The Obama Administration is under fire this week over their decision to remove the caps that limited the amount of available capital to Fannie Mae and Freddie Mac to $200 billion each. The Administration is being skewered for their sneaky timing, announcing this move quietly on Christmas Eve when consumers were distracted and federal offices were closed for the remainder of the week making contact for comment impossible.
From the WSJ, “unlimited access to bailout funds through 2012 was ‘necessary for preserving the continued strength and stability of the mortgage market,’ the Treasury said.”
Okay, that sounds great, but it’s all too convenient that this announcement came immediately before Fannie & Freddie disclosed their executive pay packages which include millions of dollars in bonuses and why wouldn’t it? Give a crackhead a blank check and see how long it takes him/her to be the proud new owner of all of the crack in a five mile radius. Give your teen daughter a blank check and tell her she can have anything she wants because she needs it and see if you don’t hear tires peeling out as she skyrockets to the mall.
The argument with any golden package given to executives is essentially that you get what you pay for, meaning large corporations (government or otherwise) must compensate qualified and talented leadership.
Okay, BUT unemployment is at a heartbreaking 10% and Texas Representative Jeb Hensarling said, “to be handing out $6 million bonuses to essentially federal employees is unconscionable,” and further criticized the Obama Administration for approving the compensation without settling on a plan to remove taxpayer supports- “to be doing that with no plan in place is just unconscionable.”
What do you think- is the timing to remove the cap too conveniently timed with disclosure of executive pay giving millions to each executive OR was the cap removal crucial for keeping Freddie and Fannie in the position our economy needs them to be? What do you think about this?