Published November 01, 2011
A Republican senator is calling on President Obama to cancel the $12.8 million in bonuses that were approved for 10 executives at the government-seized mortgage giants Fannie Mae and Freddie Mac that received a $170 billion taxpayer-funded bailout.
“I am calling on the president of the United States to cancel those bonuses and explain to the American people, the taxpayers who bailed out Freddie and Fannie, why he continues to reward failure,” Sen. John Barrasso, R-Wyo., said at a news conference Tuesday.
The two housing giants have received about $141 billion in taxpayer funds since the government took them over in 2008 during the financial crisis. Sen. Spencer Bachus, R-Ala., is pushing a bill to suspend pay packages at Fannie and Freddie and require executives and employees of government-sponsored enterprises to be paid according to the federal pay scale.
Politico first reported the $6.46 million in bonuses for the top five officers at Freddie Mac -- including $2.3 million for CEO Charles E. Haldeman Jr., who is stepping down next year -- and $6.33 million for Fannie Mae officials, including $2.37 million for CEO Michael Williams, for meeting modest goals.
A second bonus installment for Freddie executives in 2010 has yet to be reported to the Securities and Exchange Commission, Politico reported.
White House aides say the president took a lead on cleaning up excessive compensation on Wall Street with the Dodd-Frank bill, but those provisions do not apply to Fannie and Freddie.
“The White House was not involved and nor should it be,” White House Press Secretary Jay Carney said Tuesday.
But during the 2008 presidential campaign, Obama had a slightly more aggressive view.
“I’ve always said that any action with respect to Fannie Mae and Freddie Mac needs to put taxpayers first and can’t under any circumstances bail out shareholders or senior management of that company,” Obama said.
Freddie Mac defended the bonuses.
“Freddie Mac has done a considerable amount on behalf of the American taxpayers to support the housing finance market since entering into conservatorship,” Freddie spokesman Michael Cosgrove told Politico. “We’re providing mortgage funding and continuous liquidity to the market. Together with Fannie Mae, we’ve funded the large majority of the nation’s residential loans. We’re insisting on responsible lending.”
Citing a “quiet period” in advance of its third-quarter earnings report, a Fannie Mae spokesman declined to comment to Politico.
Last week, Obama launched an executive action to help underwater borrowers with mortgages backed by Fannie and Freddie while visiting Nevada – which is drowning in underwater loans.
Senate Majority Leader Harry Reid, who represents Nevada, was literally speechless when told of the bonuses.
“A gag reflex in front of all of you would be improper,” Reid said.
Fox News' Ed Henry contributed to this report.