Guess who’s going to pay retention bonuses?

posted at 2:14 pm on April 3, 2009 by Ed Morrissey

Want to bet that the next round of Bonus Outrage will get significantly less play?  That’s because the latest in retention bonuses come from politically-connected Fannie Mae and Freddie Mac.  The Wall Street Journal puts the numbers at $210 million for the bailout recipient:

In a compensation program that has drawn angry protests from politicians, Fannie Mae and Freddie Mac expect to pay about $210 million in retention bonuses to 7,600 employees over 18 months, according to a letter from the mortgage companies’ regulator to Sen. Charles Grassley.

The maximum retention bonus for any individual executive under the plan will total $1.5 million during the 18 months ending in early 2010, according to the letter, which provides previously undisclosed details about the bonuses. The regulator, James Lockhart, director of the Federal Housing Finance Agency, said in a letter to the Iowa Republican senator that about $51 million of the payouts were made in late 2008 and that the rest are to be made this year and early next year.

In the letter, a copy of which was made available to The Wall Street Journal, Mr. Lockhart defends the bonuses as vital to retaining talent at the two companies, the main providers of funding for U.S. home mortgages. Fannie and Freddie, which reported combined losses of about $108 billion for 2008, are being propped up by capital infusions from the U.S. Treasury.

Hot Air readers knew about this more than two weeks ago.  None of these compensation plans were secret. Freddie Mac, Fannie Mae, and AIG all disclosed them in their annual reports.  If these surprised members of Congress — and all evidence shows that notion as false — then it was only out of willful blindness and abject stupidity.  How many people invest $1,000 in a company without at least reading their annual report, let alone hundreds of billions of dollars?

If Congress doesn’t want to pay retention bonuses, then they should stop buying equity in private firms.

In other willful-blindness news, it turns out that Tim Geithner wasn’t really the wunderkind his supporters made him out to be:

Billions of dollars worth of financial instruments known as credit derivatives were being traded daily, as banks and investors worldwide tried to protect against losses on increasingly complex and risky financial bets. But the buying and selling of these exotic instruments was stuck in a pencil-and-paper era. Geithner, then head of the Federal Reserve Bank of New York, pressed 14 major financial firms to build an electronic network that would cut backlogs and make the market easier to monitor.

Geithner’s summit, held at the New York Fed’s fortress-like headquarters near Wall Street, was a success. By fall 2006, the new system had all but eliminated the logjam, helping derivatives trade more efficiently. One financial industry newsletter honored Geithner as part of a “Dream Team” for his leadership of the effort.

Yet as Geithner and the New York Fed worked to solve narrow mechanical issues in the derivatives market, they missed clear signs of a catastrophe in the making. When the housing market collapsed, derivatives stoked the fires that ignited inside some of the biggest banking companies. The firms’ failure to assess an array of risks they were taking has emerged as a key element in the multitrillion-dollar meltdown of the global financial system.

Although Geithner repeatedly raised concerns about the failure of banks to understand their risks, including those taken through derivatives, he and the Federal Reserve system did not act with enough force to blunt the troubles that ensued. That was largely because he and other regulators relied too much on assurances from senior banking executives that their firms were safe and sound, according to interviews and a review of documents by The Washington Post and the nonprofit journalism organization ProPublica.

A confidential review ordered by Geithner in 2006 found that banking companies could not properly assess their exposure to a severe economic downturn and were relying on the “intuition” of banking executives rather than hard quantitative analysis, according to interviews with Fed officials and a little-noticed audit by the Government Accountability Office. The Fed did not use key enforcement tools until later, after the credit crisis erupted, according to its records and interviews.

But he’s uniquely qualified!


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Outrage in 3….2….1…..

Defector01 on April 3, 2009 at 2:16 PM

crickets

Defector01 on April 3, 2009 at 2:16 PM

he and other regulators relied too much on assurances from senior banking executives that their firms were safe and sound

Much like taking the wolf’s word for it he won’t be eating sheep.

