Fannie, Freddie Executives Defend Pay

[lektrode]

damn! have we got some dueling headlines going in the lamestream media today, or what?

on the one hand the smear-machine is set to ALL AHEAD FULL/auto-pilot on the 'pubs, and since ole herman is all but washed up at this point, its on to newt - but while one side wants to pin him with taking money from that bankster-enabler buracracy from hell, we get some interesting news, coming 'all of a sudden' from outa The House?

hmmmm....
(look dont start hurlin the knives at me, i just puttem up when eye find em

http://blogs.wsj.com/developments/20...es-defend-pay/

• November 16, 2011, 10:39 AM ET

Fannie, Freddie Executives Defend Pay

By Nick Timiraos

Bloomberg News

At Freddie Mac, 14 of the 18 top management officials have turned over since August 2009.

The top executives of Fannie Mae and Freddie Mac were set to defend large cash pay packages approved by federal regulators before a congressional panel on Wednesday, one day after lawmakers took steps to put employees at the mortgage giants on a federal pay scale.
“Given the widespread economic hardship facing so many in our nation, I fully understand why the American people are upset about executive compensation,” particularly with companies that received heavy taxpayer support, said Charles E. Haldeman Jr., Freddie’s chief executive, in prepared testimony.
Still, he warned that the risks remain high that Freddie could suffer an “exodus of our most highly experienced and talented employees,” hindering the company’s ability to minimize losses and aid the mortgage market. Fannie and Freddie own or guarantee more than $5 trillion in mortgages and are in the process of rolling out a series of improvements to a program designed to allow more borrowers to refinance.
Already, the company is finding it “increasingly difficult” to retain critical employees and attract top talent, said Mr. Haldeman. At Freddie, 14 of the 18 top management officials have turned over since August 2009, offering “an indication of the difficulties we face in retaining qualified top executives given the company’s current status and uncertain future.”
The CEOs at Fannie and Freddie have base salaries of $900,000 annually. They stand to make as much as $6 million each year after receiving deferred pay and bonuses. The executives’ compensation packages remain 40% below the levels before the government took the firms over in 2008, according to the Federal Housing Finance Agency, which is overseeing the firms while they are under government control.
In 2010, the top 16 officers at Freddie Mac received more than $30 million in compensation and benefits, according to the company’s annual compensation report that was provided to Congress in June.
The FHFA approved the pay packages two years ago in consultation with the U.S. Treasury. The pay packages allow for compensation that is spread out over two years, and it is paid in cash because the company’s stock is considered worthless.
Both companies have run into challenges trying to recruit outsiders to take senior positions. Officials justified pay structures that offer long-term cash incentives because comparable private sector jobs offer more stable, long-term career opportunities, “and in many cases, substantially more compensation,” said Michael Williams, chief executive at Fannie Mae.
Executives also defended million-dollar pay packages given the increased legal and reputational liabilities that senior executives face in taking top jobs and making necessary disclosures under Sarbanes-Oxley and Securities and Exchange Commission reporting requirements. “Many executives are unwilling to accept these risks for less than what they could earn elsewhere,” said Mr. Haldeman.
On Tuesday, the House Financial Services Committee approved a measure that would put employees of the mortgage-finance companies on the federal pay scale, effectively cutting the pay of thousands of employees and suspending packages for top executives that can run to millions of dollars.

Cutting compensation would “needlessly destabilize the company” by “driving away even more employees,” said Mr. Haldeman.

uh HUH...
hmmm... seems to me - after all thats happened, maybe, just MAYBE THATS A GOOD THING???

but eye get a kick out of not only did this one apparently come from bloomyville (who i dare say is doing a MUCH better job than ole rupert&co are these daze) but that its being spun by some to make gingrich look bad?

HAHAHAHAHAHAHAHAHA !!!!!!!

oh me.... now its definetly time to go hit that rock pile....

[shiny!]

Re: Fannie, Freddie Executives Defend Pay

I listened to the hearing on C-Span radio. Near the end, after they had defended their salaries, bonuses and shoddy work, they were asked when they would be able to pay back the money they received from the taxpayer-funded bailouts. They said they would never be able to pay the money back! While I can't quote them exactly, they said that because they would never be able to pay back the taxpayers, their philosophy now was to essentially "move on".

They should all be fired, their assets confiscated and used to pay us back! Out of the millions of Americans out of work, I'm sure that quite a few could do a better job than they do for a decent middle-class salary.

[mmr]

Re: Fannie, Freddie Executives Defend Pay

They should all be fired, their assets confiscated and used to pay us back!

