Seventy GOP Congressmen Call on Geithner to Cancel the Multi-Million-Dollar Bonuses Treasury Approved for CEOs at Government-Owned Fannie Mae and Freddie Mac
January 14, 2010 - 11:19 AMSeventy Republican members of the House of Representatives are calling on Treasury Secretary Timothy Geithner to cancel bonuses given to the CEOs of Fannie Mae and Freddie Mac.
“(T)here’s a letter that’s going to Sec. Geithner from a number of us calling for a rescission of those bonuses,” Rep. Michele Bachmann (R-Minn.) told CNSNews.com Wednesday.
On Christmas Eve, at the same time the Obama administration announced that it was removing any cap on the amount of taxpayer aid to Fannie Mae and Freddie Mac, the failed mortgage giants announced that they had received approval from their financial regulator to pay $42 million in compensation packages to 12 top executives for 2009.
The compensation packages included up to $6 million each to Fannie Mae and Freddie Mac chief executives. For the CEOs, annual compensation consists of a base salary of $900,000, $3.1 million in deferred compensation and incentive pay of as much as $2 million. Public disclosure that the retention bonuses were being copnsidered first surfaced in the Spring.
In their letter, the 70 congressmen state: “Awarding lavish pay packages with hefty bonuses to government owned entities while still lacking a comprehensive plan for reform demonstrates a disconcerting lack of judgment on the part of the Treasury Department and the FHFA (Federal Housing Finance Authority).
"We share (House Financial Services Committee) Chairman (Barney) Frank’s sentiment expressed March 19, 2009 in a letter to former FHFA Director James B. Lockhart asking him to cancel retention bonuses for Fannie Mae and Freddie Mac executives," reads the letter. "Chairman Frank stated, ‘The public, having provided significant support for the purpose of restoring trust and confidence in our country's financial system, rightfully insists that large bonuses such as these awarded by institutions receiving public funds at a time of a serious economic downturn cannot continue.’ ”
Bachmann, who is a member of the House Financial Services Committee, said the letter, which was drafted by Rep. Jeb Hensarling (R-Texas) and was sent Wednesday, protests the fact that the "government-sponsored enterprises" now owned by the American people, have already cost taxpayers more than $110 billion and "put taxpayers explicitly on-the-hook for over $2 trillion in potential losses through various federal programs."
“(We are pushing) for an ending -- an unwinding, if you will -- of the U.S. owning Fannie and Freddie. We want out of this sinking business as quickly as we possibly can, and we want to pull the plug on an unlimited taxpayer bailout of Freddie and Fannie,” Bachmann said.
Bachmann's comments came at a Wednesday news conference, when CNSNews.com asked her: “The Obama administration approved the CEOs of Fannie Mae and Freddie Mac getting salaries of $900,000, plus $3.1 million in deferred payments, plus another $2 million in performance bonuses. (S)hould taxpayers have to pay these bonuses, or should they be cancelled?”
Bachmann replied: "I think that’s something that we’re very upset about. And I think we’re very upset about the bonuses."
“When Sec. Geithner said that there’d be unlimited taxpayer funding continuing to go into this sinking ship, and then bonuses they’re given?," she said. "On what basis? What did they do? What was the criteria that they could possibly be given a bonus? The fact that they got unlimited taxpayer money?”
Bachman was referring to Treasury’s announcement that it would send unlimited tax money to Fannie Mae and Freddie Mac, thereby eliminating the current $400 billion cap on emergency aid that Treasury can give without having to come back to Congress for authorization.
On Thursday, meanwhile, the president proposed a fee on the nation’s top financial institutions to recoup $117 billion of money that the Treasury Department said was lost on the Troubled Asset Releif Program (TARP), the bank bailout fund.
Ironically, Fannie Mae, Freddie Mac, GM and Chrsyler would all be exempt from the fee, which would apply mainly to major private banks, many of whom have already paid back the money they took under the the $700 billion TARP.
