McCain, Rockefeller Want To Ban Bonuses At Fannie And Freddie

WASHINGTON -- A bipartisan group of senators led by Jay Rockefeller (D-W.Va.) and John McCain (R-Ariz.) announced Wednesday that they want to ban bonuses for executives at Fannie Mae and Freddie Mac, the government-backed enterprises placed in conservatorship as part of the 2008 Wall Street bailout.

The Federal Housing Finance Agency, which oversees Fannie and Freddie, approved $12.79 million in bonus pay for 10 executives who met modest performance targets, Politico reported last week. Fannie Mae reported a third-quarter loss of $5.3 billion to the Securities and Exchange on Wednesday.

"It's inexcusable that anyone would think it's okay to hand out these bonuses,” Rockefeller said in a statement. "The American people deserve better and it's time we make sure that Fannie Mae and Freddie Mac act more responsibly with their money."

"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," McCain said. "This amendment makes clear that so long as Fannie and Freddie are in government conservatorship, bonuses such as these will not be paid out."

More than 10 million homeowners owe more on their mortgages than their homes are worth, according to Corelogic, a housing market data firm. Among "underwater" homeowners -- who comprise 22.5 percent of all mortgage-holders -- nearly three quarters are paying above-market interest rates but have little access to lower rates because of their underwater status.

Fannie and Freddie own or guarantee approximately 50 percent of all mortgages. Several elected officials, including California Attorney General Kamala Harris, have called on the FHFA to reduce principal for underwater borrowers. FHFA director Edward DeMarco has opposed writing down mortgage principal, citing a mandate to limit taxpayer losses, but has suggested he'd be open to a proposal that would make it easier for homeowners to pay down principal in a Chapter 13 bankruptcy.

A FHFA spokeswoman did not immediately provide a comment on the senators' plans for anti-bonus legislation. At least seven other senators will cosponsor the measure, according to a release.

Comments

[kemahcw]

12:00 PM on 11/11/2011

How can you protest bonuses at Freddie and Fannie but not protest those banks and corporations that received bail out money? How about BIG CORPORATIONS that give out BIG BONUSES and then lay off workers? Doth not thou protest them also??? Come on man, do you think we can't see through that line of B.S.???

[Rich Hirth]

05:22 PM on 11/13/2011

Because the banks got their $hit together and are back on track, while Freddie and Fannie still need bailouts. Also the government got preferred stock out of the deal, which was sold and a profit was made. Lastly this is America, you can't ban a company from giving their executives money, but Freddie and Fannie are government entities, so the government gets to make those calls.

[kemahcw]

03:46 PM on 11/14/2011

I didn't say ban them from giving bonuses, I said protest. Those companies that received bailout monies should have been made to sign an agreement that would cap the bonuses. That's they way it should have been done.

[Kelly Nickell]

05:04 AM on 11/15/2011

Fannie and Freddie are not government entities, they're GSE's, which is kind of what you ended up with in the Wall Street circle, more or less.

And I wouldn't call moving $50-90 trillion dollars in derivatives exposure onto your FDIC insured banking side having "their $hit together," I'd call that another bailout of a quasi-GSE in the making, as many banks capital requirements and actual capital reserves are at very low levels.

The Federal Housing Finance Agency is the agency making the call. They can be asked to turn down the approval of the 10 execs that made the targets for a paltry 13 million bucks.

If Cain and Rocky want to get serious about this token joke on us all, they should roll back Gramm Leach Bliley, and regulate the derivatives business, before the banks you think have their houses in order go casters-up yet again.

But this time, the FDIC is going to need far, far more cash to cover the losses, because that huge derivative pile is going to be covered before depositors.

That friend, is going to make a very large sucking noise, and the $130 billion we put into the S&L debacle, and the trillions squandered on the 2008 Wall Street bonanza, are going to make F&F's 13 million bonus look like change out of the cushions.

OWS

[elmoor]

10:55 AM on 11/11/2011

Pandering old men...

[Tammy Tyler Palmisano]

08:22 AM on 11/11/2011

Double Standards!..I agree but isnt this the pot calling the kettle black

[LadyPi]

12:02 AM on 11/11/2011

Forgive him, he has a goiter.

