Frank Says Gov't Should Stop Fannie, Freddie Bonus

 

Monday, Mar 23,2009, 11:53:35 PM   Click:

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WASHINGTON_A key legislators asking the federal government to cancel the ARB for hundreds of employees of Fannie Mae and Freddie Mac in the midst of public outrage on payments to companies with senior federal rescue.

Rep. Barney Frank, D-Mass., Asked the Federal Housing Finance Agency, which regulates Fannie and Freddie, to eliminate the premiums approved for this year and next. Frank also wants employees to pay premiums last fall, after both companies were placed under government control.

Initially, the award programs to Fannie and Freddie a few ruffled feathers. But the generous checks are politically sensitive as lawmakers and the general public is about more than 165 million in bonuses paid at the end of last week bailed out insurance giant AIG.

The public rightly insists that the major such as bonuses paid by institutions receiving public funds at a time of severe economic recession can not continue, "writes Frank, chairman of the House Financial Services Committee. The letter dated Thursday was released by his office Friday. A spokesman for Fannie declined comment.

More than two years, Fannie Mae plans to pay a total amount of premiums for maintaining at least $ 1 million each to four key executives as part of a comprehensive plan to keep employees from leaving. Rival mortgage finance company Freddie Mac plans the same price, but does not yet have the details of the executives who will benefit.


Both companies have been hampered by the soaring defaults. Fannie recently requested $ 15 billion in federal aid, while Freddie has requested a total of nearly $ 45 billion.

The government took control of Fannie and Freddie in September and installed new leaders. After the takeover, regulators devised a rewards program to encourage workers to remain in their jobs.

"It was essential to keep their most important asset _ _ their employees who are called to play an essential role in the economic recovery of the country," James Lockhart, director of the Agency, said in a statement earlier this week. "Like the previous senior management teams left, it would have been catastrophic to lose the next lower layer and other experienced employees."

Frank, however, cast doubt on this argument. "In this troubled economy, and in this market, it is difficult to imagine that companies would not be able to find replacements capable and talented for anyone who chooses to leave."

The legislature Thursday the House voted decisively to impose a tax of 90 percent over millions of dollars in premiums paid by the employee in need of insurance giant AIG and others, alleging the companies. Similar legislation was introduced in the Senate and President Barack Obama quickly reported general support for the concept.



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