Poor performance still commands millions
It was reported today by Politico that the Federal Housing Finance Agency (FHFA) who regulates Fannie Mae and Freddie Mac has approved $12.79 million in bonus pay after ten executives last year “met modest performance targets tied to modifying mortgages in jeopardy of foreclosure.” Although the agency has not met the expectations of helping troubled homeowners, they have banked an obscene amount of bonuses at the executive level, dipping further into the more than $170 billion of taxpayer money the agency has taken since the FHFA became the conservator of these agencies.
An FHFA Inspector General report released this spring pledged to adjust executive compensation after they found that Fannie and Freddie executives were awarded giant salaries in recent years without proper written procedures or analysis. Between 2009 and spring of 2011, the heads of Fannie Mae and Freddie Mac were paid a total of $17.1 million and the top six executives were paid $35.4 million during the same period.
“FHFA also does not provide sufficient transparency to the public of the Enterprises’ executive compensation program,” the report stated and continued with recommendations that FHFA establish ongoing review and analysis of the process.
Why the bonuses are being questioned
This happened this spring and here we are again with big bonuses during a time that the agencies are already under heavy fire. Critics are irate about the bonuses from taxpayer money because the CEO of Freddie Mac recently announced that he would be stepping down without citing a reason- his portion of the bonuses is $2.5 million after a base salary of $1 million.
Many are angry about the massive bonuses not only because the agencies haven’t performed admirably, but they’ve behaved downright poorly in some cases. The FHFA Inspector General recently reported that Fannie Mae knew about and ignored falsified foreclosure filings under their watch. To add insult to injury, Fannie Mae not only continued to use the same law firms to process foreclosures that knowingly, illegally foreclosed on homeowners, they refused to fire the firms, claiming it was too expensive to transfer the files, to the FHFA responds by completely dismantling the lawyer network serving Fannie and Freddie.
Angry mobs on both sides of the aisle
Ultimately, it is confusing that the FHFA Inspector General that admonished Fannie and Freddie for big bonuses is the same Inspector General that just approved these major bonuses. In response to the discovery of these big bonuses, Senator John Barrasso (R-WY) is calling for President Obama to cancel the bonuses and just last month, angry Democrats called for the resignation of FHFA Director, Edward DeMarco while various entities are continuing to call for the dismantling of Fannie and Freddie altogether.
At such a contentious time, many people believe that it is shocking that the agencies would tempt the angry mobs on both sides by rewarding themselves with taxpayer money.