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Economic News

Surprise! Fannie & Freddie Get Blank Checks, Executive Bonuses Skyrocket

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fannie mae freddie mac executive bailoutThe 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?

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17 Comments

17 Comments

  1. Ken Montville

    December 29, 2009 at 2:39 pm

    This is so over-the-top that it’s hard to catch my breath.

    However, what is even more annoying is that when CNBC ran with this story they had *no one* from the NAR. They had the COO of Zillow on as a guest expert to say that, while this may sound bad, it’s really what the housing market needs right now to continue to prop it up.

    Zillow! The official voice for the housing market. I can’t tell what is more astounding – the bonuses or the fact that Spencer Rascoff has ousted Vicki Golder from her place in the sun.

    Will someone please tell the NAR to wake up!

  2. Portland Condo Auctions

    December 29, 2009 at 4:40 pm

    Why? Why? This doesnt make any sense. This is moving backwards away from progress.

    -Tyler

  3. JR of Sun City Real Estate

    December 30, 2009 at 8:50 am

    This is really not a good sign. I hope that NAR will focus more in solving the real issue.

  4. Oh brother!! Bonuses bonuses bonuses. All the folks responsible for screwing things up get millions of dollars while Real Estate Businesses such as mine struggle to survive from banking bull!! Perhaps the big wigs need to all be wiped out and some fresh faces put in their place. I would love to tell all the stupidity stories about my dealings with financial entities. That has to be the dumbest run sector (financial) in our nation. However big corporations are almost as bad. No wonder we are gettting stomped globally. We are losing a long term financial war.

    Someone should consider using resources such as myself (who can provide resources) to show what the “real” world is experiencing and it’s needs. I mean….look how smart some of our legislators are. Someone came up with legislation which required people to pay more principal on their credit card debt while the credit card companies gouge consumers with high interest. Cashflow is the problem there and the idiots just made people’s cashflow worse!! Banks are causing their own foreclosures in some cases in a variety of ways. I could go on forever but I’ve written too much already. I’m thoroughly disgusted at the problem solving abilities of our present day leadership in all the important areas. Bah humbug. The rich get richer and the poor get poorer. Shouldn’t have bailed any of them out and let the market correct itself by eliminating bad business. Innovation would have taken over.

    As Americans, we have the ability to become very innovative in times of need…..or at least I thought we were able. Instead we just bail out the bad guys. It’s so much easier. Crazy and just lazy.

  5. c. mazzotta

    January 4, 2010 at 8:39 am

    Somehow, a majority of Americans actually voted for Obama. I am disgusted with this– yet not surprised. This IS exactly what America voted for. The photo in this article clearly conveys the ideology of our current liberal, democratic leadership.
    Folks, that is MY money and YOUR money being flushed down the toilet. Wake up America! Cast a wise vote in 2012!

  6. Janie Coffey

    January 4, 2010 at 9:15 am

    C – I did cast my vote wisely in 2008 and it’s not changing now or in 2012 and I consider myself fully awake.

  7. Karen Hilgers

    January 6, 2010 at 8:07 am

    Ken Montville has it right. This whole thing is going the wrong way. It is no surprise since Chicago politics has taken over the nation; I cannot believe people actually voted for this madness…….I am expecting to eventually have to close my office since there really is no friend in government for small business: The credit card companies crazy ‘solutions’ mentioned by Ken and required health care coverage for part time employees will definately play important parts in closing many doors.
    Wondering if the presidents money advisors are ones that received the bonuses from the fed insured loan programs?

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Economic News

Is the real estate industry endorsing Carson’s nomination to HUD?

(BUSINESS NEWS) Ben Carson’s initial appointment to HUD was controversial given his lack of experience in housing, but what is the pulse now?

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NAR strongly backs Dr. Carson’s nomination

When President-Elect Donald Trump put forth Dr. Ben Carson’s name as the nominee for Secretary of Housing and Urban Development, NAR President William E. Brown said, “While we’ve made great strides in recent years, far more can be done to put the dream of homeownership in reach for more Americans.”

At the time of nomination, the National Association of Realtors (the largest trade organization in the nation) offered a positive tone regarding Dr. Carson and said the industry looks forward to working with him. But does that hold true today?

The confirmation hearings yesterday were far less controversial than one would expect, especially in light of how many initially reacted to his nomination. Given his lack of experience in housing, questions seemed to often center around protecting the LGBT community and veterans, both of which he pledged to support.

In fact, Dr. Carson said the Fair Housing Act is “one of the best pieces of legislation we’ve ever had in this country,” promising to issue a “world-class plan” for housing upon his confirmation…

>>>>>Click to continue reading…<<<<<

#CarsonHUD

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Economic News

Job openings hit 14-year high, signaling economic improvement

The volume of job openings is improving, but not across all industries. The overall economy is improving, but not evenly across all career paths.