Badger40 on April 3, 2009 at 2:17 PM

Have you seen what Mrs. B. Hussein Ogabe is wearing today? She looked stunning.

Bishop on April 3, 2009 at 2:17 PM

I am outrag…

Um, you know, I only have so much time and energy and I am saving it up for April 15th.

myrenovations on April 3, 2009 at 2:18 PM

Well that’s what you get when you sleep with the boss…Herb Moses.
Which would be a funny skit…Frank sleeps with Moses, while running his Fannie Mae.

right2bright on April 3, 2009 at 2:18 PM

How many peopleCongressmen invest $1,000 in vote for a companybill without at least reading their annual report, let alone hundreds of billions of dollars? it?

Hmm… I wonder.

Badger40 on April 3, 2009 at 2:18 PM

Well that’s what you get when you sleep with the boss…Herb Moses.
Which would be a funny skit…Frank sleeps with Moses, while running his Fannie Mae.

right2bright on April 3, 2009 at 2:18 PM

Please. I just ate lunch.

Badger40 on April 3, 2009 at 2:19 PM

That would be more than the sum of the AIG bonuses.

Vashta.Nerada on April 3, 2009 at 2:19 PM

Looks like it’s Barney Frank turn to serve it up for Herb Moses

gatorboy on April 3, 2009 at 2:20 PM

Bishop on April 3, 2009 at 2:17 PM

Yes and the weather seems to be changing, summer is approaching fast…

right2bright on April 3, 2009 at 2:21 PM

Um, you know, I only have so much time and energy and I am saving it up for April 15th.

myrenovations on April 3, 2009 at 2:18 PM

Yeah, me too. I am working on haikus for signage. Let me know what you think:
1.
I paid my mortgage
That’s responsibility
Why bail out leeches?
2.
Trillions in bailouts
No responsibility
Stimulus my @$$

3.
Tax cheats and liars
Corrupt Administration
Resign Obama

I’m going to need a big sign, or hand off the extras to friends.

Vashta.Nerada on April 3, 2009 at 2:22 PM

Yes and the weather seems to be changing, summer is approaching fast…
right2bright on April 3, 2009 at 2:21 PM

Yes, it is getting warmer. Have you heard the latest from Bristol Palin’s ex?

Bishop on April 3, 2009 at 2:23 PM

So since these are government entities now, does that mean we are not allowed to be outraged?

Obama: No need for outrage here because government just failed less than expected so they deserve the bonuses. Er, but this was during Bush’s administration, government under me will not fail.

MobileVideoEngineer on April 3, 2009 at 2:23 PM

Have you heard the latest from Bristol Palin’s ex?

Bishop on April 3, 2009 at 2:23 PM

You’re trying to distract us from Britney’s Spears new song, aren’t you?

artist on April 3, 2009 at 2:25 PM

That’s because the latest in retention bonuses come from politically-connected Fannie Mae and Freddie Mac.

In an interview with CNBC, Representative Barney Frank says he wants to push for prosecution of the people who caused the country’s financial meltdown.

A September report from the Business & Media Institute suggests one possible target for investigation: a senior member of the House Banking Committee. This congressman is “a recipient of more than $40,000 in campaign donations from Fannie since 1989″ and “was once romantically involved with a Fannie Mae executive.” The same congressman “was and remains a stalwart defender of Fannie Mae.” We won’t mention his name–oh wait, come to think of it, we already did.

In other news, O.J. Simpson has gone undercover in a Nevada prison in search of the real killer.
- James Taranto

Treasury Secretary Timothy Geithner, unlike Henry Paulson, doesn’t hail from Wall Street, but he’s one more example of how titans of government swiftly come to sympathize with titans of finance. They slip in and out of each other’s worlds, promote each other to the top, and mystify their work to convince the uninitiated that no one else can do it.

They easily have their way with compromised regulators ready to look the other way as a small sliver of the population plays high-risk poker with other people’s money. This sliver then has its way again unwinding the damage caused. Huge sums are pocketed on both ends.
- Margaret Carlson

MB4 on April 3, 2009 at 2:25 PM

I paid my mortgage
That’s responsibility
Why bail out leeches?

