursday reported a $4.4 billion loss for the third quarter and announced it is seeking $6 billion from the Treasury Department. "This body should be ashamed if we let this happen, especially in these economic times."

    The senator plans to introduce an amendment to the minibus appropriations bill the Senate will take up next week that would, according to a McCain aide, "prevent (bonuses) in the future, so long as (Fannie and Freddie) are in federal conservatorship."

    A spokesman for the Federal Housing Finance Agency (FHFA), where DeMarco is acting director, told Fox, "These are not rewards for the individuals who were running the companies when the problems were created. Fannie Mae and Freddie Mac have more than 5 trillion dollars in mortgage assets, all of which are at risk to taxpayers. It is critical that we protect taxpayers by having highly qualified executives running these companies."

    Politico first reported the $6.46 million in bonuses, paid back in 2010, for the top five officers at Freddie Mac -- including $2.3 million for CEO Charles E. Haldeman Jr., who is stepping down next year -- and $6.33 million for Fannie Mae officials, including $2.37 million for CEO Michael Williams, for meeting modest goals. A second bonus installment for Freddie executives in 2010 has yet to be reported to the Securities and Exchange Commission, Politico reported.

    "Freddie Mac has done a considerable amount on behalf of the American taxpayers to support the housing finance market since entering into conservatorship," Freddie spokesman Michael Cosgrove told Politico earlier this week. "We're providing mortgage funding and continuous liquidity to the market. Together with Fannie Mae, we've funded the large majority of the nation's residential loans. We're insisting on responsible lending."

    The outrage in Congress has been bipartisan, signaling easy-sledding for McCain's amendment.

    On Tuesday, Senate Majority Leader Harry Reid, whose home state of Nevada has been ravaged by the housing crisis, could barely contain his disdain when he learned the news of the bonuses. "A gag reflex in front of all of you would be improper"

    "Why should they be taking bonuses when Fannie and Freddie are in real trouble?" Sen. Orrin Hatch, top Republican on the Finance Committee, asked. "That's what happens when government bureaucrats decide who wins and who loses."

    Fannie and Freddie received a $170 billion taxpayer-funded bailout and were put into conservatorship in 2008.

    Senate Banking Committee Chairman Tim Johnson, D-ND, also announced Thursday that soon his panel will hear testimony from DeMarco, acting director of the Federal Housing Finance Agency (FHFA), on the bonus matter.

    "Hearings are fine. Hearings are great. They're not the answer," McCain said in a Senate floor speech. "The answer is to stop it from happening."