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Job openings hit a high point

To understand the overall business climate, the U.S. Labor Department studies employment, today releasing data specific to job vacancies. According to the department’s Job Openings and Labor Turnover Survey (JOLT) for April, job openings rose to 5.38 million, the highest seen since December 2000, and a significant jump from March’s 5.11 million vacancies. Although a lagging indicator, it shows strength in the labor market.

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The Labor Department reports that the number of hires in April fell to 5 million, which indicates a weak point in the strong report, and although the volume remains near recent highs, this indicates a talent gap and highlights the number of people who have left the labor market and given up on looking for a job.

Good news, bad news, depending on your profession

That said, another recent Department report notes that employers added 221,000 jobs in April and 280,000 in May, but the additions are not evenly spread across industries. Construction jobs rose in April, but dipped in professional and business services, hospitality, trade, and transportation utilities. In other words, white collar jobs are down, blue collar jobs are up, which is good or bad news depending on your profession.

Additionally, the volume of people quitting their jobs was 2.7 million in April compared to the seven-year high of 2.8 million in March. Economists follow this number as a metric for gauging employee confidence in finding their next job.

What’s next

If you’re in the market for a job, there are an increasing number of openings, so your chance of getting hired is improving, but there is a caveat – not all industries are enjoying improvement.

If you’re hiring talent, you’ll still get endless resumes, but there appears to be a growing talent gap for non-labor jobs, so you’re not alone in struggling to find the right candidate.

Economists suspect the jobs market will continue to improve as a whole, but this data does not pertain to every industry.

#JobOpenings

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Economic News

Gas prices are down, so are gas taxes about to go up?

Do low gas prices mean higher gas taxes are on the way? Budgeting for 2015 just got a bit more complicated, if some politicians have their way.

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Gas taxes and your bottom line

Many industries rely heavily on time in their vehicle, not just truck drivers and delivery trucks. Sales professionals hop in their vehicles throughout the day, as do many other types of professionals (service providers like plumbers, and so forth). For that reason, gas prices and taxes are a relevant line item that must be budgeted for 2015, but with politicians making the rounds to push for higher gas taxes, budgeting becomes more complicated.

Gas prices are down roughly 50 cents per gallon compared to a year ago, which some analysts say have contributed to more money in consumers’ pockets. Some believe that this will improve holiday sales, but others believe the timing is just right to increase federal taxes on gas. The current tax on gas is 18.40 cents per gallon, and on diesel are 24.40 cents per gallon.

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Supporters and opponents are polar opposites

Supporters argue as follows: gas prices are low, so it won’t hurt to increase federal gas taxes, in fact, those funds must go toward improving our infrastructure, which in the long run, saves Americans money because smoother roads mean better gas mileage and less congestion.

Gas taxes have long been a polarizing concept, and despite lowered gas prices, the controversial nature of the taxes have not diminished.

While some are pushing for complete abolition of federal gas taxes, others, like former Pennsylvania Governor, Ed Rendell (D) tell CNBC, “Say that cost the average driver $130 a year. They would get a return on that investment” in safer roads and increased quality of life, he added.

The Washington Post‘s Chris Mooney points out that federal gas taxes have been “stuck” at 18 cents for over 20 years, last raised when gas was barely a dollar a gallon and that the tax must increase not only to improve the infrastructure, but to “green” our behavior, and help our nation find tax reform compromise.

Is a gas tax politically plausible?

Mooney writes, “So, this is not an argument that a gas tax raise is politically plausible — any more than a economically efficient tax on carbon would be. It’s merely a suggestion that — ignoring politics — it might be a pretty good idea.”

Rendell noted, “The World Economic Forum, 10 years ago, rated us the best infrastructure in the world,” adding that we “need to do something for our infrastructure, not in a one or two year period, but over a decade.”

Others would note that this rating has not crumbled in just a few years, that despite many bridges and roads in need of repair, our infrastructure is still superior to even the most civilized nations.

Regardless of the reasons, most believe that Congress won’t touch this issue with a ten-foot pole, especially leading up to another Presidential campaign season starting next year.

“I think it’s too toxic and continues to be too toxic,” Steve LaTourette (the former Republican congressman best known for his close friendship with his fellow Ohioan, Speaker John Boehner) tells The Atlantic. “I see no political will to get this done.”

Whether the time is fortuitous or not, and regardless of the positive side effects, many point to a fear of voters’ retaliation against any politician siding with a gas hike, so this matter going any further than the proposal stage is unlikely.

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