If your sign ends up on the news, people at home might not understand this first one.

myrenovations on April 3, 2009 at 2:27 PM

I just interviewed with Freddie Mac. I’d love to get inside and see what is really going on.

txag92 on April 3, 2009 at 2:29 PM

myrenovations on April 3, 2009 at 2:27 PM

I’m leaning towards number three. It’s pithy.

Vashta.Nerada on April 3, 2009 at 2:29 PM

Have you heard the latest from Bristol Palin’s ex?

Bishop on April 3, 2009 at 2:23 PM

You’re trying to distract us from Britney’s Spears new song, aren’t you?

artist on April 3, 2009 at 2:25 PM

MSNBC is going high-def!

TightAggressive on April 3, 2009 at 2:30 PM

Yes, it is getting warmer. Have you heard the latest from Bristol Palin’s ex?

Bishop on April 3, 2009 at 2:23 PM

No but he is on some talk show today…it must be a slow day for news…nothing else is going on. Or at least nothing important is happening today.
Not like the other week with all those obscene payouts that were under contract. Nothing that exciting this week, nothing at all.
So nice of you to ask…I hope your family is doing well…

right2bright on April 3, 2009 at 2:30 PM

I just interviewed with Freddie Mac. I’d love to get inside and see what is really going on.

txag92 on April 3, 2009 at 2:29 PM

Exactly what Barney Frank told Herb Moses…

right2bright on April 3, 2009 at 2:31 PM

Yes, it is getting warmer. Have you heard the latest from Bristol Palin’s ex?

Bishop on April 3, 2009 at 2:23 PM
No but he is on some talk show today…it must be a slow day for news…nothing else is going on. Or at least nothing important is happening today.
Not like the other week with all those obscene payouts that were under contract. Nothing that exciting this week, nothing at all.
So nice of you to ask…I hope your family is doing well…

right2bright on April 3, 2009 at 2:30 PM

He will be on the “Tyra” show next Monday.

txag92 on April 3, 2009 at 2:32 PM

Exactly what Barney Frank told Herb Moses…

right2bright on April 3, 2009 at 2:31 PM

Not a good visual to start the weekend.

txag92 on April 3, 2009 at 2:33 PM

Load the buses!

BobH on April 3, 2009 at 2:33 PM

Load the buses!

BobH on April 3, 2009 at 2:33 PM

And sharpen the pitchforks.

Wethal on April 3, 2009 at 2:35 PM

Yes, it is getting warmer. Have you heard the latest from Bristol Palin’s ex?

Bishop on April 3, 2009 at 2:23 PM

I haven’t heard a word, but I did see my very first TV commercial for rifles and ammo last night.

And I just came from downtown Chicago, the Daley Center to be exact and found the perfect parking garage for the April 15th Tea Party.

Knucklehead on April 3, 2009 at 2:36 PM

I just interviewed with Freddie Mac. I’d love to get inside and see what is really going on.

txag92 on April 3, 2009 at 2:29 PM

Fannie and Freddie gave us all a great April Fool’s Day gift-another layer of paperwork for every mortgage transaction. They must all now include a complex analysis of current market conditions.

Of course, this requires extra work for all of the professionals who handle these instruments, but of course those people will have to do all of this extra work for free.

Del Dolemonte on April 3, 2009 at 2:36 PM

Will Obama stand between the pitchforks and Fannie/Freddie?

myrenovations on April 3, 2009 at 2:37 PM

he and other regulators relied too much on assurances from senior banking executives that their firms were safe and sound
Much like taking the wolf’s word for it he won’t be eating sheep.

Badger40 on April 3, 2009 at 2:17 PM

He could’ve asked the guy who was assigned to watch over AIG’s business. You know, the guy who was paid by AIG.

Don’t worry, Tim Giethner saved Indonesia’s economy, and he can do the same for ours! What? He did WHAT to Indonesia?

