Freddie, Fannie revelations no laughing matter
POSTED: December 27, 2009
While Red Skelton's Freddie the Freeloader could always get a laugh, a couple of Washington clowns are more likely to raise your blood pressure, instead of a chuckle.
The new Freddie and Fannie the Freeloaders - also known as Freddie and Fannie Mae - were back in the news last week with word that the federal government is prepared to hand over more of our dollars to ensure the two agencies stay afloat.
The Treasury Department announced on Christmas Eve that it would lift the $400 billion cap in financial aid to agencies that buy mortgages and sell them to investors with certain guarantees to provide liquidity to the mortgage market. Fannie Mae and Freddie Mac own or guarantee nearly 31 million mortgages worth about $5.5 trillion. That's about half of the nation's home loans, The Associated Press reports.
The puzzling thing is why the government took the action to remove the cap. So far, the agencies have grabbed about $111 billion taxpayer dollars to stay afloat, and a senior official said that the Treasury Department isn't expecting the losses to top $170 billion.
So why remove the $400 billion cap? Is this a hint that bad things are on the horizon?
The Washington Post reports that Fannie Mae and Freddie Mac have received more in direct taxpayer aid than any other firm except insurer American International Group, and the two agencies have no plan to repay taxpayers.
Isn't that nice.
But there's even more that struggling Americans may find less than amusing about the D.C. Freeloaders.
While most people were focused on getting ready for the holidays, word came out that Uncle Santa already had visited top Freddie Mac and Fannie Mae executives.
The Treasury Department and the Federal Housing Finance Agency have approved pay packages of up to $6 million for the CEOs of Fannie Mae and Freddie Mac. This includes $900,000 in salary, $3.1 million in deferred payments and up to $2 million for meeting performance goals.
The Los Angeles Times reports that four more Fannie Mae executives and one at Freddie Mac have base salaries in excess of $500,000, and they could earn much more. The compensation plan for Fannie Mae leaders could push their total pay to $2.7 million or more, while the Freddie Mac official could earn $1.15 million a year if certain conditions are met.
What's required for CEOs and other executives to receive those big paychecks hasn't been disclosed.
We only hope that acting responsibly and returning these agencies to profitability are at the top of the list. Until Freddie and Fannie are in the black, it's hard to justify top executives seeing the bonus green and laughing all the way to the bank at our expense.
Even Red Skelton couldn't make that amusing.
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