$1 Million Per Year for New Fannie, Freddie Chiefs

The government-appointed chief executives of Fannie Mae and Freddie Mac each will likely be paid more than $1 million a year in salary and bonuses, the regulator overseeing the companies said today.

James Lockhart, the chairman of the Federal Housing Finance Agency, confirmed the figure while being questioned by lawmakers on the House Financial Services Committee. It was the first oversight hearing on the mortgage giants since the government seized control of them on Sept. 7.

Lockhart's testimony to the committee was virtually the same as what he told the Senate Banking Committee on Tuesday.

The new chief executives, Herbert Allison of Fannie Mae and David Moffett of Freddie Mac, will receive salaries of $900,000. It's expected that bonuses based on how well they run the companies will push them over the $1 million mark.

The departing chief executives of the companies received far more compensation. Allison and Moffett are long-time financial industry executives, and they are set to make their first public comments since taking over the companies in today's hearing.

Other highlights from Lockhart's testimony:

* He said Fannie Mae and Freddie Mac had a "better book than many lenders," but their huge exposure -- that means owning or guaranteeing more than $5 trillion in mortgages -- was overwhelming with what he called a "thin capital base."

* He said he is working with New York Attorney General Andrew Cuomo to finalize an agreement to work more aggressively to beat back inflated appraisals.

* He said the companies are continuing to make some low-documentation loans -- one of the risky loan types that contributed to the crisis -- but they were reviewing whether to maintain the practice or cease it.

*Lockhart said he will make a final determination over whether the companies will put money into the housing trust fund, which Congress established this year to support housing for the poor, after they report third quarter results later this fall.

-- Zachary A. Goldfarb

September 25, 2008; 1:42 PM ET  | Category:  business
Previous: Pelosi: We Hope to Bring a Bailout Bill Soon | Next: Market Rally Continues -- Dow Flirts With 300

Comments

Please email us to report offensive comments.



Already this new plan is unacceptable to WE THE PEOPLE.

Why are they still making the very same kind of loans that caused this crisis in the first place?

And why on earth would they agree to pay anyone $900,000?

NO TAX DOLLARS TO SUPPORT CORPORATE WELFARE!!!

Posted by: KEVIN SCHMIDT | September 25, 2008 1:48 PM

Obscene!

Posted by: Mark F. Tillman | September 25, 2008 2:14 PM

This salary is awefully low for someone who has to take on so much responsibility. I hope they are getting stock options to reward them doing a good job.

Posted by: KevinM | September 25, 2008 2:14 PM

Politicians, investment bankers and CEO's -- Criminals. Wait, it is only a crime if the law or its enforcers say it is. Ok, ok.

Posted by: Michael | September 25, 2008 2:15 PM

"continuing to make some low-documentation loans"

and they keep asking for more money in bailouts?

Let them eat crow!

No $7,000,000,000.
Not even $7 of tax money should go to these CROOKS!

Posted by: Scary Larry in Denver | September 25, 2008 2:17 PM

A million is too much! They are public servants now not corporate executives! They should not get that much money even if it was a fraction of the old costs! The public will rip that money from their hands!

Posted by: mad citizen | September 25, 2008 2:19 PM

It would be better if these guys get only 250k a year which is still a lot. But 1 million a year?, what for?

Posted by: eaglestrk | September 25, 2008 2:22 PM

It would be better if these guys get only 250k a year which is still a lot. But 1 million a year?, what for?

Posted by: eaglestrk | September 25, 2008 2:24 PM

1M in pay? You gotta be *&^%&%$ kidding me. Per year? That's over 2.5 times what the President makes!! The Mexicans are going to have to keep us out of their country in a few years.

Posted by: dcp | September 25, 2008 2:25 PM

Wow! Thats like miminum wage for CEO's! I heard Bush's boy, Sec. of Treasury Henry Paulson, made over $500,000,000 paid in stock while working for Goldman Sachs.

The fox is truly in charge of the henhouse. What other outcome could we expect?

Posted by: Donny | September 25, 2008 2:25 PM

Where can I sign-up for this job?

Posted by: looking for work | September 25, 2008 2:25 PM

The most disturbing part of this story is...

"* He said the companies are continuing to make some low-documentation loans -- one of the risky loan types that contributed to the crisis -- but they were reviewing whether to maintain the practice or cease it."

That's simply irresponsible. Absolutely, positively irresponsible. And it's shocking that they would even think of continuing such practices. I'm left to wonder if the greater taxpayer exposure in Fannie and Freddie is a larger risk than we were led to believe.

Posted by: corbett | September 25, 2008 2:27 PM

unbelievable

just hearing that a ceo will now be getting $1 million plus benefits makes my blood boil -

i will not pay a cent in taxes to bail out these institutions -

make the 1.9% of the richest pay it -

Posted by: muslit | September 25, 2008 2:30 PM

WHAT!?! Where is one million on the GS pay scale?? Did I miss something? These guys are civil servants now and need to receive like pay.

