With All the Attention on AIG, Bonuses To Execs of Other Failed Firms Got Overlooked
Well, look at this: While we were riveted, watching that AIG public lashing on Wednesday, top executives other spectacularly failed companies – Fannie Mae and Freddie Mac, to be precise — are taking home some big bonuses as well, The Wall Street Journal reports.
From The Journal:
Fannie Mae is due to pay retention bonuses of between $470,000 and $611,000 this year to some executives, despite enormous losses at the government-backed mortgage company. Fannie’s main rival, Freddie Mac, also plans to pay such bonuses but hasn’t yet provided details.
Fannie’s bonuses are smaller than ones paid by American International Group Inc. that have caused a political firestorm for that company. Seventy-three AIG executives received retention payments of $1 million or more recently, according to New York Attorney General Andrew Cuomo.
But the Fannie bonuses are still considerable and come at a time when Fannie and Freddie are receiving increasing amounts of funding from the Treasury. For 2008, Fannie and Freddie reported combined losses of about $108 billion, largely stemming from a surge in home-mortgage defaults. The Treasury has agreed to provide as much as $200 billion of capital apiece to Fannie and Freddie in exchange for preferred stock. The two companies have said they will need a combined $60 billion of that money to cover their losses so far.
So, lose more than $100 billion, and your company fights to keep you! This is beyond absurd. I haven’t seen any reporting on whether these Fannie and Freddie executives have contracts requiring those payments. Regardless, they should follow the lead of some AIG executives and give the money back. It’s hard to call it merit pay, by any stretch of the imagination.
Or let’s put them on the spot. Send those Fannie and Freddie high achievers to California’s Inland Empire, or Detroit, and have them explain, in person, to a gathering of former homeowners who lost their properties to forceclosure, exactly why they deserve their big rewards.