I certainly have no issue with punishing everyone in the current management team who was responsible for creating this mess. (Many of those who were most responsible left years ago.) However, this is exactly why no one with a reasonable ability to evaluate risk (an important skill for anyone who would be responsible for managing a $2 trillion mortgage portfolio) would voluntarily step into that job to replace them without very high compensation for taking that risk. If one has the choice between taking a senior job at Fannie or Freddie with tremendous risk for a median salary, or taking a job with a bank and earning hundreds of thousands of dollars without the risk of being publicly tarred and feathered, isn't the choice obvious?

Out of the millions of Americans out of work, I'm sure that quite a few could do a better job than they do for a decent middle-class salary.

I doubt that anyone could manage these mortgage portfolios to profitability, at this point managing these companies is just a matter of disaster containment. However, if one isn't willing to pay the market rate for decent replacements, it's quite possible to make what is already a bad situation even worse.

[lektrode]

Re: Fannie, Freddie Executives Defend Pay

ok - thats reasonable - but how about we just go back to the 'good ole daze' when bankers put their OWN money on the line and evaluated mortgage applicants the way i was 'evaluated' (read: put on the rack, basted and grilled, in 2003) by a bank, A REAL BANK, that to this day, nears i know, still owns/services the loan?

when they had skin in the game, it seems to me things worked out better for all parties concerned - except, of course, the FIRE brigade, most of whom got paid via commissions vs salary and in the ultimate conflict of interest, colluded with the realestate people, the appraisers, the loan originators, et al - to do what? DRIVE UP THE PRICES OF RESIDENTIAL PROPERTIES until they were no longer 'affordable' by the working class - and WHY did this happen?

because the political class got to make hay with it, while they SCREWED the working class and then got re-elected while they were at it, for 'expanding home ownership' (read: loan-owners) while the shyster class all got rich touting their "how to get rich on real estate with no money down and pay no taxes while making millions"

my head is still spinnin trying to figure out who was worse: the banksters or THE GD POLITICIANS!!!

and at this point, after the past 2-3 years in particular?

the politicians are 'winnin'

[mmr]

Re: Fannie, Freddie Executives Defend Pay

If one were starting a new banking system from scratch, one could go back to the really old days for ideas - apparently England used to do the following:

- Banks were unlimited liability corporations (i.e., if you owned a bank, the bank's losses would become your personal losses)
- Even if you sold your ownership stake in the bank to someone else, you were still liable for losses afterwards
- No deposit insurance, so depositors would take a really keen interest in what the bank managers were doing with their money

It wasn't a perfect system, and would be very difficult to scale up to support mega-corporations in a complex economy like the one we have today, but at least it addressed the conflict of interest problem.

[jiimbergin]

Re: Fannie, Freddie Executives Defend Pay

If one were starting a new banking system from scratch, one could go back to the really old days for ideas - apparently England used to do the following:

- Banks were unlimited liability corporations (i.e., if you owned a bank, the bank's losses would become your personal losses)
- Even if you sold your ownership stake in the bank to someone else, you were still liable for losses afterwards
- No deposit insurance, so depositors would take a really keen interest in what the bank managers were doing with their money

It wasn't a perfect system, and would be very difficult to scale up to support mega-corporations in a complex economy like the one we have today, but at least it addressed the conflict of interest problem.

Although not a bank, Lloyd's of London operated on the unlimited liability of each "Name" in each syndicate. Each person backing a given syndicate had unlimited liability in the insurance risks it provided. This has changed since 1994 where corporations with limited liability to stock holders were brought in. Now no new unlimited "names" can write new business.

[LorenS]

Re: Fannie, Freddie Executives Defend Pay

As a veteran I made use of a VA loan.

As it turns out it was a bad deal for me and, ultimately, the community at large. Houses were already overpriced and I ended up moving due, in part, to the telecom bubble. I never made up my expenses and the housing market was artificially inflated for years after.

Fannie and Freddy are socially destructive. It doesn't matter what you pay the CEO, it's too much.

Almost always, when it comes to lending someone money or helping them to manage on their own the latter is more beneficial. I'd have been better off on my own.

[lektrode]

Re: Fannie, Freddie Executives Defend Pay

....Fannie and Freddy are socially destructive. It doesn't matter what you pay the CEO, it's too much.

Almost always, when it comes to lending someone money or helping them to manage on their own the latter is more beneficial. I'd have been better off on my own.

+1
on all the above.

too bad rick perry wasnt able to name a few more buracracy's he'd dismantle - the above 2 would be at the top of my list.

but it looks like perry = toast... as we see the smear machine has opened both barrels on him, with the usual suspects on the blogosphere refilling the chamber as fast as the left can pull the trigger:

http://www.google.com/#hl=en&cp=11&g...w=1001&bih=659