Never mind, then. We’re screwed.

hawksruleva on April 3, 2009 at 2:37 PM

You’re trying to distract us from Britney’s Spears new song, aren’t you?
artist on April 3, 2009 at 2:25 PM

What? NO!

Gardening tips at the top of the hour, then an interview with a sorta famous pastry chef.

Bishop on April 3, 2009 at 2:38 PM

The President told the bankers:

“My administration,” the president added, “is the only thing between you and the pitchforks.”

getalife on April 3, 2009 at 2:38 PM

Attention:
Fannie Mae bonus recipients…Barney Frank has asked you to go to the Human Resources to claim your bonuses…please use the back door entrance. You can pick up your Bon-Us t-shirt at the same time.

right2bright on April 3, 2009 at 2:39 PM

Gardening tips at the top of the hour, then an interview with a sorta famous pastry chef.

Bishop on April 3, 2009 at 2:38 PM

There’s a horrible shooting in Bingamton New York, 15 dead so far.

So sad, what’s happening to the world?

Knucklehead on April 3, 2009 at 2:39 PM

MSNBC is going high-def!

TightAggressive on April 3, 2009 at 2:30 PM

Or is it high-deaf, in their case? They never seem to hear the bad news about Obama. Or Twitter…

hawksruleva on April 3, 2009 at 2:40 PM

The President told the bankers:

“My administration,” the president added, “is the only thing between you and the pitchforks.”

getalife on April 3, 2009 at 2:38 PM

Finally, you are getting to see his strong-arm threats that he learned from his days on the street working with ACORN and the unions.
Thanks for bringing up that despicable act of violence and threats.

right2bright on April 3, 2009 at 2:41 PM

There’s a horrible shooting in Bingamton New York, 15 dead so far.
So sad, what’s happening to the world?
Knucklehead on April 3, 2009 at 2:39 PM

It will be sadder still when the grabbers use this as a justification for taking the guns away.

Bishop on April 3, 2009 at 2:41 PM

Remember to blame the guns, not the gunmen.

myrenovations on April 3, 2009 at 2:43 PM

It will be sadder still when the grabbers use this as a justification for taking the guns away.

Bishop on April 3, 2009 at 2:41 PM

Stop being silly…Theywon’t take the guns away; just the ammunition. The 2nd amendment does not cover this. How’s that for interpretation?

TightAggressive on April 3, 2009 at 2:47 PM

Bonuses?!? I’m suprised there is any monry left to give bonuses after all the Clinton hacks (Gorleck, Johnson, Raines, Emanuel) raped and pillaged the last few years.

Dire Straits on April 3, 2009 at 2:51 PM

Who cares. Show us the new puppy please.

faraway on April 3, 2009 at 2:55 PM

MSNBC is going high-def!

TightAggressive on April 3, 2009 at 2:30 PM

Does that mean we get twice the leg-tingles in our pixels?

Steve Z on April 3, 2009 at 2:57 PM

Inescapable lesson to all big business executives: spend less on production, research, and design. Instead, invest in lobbyists and politicians.

That ought to get our economy humming again.

Doctor Zero on April 3, 2009 at 3:06 PM

I didn’t give a rat’s vertical crease about the AIG bonuses and I only care about these as an example of the rank hypocrisy of the politicians who used AIG for political cover. They are scum and what they truly deserve I cannot say for fear of being banned by our beta-male-in-chief.

SKYFOX on April 3, 2009 at 3:12 PM

I’m outrageously outraged!!

/TOTUS

bikermailman on April 3, 2009 at 3:16 PM

I’m exhausted from the sheer stupidity.

Black Adam on April 3, 2009 at 3:17 PM

This hacks me off to no end. I worked for a big mortgage company that started losing money at the end of 2006. The company eliminated ALL bonuses for the entire year, even though we made money until the fourth quarter. It cut my total income by one-third, with no warning. Some senior executives lost bonuses of a million dollars. After a bunch of high paid managers quit and the senior management was replaced, bonuses were restored for 2007 but they were very small, less than one-third what we had received for 2005.