Posted by: Anonymous | September 25, 2008 2:30 PM

Hang em, all!!!

Posted by: Madame DeFarge | September 25, 2008 2:31 PM

How can these characters look themselves in the mirror... this is totally unacceptable to me. Base salaries should be much lower and perhaps after a 6 month performance evaluation could possibly increase pay....

As far as low documentation loans... NADA, NO WAY JOSE´.... IT WILL EVOLVE INTO ANOTHER MESS

Posted by: Mad as Hell... | September 25, 2008 2:33 PM

One million dollars a year...wow. Do you really think there is that much difference between a CEO that makes $500K and $1,000K? Anyone who thinks so ought to ask why the former guys drove their companies into the ground. Where do I buy one of Bush's money printing machines from (might be on backorder from Iraq)?

Posted by: RosslynRenter | September 25, 2008 2:35 PM

I AM LOSING FAITH AND HOPE IN OUR GOVERNMENT. THE MORE I AM FORCED TO THINK ABOUT THIS MESS, THE MORE VOMIT I PRODUCE...

THIS IS UNACCEPTABLE AMERICA, WE ARE BEING TAKEN FOR A LONG RIDE DOWN A ROAD TO NOWHERE, ALONG WITH MS. PALIN

Posted by: MAD AS HELL.... | September 25, 2008 2:37 PM

I for one think a million bucks is a reasonable salary for a CEO that has to take on so much responsibility and will be under such scrutiny. Fannie and Freddie are not/not technically owned by the government. They will still be publically traded companies. And as someone else earlier wrote, of Paulson took home $100 million plus at Goldman, if these CEOs are intelligent and know what they doing, then we're getting a deal.

Posted by: Prudent guy | September 25, 2008 2:37 PM

THESE NEW GUYS SHOULD NOT EARN A PENNY MORE THAN THE PRESIDENT OF THE UNITED STATES IS PAID!

They should receive bonuses of up to $1 million ONLY IF AND WHEN THE LOSSES FROM PREVIOUS HORRID CORPORATE GOVERNANCE ARE RECOUPED FOR THE AMERICAN PEOPLE!

After all, they are nationalized now, we own them, so these jerks need to ACTUALLY OUTPERFORM THE MARKET FOR THEIR BONUSES!

Posted by: JBE | September 25, 2008 2:38 PM

$1,000,000???!!!

We the people veto.

Time to overthrown Congress.

Posted by: Angry Dem | September 25, 2008 2:39 PM

$1,000,000???!!!

We the people veto.

Time to overthrown Congress.

Posted by: Angry Dem | September 25, 2008 2:39 PM

It is a tale full of sound and fury, signafying nothing except The Fox ate The Chickens.
No crying, no whinning, of all no signafying, nothing at all, nothing at all, nothing at all.

Posted by: mainstreetamerica | September 25, 2008 2:41 PM

Actually Corbett, the low/no documentation loans are how I got my mortgage -- and have since refinanced and have never, ever been late.

They can be useful in situations where you've got a couple where one of the partners is finishing a professional school (law/medicine) and it's a pretty sure bet that their income will go up significantly. The low/no document loan allowed us to purchase a condo right before the height of the insane real estate market. I think the key is that the loan officers need to use common sense and be as much as an advocate for the security of the loan as they are for those needing the loan.

My husband and I also used a bit of common sense and purchased only what we knew we could afford. Being dogmatic about any situation never leads to the best outcome.

Posted by: Danielle | September 25, 2008 2:41 PM

We are footing the bill for the excessive greed and incompetence of Wall Street.

Our elected officials (Dems and Republicans) don't blink twice when it comes to bailing out the rich.

Posted by: Woodbridge Hoo | September 25, 2008 2:44 PM

So much for taxpayer’s protections. What was it McCain demanded--$400k tops, no more in salary than the highest government official. Shows you how much power and influence McCain has in Washington.

The taxpayers are once again bamboozled—not to mention ripped off—by our government.

Good thing it's finger pointing time--the time every four years voting American taxpayers assign blame for destructive governance.

Now is the time America!

Now is the opportunity for American taxpayers to vote out all irresponsible members of the House of Representatives, 1/3 of the Senate, and the President and Vice President of the United States.

Get Out and Vote America!

Posted by: socalgal59 | September 25, 2008 2:47 PM

I second, no tax payer money for corporate welfare!

Posted by: andy | September 25, 2008 2:47 PM

Im filing for bankruptcy....and I refuse to pay another red cent to this fiasco. I am in dept my wife cant find work and she worked for Fannie for 13 years and my job ends in 1 week.

Dissapointed Republican

Posted by: Im done | September 25, 2008 2:52 PM

Im voting Democrat this is going to be a dept my childrens children will have to pay.


Dissapointed Republican

Posted by: Im done | September 25, 2008 2:55 PM

Totally unacceptable!!! Vote every single moron out of Congress, this is insane.

