Saturday, December 26, 2009

Unlimited Borrowing, Big Bonuses for Fannie/Freddie

The Obama administration, while condemning Wall Street bonuses, authorized huge bonuses for executives of the government giants Fannie Mae and Freddie Mac. They also authorized unlimited borrowing on the taxpayer's credit card for both the government lending giants. All this done over the Christmas weekend to minimize news coverage.

But even as the administration was making this open-ended financial commitment, Fannie Mae and Freddie Mac disclosed that they had received approval from their federal regulator to pay $42 million in Wall Street-style compensation packages to 12 top executives for 2009.

The compensation packages, including up to $6 million each to Fannie Mae and Freddie Mac's chief executives, come amid an ongoing public debate about lavish payments to executives at banks and other financial firms that have received taxpayer aid. But while many firms on Wall Street have repaid the assistance, there is no prospect that Fannie Mae and Freddie Mac will do so.