Lawmakers: Stop $12.79M Bonuses to Execs at Bailed-out Fannie, Freddie

Lawmakers from both parties are seeking to stop $12.79 million in bonuses to 10 executives at Fannie Mae and Freddie Mac, the two mortgage-financing giants that have drawn nearly $170 billion in taxpayer bailouts since they were taken over by the federal government three years ago.
In the House, Financial Services Committee Chairman Spencer Bachus, R-Alabama, said his committee would meet next week to vote on a bill to suspend the compensation packages to Fannie and Freddie executives.
In the Senate, Republican Senator John McCain, of Arizona, and Democratic Senator Jay Rockefeller, of West Virginia, plan to introduce an amendment backed by seven of their colleagues that prohibits top employees at both firms from receiving such hefty bonuses as long as the companies remain under U.S. conservatorship.
“It’s outrageous that Fannie Mae and Freddie Mac executives would expect multi-million dollar bonuses after $170 billion in taxpayer bailouts and one in every four homeowners’ mortgage underwater,” said Senator John McCain. “This amendment makes clear that so long as Fannie and Freddie are in government conservatorship, bonuses such as these will not be paid out.”
With such bipartisan support, the executive bonuses to Fannie’s and Freddie’s leadership may be doomed. President Obama has repeatedly opposed lucrative bonuses to any financial firm previously bailed out in the wake of the financial crisis.
Fannie and Freddie finance most mortgages taken out by Americans. The government moved quickly to take over the two quasi-public companies after they had accumulated billions in toxic-mortgage securities, preventing insolvency and a deeper collapse of the housing-finance market.
Since late 2008, Fannie and Freddie have drawn from an open-ended U.S. Treasury credit line to cover quarterly shortfalls. The bailout tally stood at $169 billion, but both Fannie and Freddie released third-quarter earnings reports in recent days that include further requests for funs from the Treasury, which will continue supporting the two firms until the end of next year.
Fannie Mae, the bigger of the two, reported on Tuesday a quarterly loss of $5.1 billion. Fannie said it needed a further $7.8 billion in bailout funds. Freddie Mac last week reported its worst quarterly loss in more than a year, at $2.5 billion, and said it needed another $6 billion from the federal government.

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