[realtimeVIC1]

11:32 PM on 11/10/2011

a little late with the phony outrage, Senator.

[jeliz]

10:40 PM on 11/10/2011

These guys are like some of my family: They won't watch anything but Fox news and they don't hear anything they don't like. That is the only way I can see them coming out and being so hypocritical on these types of topics. It's like they are never addressing more than 30% of the population and only trying to address those who agree with them. Their whole mentality is warped, so much so that they forgot the rest of us out here were listening in. Goobers.

[jeliz]

10:32 PM on 11/10/2011

I got so mad last night watching Fox where they were bashing Dodd Frank and saying that no one needed a bonus at Fannie Mae. Why haven't the Great White Republicans complained at all about the CEOs of failed institutions we bailed out who received obscene sums of bonus money? Not one word was spoken against those institutions, their massive greed or incompetence, and nary a word was said against them getting bonuses. Time to clean up your act, Republicants. This is why OWS exists. You have not taken your own kind to task. Do your jobs or get out. We don't need slackers in the American Congress.

http://www.aflcio.org/corporatewatch/paywatch/

[Sad But True]

08:27 PM on 11/10/2011

Score one for Johnny.

Boy, it's been quite a while since I've been able to say that...

[James Nickel]

02:26 PM on 11/10/2011

Hey Mr Business Man, no profit, no bonus. It's that simple!

[StopMakingSense2]

01:55 PM on 11/10/2011

They are a quasi private/public entity and republicans think insanely large bonuses are good for the private sector so why the hypocrisy? Ridiculously high salaries not tied to performance are norm for America's boardrooms. It's actually better to suck because of the huge golden parachutes they all have.

[Carl Caroli]

01:40 PM on 11/10/2011

For once I agree with McCain.

[sackman]

02:15 PM on 11/10/2011

I agree with him too, But lets go one step further, lets ban all new money to senators as well. The reps, secretarys, bathroom cleaners. landscapers. and and and

[Flippy Cat]

01:39 PM on 11/10/2011

I seem to recall that when the issue came up in 2009 about paying huge bonuses to Wall Street execs, the Repubs were screeching that the bonuses must be paid because they were part of the individual's contract. They said the U.S. government had no rights to negate a legal contract.
In the case of Fannie and Freddie, new people were brought in to clean up the mess. While these two GSE's are still in trouble ( it's ridiculous to think they would be cleaned up in 3 years) much has improved at these entities. The people who have started the process of turning FNMA and FHLMC around should be paid bonuses.
I am in the mortgage lending industry and can see the benefits of what these individuals have done. Have they accomplished everything? Definitely not, but Rome wasn't built in a day either. These complicated and convoluted financial issues are not solved overnight. They are so complex that it will take years.

[Cheryl Lombard]

02:13 PM on 11/10/2011

THOSE TEN EMPLOYEES DO NOT DESERVE TO SPLIT BONUSES OF 12+ Million. How ridiculous is that when the PEOPLE who are struggling to keep their homes PAID TO BAIL THEM OUT!
If the government is in such financial turmoil, why do these bonuses keep getting paid....

[freedomny]

09:38 PM on 11/10/2011

What??? If they want to make more money than they should try to get a job on Wall Street. The taxpayer is paying these bonuses. And trust me...there are many bright and talented people who would love to have a well paying job that could do just a good a job as they are.

I was in the mortgage business for many years. Pray tell....what are the benefits that these individuals have done. Really. Give me some examples....I'd love to know what they are.

Banker supporting ethical capitalism.

[Frog in a pot]

12:53 PM on 11/11/2011

The taxpayer isnt paying those bonus's they are for profit ,largely privatized ,Quasi-governemntal institutions.

They worked quite well as a not for profit.

[americawasgreatonce]

01:11 PM on 11/10/2011

McCain handed Obama the election by picking the broad... He had some good choices and if he had picked any one of them he would now be President.

[StopMakingSense2]

01:57 PM on 11/10/2011

In your dreams and everyone else's nightmares.

[americawasgreatonce]

01:09 PM on 11/10/2011

5.3 Billion loss and heres your bonus... we are all stuffed!

[truthsayer4ever]

12:57 PM on 11/10/2011

Wow! Senator McCain must be taking his meds as prescribed. He made some sense today.