OTR Interviews

Washington Has No Holiday Cheer for Executive Bonuses for Bailed-Out, Failed Mortgage Giants Freddie Mac, Fannie Mae

Sen. John Thune and bipartisan group of senators want Pres. Obama to intervene on 'wasteful' bonuses in bailed-out mortgage giants


This is a rush transcript from "On the Record," November 7, 2011. This copy may not be in its final form and may be updated.

GRETA VAN SUSTEREN, FOX NEWS HOST: And now it's time for you to get out your wallets! Remember Fannie Mae and Freddie Mac? Well, you bailed them out to the tune of -- ready for this? -- $140 billion! But they last week asked for a bit more. They want $6 billion more. Oh, and that's not all. They're asking you for a little pre-holiday spirit. The executives are asking for $13 million in bonuses not for the Fannie Mae or Freddie Mac, they want that for themselves. So are you in the mood to pay it?

Senator John Thune joins us, who apparently is not in the mood to pay it because you sent a letter off. You -- you're not -- where's your holiday cheer?

SEN. JOHN THUNE, R-S.D.: Good question, Greta. Definitely not in -- my holiday cheer isn't in support of $12.8 million in bonuses for Freddie Mac and Fannie Mae executives.

VAN SUSTEREN: So what's the letter you wrote? And apparently, you weren't the only one who's on this letter. It's quite a hefty list of senators who are unhappy about this.

THUNE: It is. We had 60 senators sign a letter to the executive at the Federal Housing Finance Agency and basically saying that they need to reexamine their federal or their employee compensation package to make it more accurately reflect the public mission of the agency, as well as the fiscal realities that we're facing today. I mean, these bonuses just show a real tin ear to what's happening in the real economy out there and having 14 million Americans who are unemployed.

VAN SUSTEREN: You know, your -- the letter I read, it's signed by the 60 senators, is such a nice senator-like letter. I would have written it for the first line would be, Are you out of your mind?


VAN SUSTEREN: I mean, really! I mean, it's, like -- I mean, it was actually astounding because not only were they asking for, you know, $12 million, $13 million, $14 million in personal bonuses, but they're also asking for billions of dollars more in aid. So it's not like they're coming and saying, Look how successful we are. Look how great things we've done. But they're also -- they're asking for another handout. So I'm not particularly impressed with what they've done.

THUNE: Right. And I think the letter was designed -- obviously, you get 60 senators to sign a letter, you're going to have to find language everybody agrees with. I probably would have made it a lot harder myself. But I think we called them wildly imprudent. We said that this was wasteful, and we talked about, again, coming back and creating a compensation structure that is just really more consistent with the public mission of the agency.

And Freddie Mac and Fannie Mae, although they're not officially debt of the federal government, they are off-balance-sheet debt. And of course, we've seen the taxpayers have had to bail them out to the tune of over $140 billion so far.

So this is to me -- it is -- I think most people would find it outrageous, and I think it's something that needs to be addressed and dealt with. And I think it's something that the president, frankly, needs to get involved with, as well, because this is something that's happened on his watch. He was very critical of Freddie Mac and Fannie Mae when he was running for office and the types of pay that was made to some of the senior officials.

VAN SUSTEREN: Well, it's -- I'll tell you, the man who spoke last week, testified, Edward DeMarco, who's the man who's making the decision -- and I think it's worth noting that the executives who are in line to get this -- to divy up this $13 million in bonuses are being paid salaries of $900,000. So it's not like, you know, they don't have substantial salaries to begin with.

But he said in testifying something to the effect that they need to pay off bonuses to attract, you know, good talent. The good talent won't come around unless you pay. And I thought to myself, Good talent? If they -- you know, if they have good talent, why do they need another bailout?


VAN SUSTEREN: I mean, it isn't exactly good talent if -- maybe we could -- maybe we pay just to get rid of them so we don't have to pay another $6 billion next quarter!

THUNE: Right. Well, these are the guys who were brought in to kind of clean up the mess. And you know, so far, they're asking for another $6 billion. They have reduced what we think is going to be the liability of the taxpayers, though, for the Freddie Mac and Fannie Mae bailout significantly over the course of the last year.

But that being said, they're asking for an additional $6 billion in taxpayer assistance at a time when they're making these big bonus payments. And it just sounds -- it just looks terribly inconsistent, and I think it is -- it is an outrage. And I think, you know, you've got to show a little bit more of an ear for what's going on in this country right now and how important it is that we get our fiscal house in order, how important it is that we get people in the real economy back to work. This just doesn't square with that.

VAN SUSTEREN: I take it that we didn't sort of tie them up and handcuff them and drag them into these $900,000 jobs, right? They came voluntarily?

THUNE: Right, and you know...

VAN SUSTEREN: I mean, so it's, like -- (INAUDIBLE) it's not like they were forced to take -- and I -- when -- when they got these jobs, did we promise them this $13 million to be divvied up in bonuses?

THUNE: I don't know the answer to that for certain. What I know is that the Federal Housing Finance Agency, in consultation with the Treasury, sets this. Now, the president's czar sort of set the pay for a lot these things a long time ago. But I think the bonuses are probably all something that's very discretionary. And you would think if it's discretionary, you wouldn't want to make those types of payouts right now.

Now, the House of Representatives is working on legislation to reform Freddie Mac and Fannie Mae in a way that would create a new structure for the pay for these that's more consistent with what other federal employees might receive.

VAN SUSTEREN: Other people's money.

THUNE: Well...

VAN SUSTEREN: Boy, it's easy to spend it, isn't it?

THUNE: Well, it really is. And like I said, we just -- this struck us -- when we saw this, it was, like, My gosh, we have got to get on the record here. And so that's what the letter was deigned to do. And frankly, they ought to cancel. They ought to rescind these bonuses.

VAN SUSTEREN: Senator John McCain was -- he was on the floor about 15 minutes, pounding the podium. He was -- he was furious. He was so enraged.

THUNE: Yes, John's very -- well, as are a lot of people. I mean, a lot of my colleagues -- that was why it was so easy to get signatures on the letter when we started circulating it because all you had to do is say, Did you see these bonuses, what they're paying out? And everybody's, like, "I'll sign, I'll sign."

But I think that's the kind of reaction the American people have, and that's why it's so important that there be some action taken to correct or rectify this.

VAN SUSTEREN: Are you going to stop it? You're asking...

THUNE: You cannot defend it.

VAN SUSTEREN: ... to stop this?

THUNE: Well, we'll -- we're -- there are going to be efforts made, I think, legislatively...

VAN SUSTEREN: Efforts made?

THUNE: I think there are going to be...

VAN SUSTEREN: Efforts made! This has got to stop!

THUNE: ... measures made legislatively. So we will do everything we can to put pressure on these guys to try and get this thing canceled.

VAN SUSTEREN: Senator, thank you, sir.

THUNE: Thanks, Greta.