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Fannie And Freddie Bonuses Coming Next Furor

By Big Tent Democrat, Section Economy
Posted on Wed Mar 18, 2009 at 03:35:13 PM EST
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Here's the next furor:

Fannie Mae is due to pay retention bonuses of as much $470,000 to $611,000 this year to some executives despite enormous losses at the government-backed mortgage company. Fannie's main rival, Freddie Mac, also plans to pay such bonuses but hasn't yet provided details.

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    Fannie And Freddie Bonuses Coming Next Furor | 36 comments (36 topical)

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    Hopefully (5.00 / 1) (#1)
    by Amiss on Wed Mar 18, 2009 at 03:39:54 PM EST
    Congress will stop the pay-out of these bonuses BEFORE they are paid.

    Don't count on it (5.00 / 4) (#4)
    by jbindc on Wed Mar 18, 2009 at 03:52:47 PM EST
    They will claim they only found out about it today.

    Parent
    And, they were probably paid out (5.00 / 1) (#8)
    by Inspector Gadget on Wed Mar 18, 2009 at 04:05:30 PM EST
    yesterday.

    Parent
    Weren't the bonus in the Stimilus Bill? (none / 0) (#28)
    by BrassTacks on Thu Mar 19, 2009 at 01:30:22 AM EST
    I heard, from two different sources, that Congress agreed the bonuses could be paid because they are part of contracts.  Ditto AIG, the bonuses were in the TARP bill that Obama pushed through with few of the Congressmen reading it.  They can't now claim that they didn't know about these bonuses.  

    Honestly, Geithner needs to go.  He's been a disaster from the beginning.  He should have prepared Obama for this mess.  He had to know that the bonuses were in the bill.  He's made Obama go on the defensive and look like a fool.  

    Parent

    The bonuses were not in the stimulus bill (5.00 / 2) (#29)
    by caseyOR on Thu Mar 19, 2009 at 01:39:40 AM EST
    Chris Dodd pushed hard to include limits on compensation for any company taking bailout money, not just AIG. The Obama administration, led by Geithner and Summers,  opposed these limits, and fought to have them removed from the bill. And, in the end, Obama won. Now, though, since the s**t has hit the fan, Obama's people have very sleazily been claiming that the limits were removed from the bill by Dodd. It is a lie being told by, among others, Robert Gibbs, Obama's press secretary.

    Geithner claims that he didn't know about the AIG bonuses until last week. That also appears to be a lie. And according to Ed Liddy, the current CEO of AIG, he discussed these bonuses with Bernancke months ago.

    Parent

    Dodd wrote the limitations (5.00 / 1) (#31)
    by Green26 on Thu Mar 19, 2009 at 05:33:31 AM EST
    on compensation in the stimulus bill. Dodd won on this; Gaithner didn't.

    Dodd included the language that says existing contracts are an exception to the limitions.

    Given that this provision was adopted by Congress only a month or so ago, how can so many in Congress be angry and surprised that AIG is doing what Congress specifically said was okay for companies to do?

    Parent

    The exemption (5.00 / 2) (#32)
    by Big Tent Democrat on Thu Mar 19, 2009 at 06:04:09 AM EST
    was included at Geithner's urging.

    Parent
    Where have you seen that Geitner (none / 0) (#35)
    by Green26 on Thu Mar 19, 2009 at 10:40:20 AM EST
    requested the language saying the Dodd-written language not apply to previously entered into employment agreements?

    The bidding went something like this, is my recollection. The executive comp limitation in the bill(s) (or the main bill, or one bill) was much less broad than what was eventually adopted. It didn't apply to companies who had already received TARP funds, among other things.

    Dodd decided to significantly change and broaden the provision, according to press reports. Geithner and Obama administration became concerned and made a significant effort to narrow it, including going to the Hill, I believe.

    Overall, Dodd won out on this, as the executive comp limitation provision ultimately became retroactive and broader. Retroactive in the sense that it applied to prior TARP recipients.

    As for the provision exempting previously entered into employment contracts, this may have come from Geither. And while I seen some commentators try to indicate this, I have yet to see an article that had clear information on that narrow point. This includes the Hamsher article, and other articles.

    Was Geithner in the conference committee meeting when the final language was written? Axelrod was there and observing, along with various Democratic members of Congress. Shortly after the bill was passed, I spoke to a Senator who was in the meeting. He listed the participants in the committee meeting. I don't recall him mentioning Geithner. It is possible that I'm not remembering correctly, or that he inadvertently didn't list Geithner.

    Anyway, I don't know who pushed to insert the exemption, where it actually came from, and who agreed to insert it. I'm just curious if there is definitive information that Geithner in fact is the one responsible for it.

    Parent

    My new plan. (5.00 / 2) (#2)
    by LarryInNYC on Wed Mar 18, 2009 at 03:46:54 PM EST
    All my programs will, from now on, be guaranteed to fail in ways that are subtle enough that my clients won't notice the problem until the bad software has destroyed their companies.

