Oh-so glad to know Fan, Fred execs are still making millions
Well, this is just fantastic news. From John Solomon, a former ace investigative reporter for the Associated Press and now executive editor of iWatch News at the Center for Public Integrity, writing at the Daily Beast:
Over the last two years, the Obama administration has approved a whopping $34.4 million in compensation to the top six executives of the financially troubled Fannie Mae and Freddie Mac mortgage giants, and lacks the necessary protections to ensure such compensation is even warranted.
The largesse flowed to the six executives even though the two companies they run struggle to staunch billions of dollars in losses, remain in government conservatorship, and must compensate taxpayers for assuming the companies’ liabilities during the mortgage crisis. To compensate taxpayers, Fannie and Freddie are tapping Treasury Department funds to pay required 10 percent dividends each quarter to the U.S. government.
Where shall we begin? Aside from the dough itself — I’ll get back to that in a moment — we have the always troubling “lacks the necessary protections” that makes far too many appearances in reviews of federal decisions or operations. And we have the recurring theme of this administration allowing bailed-out companies to use Government Money B to make required payments on Government Money A.
But the real kicker for me is this presumptive explanation of the payments from the Federal Housing Finance Agency, or FHFA:
An FHFA spokeswoman told iWatch News the agency had no immediate comment. A Treasury Department spokeswoman did not respond to a request for comment.
The FHFA has defended executive pay at Fannie and Freddie in the past by saying the salaries were necessary to recruit and retain talented executives who can run big, complex companies. (emphasis added)
Hmmm, now where have we heard the “necessary to recruit and retain talented executives” line before? That’s right: From private-sector companies defending the pay of their CEOs to — wait for it — people like President Obama who excoriate said executives for making too much money.
That’s quite a reversal on the usual idea that what’s OK to do with private money is not OK to do with public money. Where, oh, where is the White House Pay Czar when you need him?
– By Kyle Wingfield
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52 comments Add your comment
Joe Mama
May 31st, 2011
1:03 pm
Linda — “The CRA Act was passed under Carter & didn’t have much teeth. Clinton bragged that it was his adm. that was responsible for the “staggering” $800 B in loans (’93-’00) to low & moderate income people who could not otherwise qualify to buy houses. It was the GSE Act of 1993 that began lowering the income, credit & down payment standards/requirements for the Democrats’ social justice engineering goals for affordable housing.”
The GSE act did not do all the things that you and others have attributed to it. Furthermore, a large portion of the loans that went south were *not* loans to poor and lower-income buyers; they were loans to well-to-do buyers and real estate flippers. I can show you rotten MBS pools where the constituent homebuyers in the pool had average credit ratings of 720+.
Those are NOT poor people who couldn’t qualify for homes without help.
“Mortgage originators were just following the lower standards.”
No, they weren’t. There’s nothing in those standards about Liar, NINJA or LTV loans. Those came along later.
Tracy
June 2nd, 2011
8:25 pm
I have read a lot of blaming and finger pointing but still no REAL solution to the mortgage problems going on today. Did people get mortgages that should not have qualified…yes but that is not the source of the problem. I wish some of you could be down in the trenches with me on an every day basis. In the past when a homeowner had financial difficulty due to illness, job loss, divorce or a variety of other reasons they had no choice but to cut out the fat and tighten their budget. This usually included downsizing their residence. Today that is no longer a simple option, it is still an option and most times a necessity but with the drop in home values (yes do to the outrageous inflation of home prices) your options are to either do a deed in lieu, short sale, or let the home go into foreclosure. Now just take for instance a family who has a 30 year mortgage for $200,000 with a 7% interest rate (they bought their home in 2005 with 20% down at a home value of $270,000 and a 780 credit score) Now Dad’s been downsized and little Bobby is sick, they deplete their savings and decided the next step is to sell the home and downsize. Can someone tell my why these banks will let the home sit for 6-24 months before agreeing to a short sale???? Or say Dad is just temporarily laid off and applies for a loan modification why does it take the bank 6-24 months to approve or disapprove this modification???
This is where the real miss use of the government bail out is happening!!!! On insured loans the banks are getting subsidized for every month a payment is missed until there is a solution so they are dragging out the process in astronomical proportions.
I know many of you will disagree with me but as I said I am down in the trenches, I have had loan mitigators purposely give me the incorrect fax number (off by one number) multiple times by the same negotiator always off by the same number or wait until the last day of approval to tell me that one document or another has expired.
I realize this is a new sector of the lending industry but these are supposed to be educated professionals they do know what they are doing, playing dumb is just making them more money.
In regard to property values and the huge decline, well the government has inadvertently help the values drop even lower than estimated and why? Well think about Dad and little Bobby who owe $200,000 on a home that is now worth $130,000 They are paying $1330 a month at the end of the 30 years the bank would have made a profit of $279,000 in interest only. (Keep in mind the average American moves every 7 years so the lender was not looking at 30 year return when they gave the mortgage) If the government gave the lending industry incentives to lower the principal to say $150,000 (still $20,000 more than value and the bank doesn’t need to hire attorneys or pay Realtor fees) The lender will still make $123,610 in interest only, plus what ever “incentives” the government offers. But for some reason the banks are choosing to let the homeowner “short sale” for under market value and pay Realtor and attorney fees…………so they are taking $100,000 on a property values at $130,000 and letting it deteriorate to the point of being almost “unsellable”………hmmmm??? why is that???
The government incentives that are currently offer to the banking industry promote homeowners to sit in limbo for months on end to eventually leave their HOMES and let them sit vacant while nobody answers their phone calls and the homes deteriorate, mold grows on walls, yards are overgrown, tax bills increase, windows are broken and vagrants move in……I have witnessed this happen over and over again and the worst part about it is that it not only affects the family that was forced to leave but their neighbors. Do any of you want to live next door or across the street from one of these eyesores?
Please someone out there make an intelligent(not political) comment on a possible solution because this is not over by a long shot………..