Federal Housing Finance Agency
While the administration regularly takes Wall Street to task for what it calls excessive bonuses, especially to companies bailed out by taxpayer money, it has been relatively silent about the bonuses approved by its own Federal Housing Finance Agency for two quasi-government companies at the center of the housing market meltdown:
The Federal Housing Finance Agency, the government regulator for Fannie and Freddie, approved $12.79 million in bonus pay after 10 executives from the two government-sponsored corporations last year met modest performance targets tied to modifying mortgages in jeopardy of foreclosure.
Remember AIG and the huge uproar over the bonuses they were contractually bound to pay soon after the bailout? Well these bonuses weren’t wrapped up in any contractual binding. These have been approved since that time. And to top it off, on average, they’re larger bonuses than AIG paid.
You’d think the FHFA would have a clue, wouldn’t you? You’d think they’d understand the “optics” of this sort of a payout of taxpayer money, not to mention that the government is supposedly trying to cut spending.
But obviously they don’t understand that.
Thankfully the Congress has thus far reacted to the situation in a swift and positive manner (for once):
The House Financial Services Committee, responding to lawmaker anger over compensation at Fannie Mae and Freddie Mac, approved a measure that would suspend the compensation packages for executive officers at the companies. The bill also would require employees of the two firms to be moved onto a pay scale that lines up with federal financial regulators including the Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency.
“Awarding lavish pay packages to the heads of these companies that have accepted $170 billion in taxpayer cash can’t be defended,” Representative Spencer Bachus of Alabama, the panel’s chairman and sponsor of the bill, said today.
We will see if they carry it on through and actually get something passed, but even Barney Frank, who initially opposed the bill is now supporting it. And when Freddie and Fannie have lost Barney, they’re in trouble:
Representative Barney Frank, the top Democrat on the Republican-controlled panel who initially opposed the measure, voted for the bill because of what he described as “insensitivity” by the companies in continuing to award bonuses.
“I had hoped that they would use restraint on their own because I think it’s better that we not intervene,” Frank, of Massachusetts, said today. “But they did not.”
Again, the “insensitivity” wasn’t something the companies did, although they likely requested the bonuses. It was the FHFA, a governmental agency, which approved the bonuses. It is business as usual among the bureaucrats who are obviously “insensitive” to the situation and continue to lavish taxpayers money where ever they decide it is deserved. If you want a clue as to why the federal government’s spending remains out of control, this is a good example.
Bureaucracies are forever it seems and they become the unaccountable drivers of government action. It is there which, if any meaningful reform is ever to be undertaken with shrinking the size and cost of government is to be done, where reformers must start.