    I figure, this way they'll pay me huge bonuses to keep me on.  I mean, who else will know where all the bugs are?

    Sounds like a solid business plan (5.00 / 1) (#12)
    by nycstray on Wed Mar 18, 2009 at 04:17:59 PM EST
    to me. I was just trying to figure out how to work it into mine :P

    Who knew integrity was so last decade?!

    Parent

    wasn't this business model (none / 0) (#13)
    by Jlvngstn on Wed Mar 18, 2009 at 04:25:21 PM EST
    already tried successfully leading up to 2000?  Worked out well last time.

    Parent
    This is disgusting (5.00 / 1) (#3)
    by jeffinalabama on Wed Mar 18, 2009 at 03:48:16 PM EST
    and irresponsible.

    I wish I could make a difference, but I'm too busy looking for a new job, since my position is being eliminated because of bad economic times.

    Oh No, not you Jeff (5.00 / 1) (#34)
    by Militarytracy on Thu Mar 19, 2009 at 09:39:03 AM EST
    I know we will survive this, but it doesn't make it any more tolerable!  In fact, knowing that this has caused you to get the ax makes me just furious!  Auburn University.......one of the few higher learning establishments that Bama takes pride in.......and its overly conservative leaning has done this to it.  Do you think I can get any of the people around me here to understand that?

    Parent
    Re: Making a difference... (none / 0) (#22)
    by kdog on Wed Mar 18, 2009 at 06:49:59 PM EST
    Ya know...to make a difference and stop the thieving of the nation we'd have to be as ruthless, as cunning, as heartless, as conniving, and as leecherous as the perpetraitors of this unprecedented fraud.

    I don't know what we do.  I guess duck and cover and love your neighbor, same as always.

    Good luck jeff...we're all gonna need it.  There are retention bonuses in zombie corporations to be paid and wars to wage and people to cage.

    Parent

    The future of the Obama administration (5.00 / 6) (#5)
    by Cream City on Wed Mar 18, 2009 at 03:57:36 PM EST
    well may rely on how it handles this week.

    And flying out to sunny California to go on Leno is not gonna save it.  That campaign is so over -- and the re-election campaign calls for staying in the capital to at least look like it is in charge.

    It does look silly (5.00 / 5) (#6)
    by jbindc on Wed Mar 18, 2009 at 04:02:06 PM EST
    I know he's going out for other things, but all people will see is that he is flying out on Air Force One (at taxpayer expense) in the middle of all these fiascoes to go on "The Tonight Show". The young ones who voted for him will love it and think it cool, but lots of people will not.

    Parent
    I disagree (5.00 / 2) (#11)
    by CST on Wed Mar 18, 2009 at 04:17:49 PM EST
    In 3 years, no one will remember this week.

    They will remember how the economy is doing 3 years from now.

    Parent

    Yes but it is important that his credibility (5.00 / 1) (#19)
    by BernieO on Wed Mar 18, 2009 at 06:09:59 PM EST
    is kept high now. Otherwise he will have even more problems getting things like health care reform through and then he will be blamed for its failure. People may not remember this specific event, but it chips away at his image at a time he needs to been seen as serious, not a fun guy. We got enough of the fun guy routine with Bush and I think - hope - the public has wised up.

    Parent
    Of course not. But this week (5.00 / 2) (#21)
    by Cream City on Wed Mar 18, 2009 at 06:13:32 PM EST
    and next week may determine whether the budget and the next bills get through to fix the economy.

    Actions have consequences.

    So do inactions.

    Parent

    You suppose they will talk (none / 0) (#7)
    by Inspector Gadget on Wed Mar 18, 2009 at 04:05:04 PM EST
    about the country, or will they keep the topics to basketball and cocktail parties? I'm guessing this will be a purely social event.


    Parent
    I think the town hall will (none / 0) (#17)
    by MKS on Wed Mar 18, 2009 at 05:47:24 PM EST
    focus on the economy...,.

    And, Obama will talk with Leno about the economy too.  Let's see what happens tomorrow on the Leno show.

    Parent

    Almost 80F today (none / 0) (#10)
    by sarcastic unnamed one on Wed Mar 18, 2009 at 04:17:32 PM EST
    according to my car thermometer.

    Parent
    Many have predicted doom for Obama (none / 0) (#16)
    by MKS on Wed Mar 18, 2009 at 05:42:57 PM EST
    many times before.  

    If the economy is doing well in 2012--he will be re-elected.

    The bonus issue is short-term issue.

    Parent

    The bonus issue (5.00 / 2) (#18)
    by jbindc on Wed Mar 18, 2009 at 06:09:02 PM EST
    Will be longer than you think if Obama comes back in a few months asking for more stimulus and TARP II.  This stuff will be resurrected.

    Parent
    Perhaps (none / 0) (#24)
    by MKS on Wed Mar 18, 2009 at 07:23:06 PM EST
    but Citi says it is profitiable.  B of A says the same thing.....If that is true, there will be no need for TARP II.