There is nowhere else these Fannie and Freddie people can go now. It’s ridiculous to assert that ANY of them will leave without a retention bonus. Anyone in this industry that has any job now is damn lucky and glad to have it!

rockmom on April 3, 2009 at 3:21 PM

Guess who will be donating a little more to the libs this year?

marklmail on April 3, 2009 at 3:25 PM

Dumb = Fannie/Freddie Bonuses

Dumber = AIG Execs who gave back their bonus.

Anyone wanna try for dumbest?

BobMbx on April 3, 2009 at 3:26 PM

Can someone please tell me………

…….. why this video isn’t being played on a very big screen?

Seven Percent Solution on April 3, 2009 at 3:37 PM

The only thing that stands between them and the pitchforks is the Obama Administration and an idling bus.

unclesmrgol on April 3, 2009 at 3:40 PM

I know liberal members of my extended family that put their money in Fannie Mae because they were told by the investment counselors that it was impossible to lose any money because the government guaranteed all investments in this organization 100%. That is all they needed to know or cared about. The rest of their time they spent watching The View and Katie telling them all they needed to know about life in America. Other than that it was dinner at their favorite restaurant and maybe off to the Casino for a little gaming. Life is good. When it was time to vote Barbara and Katie had decided for them all they had to do was get to the polls and pull the lever. With early voting they could get that out of the way early and before the rush. Life was even better and full of hope and change.

rsl775 on April 3, 2009 at 3:44 PM

Life was even better and full of hope and change.

rsl775 on April 3, 2009 at 3:44 PM

Be sure and inform them that their share of “Hope and Change” is only going to them $163,000 each.

BobMbx on April 3, 2009 at 3:52 PM

If the media had ANY integrity whatsoever they would be clamoring to interview one senior administration official WHO GOT A GIGANTIC RENTENTION BONUS….when he was an INVESTMENT BANKER:

Chief of Staff, Rahm Emanuel.

Per the NY Times:
http://www.nytimes.com/2008/12/04/us/politics/04emanuel.html?pagewanted=2&_r=1

Tax returns Mr. Emanuel released while first running for office and reported in news articles, along with Congressional financial disclosures, reveal his steep financial ascent while working at Wasserstein [investment bank]. He earned more than $900,000 in 1999, his first year at the firm; nearly $1.4 million in 2000; and $6.5 million in 2001, when he left the firm in midyear to run for Congress. He collected $9.7 million more from the firm in deferred compensation in 2002.

Mr. Emanuel’s annual salary was not especially large but his hefty paydays came from bonuses for the business he brought in, as is customary in investment banking, along with the company’s sale in 2001 to the German Dresdner Bank, which allowed him to benefit from an equity stake, as well a large retention bonus paid to him based on his prior performance.

Now you know why Rahm’s not giving any interviews (well, except for maybe a puffball with Larry King).

jeanneb on April 3, 2009 at 4:28 PM

willful blindness and abject stupidity

To be fair, this is a distinct possibility.

NoLeftTurn on April 3, 2009 at 5:10 PM

The President told the bankers:

“My administration,” the president added, “is the only thing between you and the pitchforks.”

radio moscow on April 3, 2009 at 2:38 PM

The politics of fear.

Bush would be proud of him.

Del Dolemonte on April 3, 2009 at 5:32 PM

Hope the TEA PARTIES grow to huge gatherings. Maybe the pitchfork would be a sign the big O would understand, since he used it with his talk with the bankers. Make him aware that government is not exempt from the peoples anger either.

hillbilly on April 3, 2009 at 6:16 PM

I’m exhausted from the sheer stupidity.

Black Adam on April 3, 2009 at 3:17 PM

And as Rush said this morning, we have FOUR more years of this.

Jvette on April 3, 2009 at 6:44 PM

We all know there will be no bonus outrage over FNMA/FRMC…

ThereGoesTheNeighborhood on April 3, 2009 at 10:58 PM