Posted by: Greg | September 25, 2008 3:01 PM

Disappointed Republican// I too cannot hold my head up thinking how I was duped by Bush, but knew who showed up in Florida to steal the election for him that things were not as perceived, yet I had voted for him. At that point in time I began to get my house in order knowing this day would come. This man does not have the IQ to pull off what has been pulled. I urge everyone to look at who was sent to Florida and what role they have since played out in the last eight years.

Posted by: mainstreetamerica | September 25, 2008 3:16 PM

$900,000 a year, plus bonuses? Isn't that part of the problem to begin with??? If we made the corporate raiders pay back all the wealth they've all ready stolen from the taxpayers we certainly wouldn't need a $700B bailout in the first place.

God save us from ourselves if this is what we continue to let happen!

Posted by: angryamerican | September 25, 2008 4:41 PM

WHO SHOULD OVERSEE THE FIX and WHO SHOULD BE HEADING TO JAIL?

Too many have fed at the trough. What Fannie Mae and Freddie Mac executives did was illegal.

http://pacificgatepost.blogspot.com/2008/09/fanny-mae-freddie-mac-congressional.html

Still no time to panic, but some executives and some in Congress should see jail time.

Posted by: Anonymous | September 25, 2008 5:47 PM


Congress does not have the power to transfer this much power to the Executive Branch, without amending the Constitution. This bailout of Wall Street robber barons is a massive restructuring or our government and financial systems that should not be made without modifying the Constitution.

This move will change the entire power relationship between the Congress and the Executive Branch, as well as the power relationship between American citizens and our government. To give governmental powers and obligations to financial institutions over our populace is clearly outside of the realm of the Constitution.

There is no sunset provision on many of the main powers granted by this legislation and thus these powers will become a permanent change to our government.

Let's face the truth and respond accordingly. The same political sellouts in Washington, DC who have been giving big business and liberal social agendas anything they want have been doing the same behind the scenes by removing most of the laws and regulation management on that level as well.

Over the last ten years they have removed or ignored most of the regulations that were put in place to assure another great depression never happened again.

They are desperate for more power and money to delay the inevitable and to assure that your average American citizen takes on most of the burden! Including bailing out foreign banks that are in the U.S.!

So, we have a President with approval ratings in the low 20 percentiles rushing out to ask a Congress with a 9% approval rating to give them unprecedented powers, amnesty from oversight and court prosecutions, and another 700 Billion+ dollars guaranteed by the taxpayers and the full force of the American government to extract that money and interest from us all. They have made slaves of us!

They say the power and funds must be delivered within days to avoid a global economic meltdown that will have dire consequences for us all.

It's a shame to think that there are many Americans left in our nation who believe a word of what comes out of the mouths of any of these traitors in the Bush administration. Politicians in Washington, DC are fearful of losing their jobs if the true economic consequences manifest BEFORE election day, instead of after, and thus the politicians give the appearance of doing something huge.

First, there is no assurance or even likelihood that this unprecedented bailout and amnesty for Wall Street traders will work. They have already thrown hundreds of billions of dollars of your money into bailouts for Barons, Fannie Mack, Fanny May, and AIG. The 700B+ more they claim they need this week is probably what they estimate is needed to prevent the collapse till after Nov 4, 2008 which is election day.

The requested bailout bill would establish unprecedented powers for the Executive Branch to keep borrowing large sums, many analysts believe that the true costs could range between 1 to 5.5 Trillion dollars of your money!

They want the power to designate private financial companies and banks "as financial agents of the Government, and they shall perform all such reasonable duties related to this Act as financial agents of the Government as may be required of them" (Sect. 2-B-3).

Upon passage of this legislation, going to the bank will be similar to going to the DMV, tax offices, or any government agency. The banks will be more under the control of the Executive Branch and inversely your bankers will be your government. MORE FREEDOM TAKEN AND BIG BROTHER WATCHING!!

The secretary will be allowed to buy and sell mortgage securities and then use the funds from any sales to pay for administrative costs and other measures in this program, instead of returning the funds to the taxpayers.

The real kicker is found in Section 8, where it reads "Decisions by the Secretary pursuant to the authority of this Act are non-reviewable and committed to agency discretion, and may not be reviewed by any court of law or any administrative agency."

No more power and money in exchange for their failures!

Let the financial chips fall where they may and let the market corrections occur and if the consequences for the American public are dire, let us shift through the ashes and rubble of their greed and the excess created to determine how and why this happened. Let Congress use their investigatory power to launch inquiries to determine who should have their assets seized and who is going to prison for this treachery.

This monopoly game is over. It is time to enforce the rules and start over. It is time for many of those in high places to go to jail!

Posted by: Anonymous | September 25, 2008 11:35 PM

The outgoing CEOs make 15 - 30 million. 1 million is low. These new CEO's are paid fair. It's the old CEO's that drove the companies into the ground, and are still getting paid by the bailout money that should anger y'all.

Posted by: Outgoing CEOs | September 27, 2008 5:55 AM

The comments to this entry are closed.

 
 
RSS Feed
Subscribe to The Post

© 2010 The Washington Post Company