    Even the Republicans are talking about an RTC type program to deal with toxic assets....Obama just needs to frame the issue correctly and avoid the perception of "bailing out" banks--in reality the government is buying the stock of the banks--or "nationalizing" them.....

    I assume that at least some of the bonuses will be returned.  How many AIG executives want to be made infamous over this issue?

    Parent

    Or a TARP III (none / 0) (#25)
    by MKS on Wed Mar 18, 2009 at 07:45:49 PM EST
    The second half of the original TARP is what is now working its way through the system....

    Parent
    LOL (none / 0) (#30)
    by NYShooter on Thu Mar 19, 2009 at 02:19:48 AM EST
    "How many AIG executives want to be made infamous over this issue?"

    52 cashed their "retention" bonus checks, quit the company, and shot out the door faster than a ball bearing outta a slingshot.

    how many.......lol, lol, lol


    Parent

    The story is not over (none / 0) (#36)
    by MKS on Thu Mar 19, 2009 at 12:04:32 PM EST
    They are trying to conceal their identities.....That will not work....They are going to be as infamous as child molesters when this is done.....

    The smart ones will figure that out and return the money.....

    Parent

    The economy in 2012 (5.00 / 1) (#20)
    by Cream City on Wed Mar 18, 2009 at 06:12:26 PM EST
    may well depend upon what Obama can get approved in coming weeks, which may well depend upon whether his administration gets through this week with credibility.  

    It's how cause-and-effect works.

    Parent

    I don't think so (none / 0) (#23)
    by MKS on Wed Mar 18, 2009 at 07:16:42 PM EST
    I think the stimulus and the existing TARP are probably sufficient....They haven't even kicked in yet but we see signs already that the bottom is near....And once the stimulus does kick in, we should be doing much better.

    What may be more at risk is health care reform and energy issues--from Republicans who could argue government always gets things wrong....but the overall economy should recover enough to get Obama re-elected....

    Obama will probably be very lucky on the timing of the recovery.....As jobs come back, the issue will become the deficit and inflation....Obama clearly has this end game in mind.....The expiration of the Bush tax cuts in 2011 will help both suck up excess cash to stem inflation and also to close the budget deficit.  And, the Fed will have to raise interest rates above their current almost-zero level and that will help with inflation too.  Selling stock owned by the government in AIG and Citi will pull even more cash out of the system and help with budget issues.....

    Obama has very good long range strategies....The short term execution has taken a hit over AIG but it will be forgotten as things move along....

    Again, I would not bet against Obama....  

       

    Parent

    It's the health care and energy issues (none / 0) (#26)
    by Cream City on Wed Mar 18, 2009 at 09:37:41 PM EST
    that concern me, that could be what the cost will be for the problems now.  We have had to fix the economy again and again, so I know that it will be done -- it's just how soon that I worry about.

    But the real long-term fixes to our economy and more would be the health care and energy bills that, once again -- as with Carter, as with Clinton -- may not happen now.  And if not now, when?  

    Parent

    True (5.00 / 2) (#27)
    by MKS on Thu Mar 19, 2009 at 12:29:49 AM EST
    That is the real risk...

    Hopefully, the government will get the bonuses back by, if nothing else, sheer shaming of the AIG executives.....The identities of those taking the big bonuses will come out, sooner or later.  Better to be a hero and return it than a cad who tries to keep it.  The blackballing will be relentless....

    Parent

    I just can't wait for Saturday (5.00 / 1) (#9)
    by Militarytracy on Wed Mar 18, 2009 at 04:14:49 PM EST
    and to go to the diner and listen to pontificating Shelby and his genuflecting supporters Fox Newsing this crap to death.  The sudden moral outrage of my fellow local Republicans is going to ruin my onion rings and I'm just going to have one exhausting conversation after another.  Can somebody just stop the stupid long enough for me to catch my breath?

    The guys who sit on our board (5.00 / 1) (#14)
    by jondee on Wed Mar 18, 2009 at 04:44:05 PM EST
    are the guys who sit on their board, who in turn sit
    on the other companie's board; and they're all golfing buddies with the Secretary of Defense and Bernie Summers Paulson Greenspan III.

    And the rest, as the ancient Rabbis said, is commentary.

    Parent

    Perhaps, as a public service, (5.00 / 3) (#15)
    by oculus on Wed Mar 18, 2009 at 05:19:04 PM EST
    you could live blog or Twitter?

    Parent
    I was thinking exactly the same thing (none / 0) (#33)
    by Militarytracy on Thu Mar 19, 2009 at 09:33:59 AM EST
    a little videoing or something.  This website generates a lot of really really good ideas along with a lot of reality checks and linking to something like that for everyone to check out cannot be a bad thing.  You know this is the start of the talking pts that the Dems give the whole world away, the bleeding hearts that they are.  Forget about the fact that rubberstamper Shelby has everything to do with the creation of this horror and has no solutions outside of burn it all down.  This is where the next fight for our country is......and for some sort of middleclass to survive and grow!  

    Parent
    Fannie And Freddie Bonuses Coming Next Furor | 36 comments (36 topical)

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