In addition to Bachmann and Hensarling, the letter was signed by: Reps. John Boehner (R-Ohio); Spencer Bachus (R-Ala.); Mike Pence (R-Ind.); Paul Ryan (R-Wis.); Scott Garrett (R-N.J.); Shelley Moore Capito (R-W.V.); Don Manzullo (R-Ill.); Walter Jones (R-N.C.); Patrick McHenry (R-N.C.); Bill Posey (R-Fla.); Leonard Lance (R-N.J.); Peter Roskam (R-Ill.); Marsha Blackburn (R-Tenn.); Geoff Davis (R-Ky.); Virginia Foxx (R-N.C.); Mike Simpson (R-Idaho); Louie Gohmert (R-Texas); Lynn Jenkins (R-Kan.); Jack Kingston (R-Ga.); Dana Rohrabacher (R-Calif); Jason Chaffetz (R-Utah); Todd Akin (R-Mo.); Cathy McMorris Rodgers (R-Wash.); Steve King (R-Iowa); Joe Wilson (R-S.C.); Sam Graves (R-Mo.); Roy Blunt (R-Mo.); Frank Wolf (R-Va.); Kevin Brady (R-Texas); Adam Putnam (R-Fla.); Greg Walden (R-Ore.); John Fleming (R-La.); Ileana Ros-Lehtinen (R-Fla.); Cliff Stearns (R-Fla.); Steve Scalise (R-La.); Peter King (R-N.Y.); Ron Paul (R-Texas); Randy Neugebauer (R-Texas); Joe Barton (R-Texas); Jeff Flake (R-Ariz.); John Boozman (R-Ark.); Charles Dent (R-Pa.); Pete Olson (R-Texas); Peter Hoekstra (R-Mich.); Bob Goodlatte (R-Va.); Roscoe Bartlett (R-Md.); Judy Biggert (R-Ill.); Ed Royce (R-Calif.); John Duncan (R-Tenn.); Robert Latta (R-Ohio); Kenny Marchant (R-Texas); Mike Castle (R-Del. At large); Doug Lamborn (R-Colo.); Kevin McCarthy (R-Calif.); Joe Pitts (R-Pa.); Paul Broun (R-Ga.); Gregg Harper (R-Miss.); Trent Franks (R-Ariz.); John Kline (R-Minn.); Dan Burton (R-Ind.); Jim Jordan (R-Ohio); John Shadegg (R-Ariz.); Tom Rooney (R-Fla.); Blaine Luetkemeyer (R-Mo.); Dan Lungren (R-Calif.); Tom McClintock (R-Calif.); Mary Bono Mack (R-Calif.) and Kay Granger (R-Texas).
A transcript: of CNSNews.com's exchange with Rep. Michele Bachmann (R-Minn.) follows below:
CNSNews.com: "The Obama administration approved the CEOs of Fannie Mae and Freddie Mac getting salaries of $900,000 plus $3.1 million in deferred payments plus another $2 million in performance bonuses. Should taxpayers have to pay these bonuses, or should they be cancelled?"
Rep. Michele Bachmann (R-Minn.): "I think that’s something that we’re very upset about. And I think we’re very upset about the bonuses. When you look at two entities that are owned practically part and parcel by the federal government, recipients of a Christmas gift on Christmas. When Sec. Geithner said that there’d be unlimited taxpayer funding continuing to go into this sinking ship, and then bonuses they’re given? On what basis? What did they do? What was the criteria that they could possibly be given a bonus? The fact that they got unlimited taxpayer money? I think that we are absolutely outraged by that, and there’s a letter that’s going to Sec. Geithner from a number of us calling for a rescission of those bonuses. And also, for an ending -- an unwinding, if you will -- of the U.S. owning Fannie and Freddie. We want out of this sinking business as quickly as we possibly can, and we want to pull the plug on an unlimited taxpayer bailout of Freddie and Fannie."