HERE WE GO AGAIN:

Fannie Mae chiefs in line for huge bonuses.. HERE WE GO AGAIN! BANKERS ARE OUTLAWS POCKETING OUR MONEY!

Fannie Mae will pay its top executives retention bonuses of up to $611,000, the state-controlled mortgage lender and guarantor revealed yesterday amid the furore over compensation at AIG.

Meanwhile, a New York judge ordered Bank of America (BoA)

to disclose the recipients of $3.6 million-worth of bonuses handed out to bankers at Merrill Lynch, the investment bank bought by BoA last September.

In a filing with the Securities and Exchange Commission, Fannie Mae said that it would pay Michael Williams, its chief operating officer, $611,000 this year to induce him to remain at the company, on top of his salary of $676,000.

Three executive vice-presidents at the company will receive between $470,000 and $517,000 each.

Fannie Mae was taken into Government conservatorship last September along with Freddie Mac, another giant mortgage lender, after making losses of $108 billion last year, mainly on defaulting home loans.

The companies have been promised as much as $200 billion in funding by the Government so that they can keep lending to American homebuyers. Their activities are overseen by the Federal Housing Finance Agency.

There was outcry this week after AIG revealed that it would pay $165 million in retention bonuses to 400 staff, despite having received more than $170 million in support from the Government.

Freddie Mac operates a similar staff retention plan to that of Fannie Mae but is not expected to disclose the amounts paid to its executives until the end of April.

Andrew Cuomo, the New York Attorney General, is investigating the bonus payments at AIG and at Merrill Lynch, where he suspects BoA shareholders were misled about the payments, which were paid in December, a month early and weeks before the investment bank unveiled a surprise $15.8 billion fourth-quarter loss.

The Attorney General suspects that some of the bankers who received early multi-million dollar bonuses may have been prompted to report larger than usual losses on their trading books as a result, to the detriment of shareholders.

Shareholders were not informed of the bonuses as part of the announcements made during the takeover of Merrill Lynch by BoA.

BoA had argued that the names of the recipients should remain private and declined to hand them over to Mr Cuomo.

But following weeks of legal argument, Supreme Court Justice Bernard Fried decided last night that BoA had not justified its desire to keep the names private for competition reasons.

BoA said that it would comply with Justice Fried’s order and could provide the names to Mr Cuomo as early as Thursday.

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Pumas Unleashed says:

Curiously, we find Fancy Nancy Pelosi, Harry Depends Reid, Chris Puffin-Stuff Dodd, Barney ‘the Grape’ Frank and Tiny-Tim Geithner hiding out in the Congressional Cloak Room as our ever fragile economy hurtles towards the Black Hole of the abyss.

Congress once more turns a blind eye to yet more wasteful spending…of Our Money! When you’re in a hole and you prefer seeing daylight someday in an economy destined never to recover in three generational life times, the first thing you do in triage is stop digging-

It would be refreshing if one out of several hundred elected delegates elected to represent their constituency would speak out in advocacy for the people he/she was trusted to represent. Passing emergency legislation putting a moratorium on monetary remuneration handed out as party favors would be a start, until economic indicators are recognized as positive where the bottom has been reached and the hemorrhaging has more than abated, it has stopped. Rewarding failure has never proved a good investment.

We are in the hellacious grip of a Congress preening in the mirror adjusting and admiring their reflections rehearsing their scripted speeches in preparation for the forthcoming public outcry. Why are we rewarding Congress for their continued arrogance and failure?
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UPDAte to yesterday’s Announcement:

When it took over Fannie Mae, the government instituted a retention program. Under the program, employees deemed crucial to the company’s efforts to carry out government housing plans are eligible to receive bonus payments, but some may not receive any.

With the multitudes of citizens unemployed, how difficult would it be to replace the executives who have deferred to the bonus retention plan written last September without bonuses added to their contracts just to retain a job? As far as using the “critical” second layer of executives for filling the posts of the ones leaving, all that accomplished was the likelihood of maintaining the status quo for continuing the compounding of the same errors committed by their Sr.  predecessors!

THE ADAGE: “A NEW BROOM SWEEPS CLEAN” was coined for a reason,  attending to situations just like this one. When you do not replace the leadership that drove Fannie Mae and Freddie Mac into the ditch in the first place NOT with a second string of existing incompetents unless there is fear in the industry fresh, new, unassociated executives may uncover more embarrassing scenarios.

“Many employees have received significant pay reductions, with no bonuses for 2008 performance and all past stock grants are virtually worthless. This retention program is pay for specific efforts underway now to meet national goals,” Federal Housing Finance Agency director James B. Lockhart III said in a statement.

“We started to design a retention plan with a compensation consultant even before the [take over] because it was critical to retain their most important asset — their employees — who are being asked to play a vital role in the nation’s economic recovery,” he said. “As the previous senior management teams left, it would have been catastrophic to lose the next layers down and other highly experienced employees.”

FHFA signs off on all major compensation decisions. Freddie Mac hasn’t disclosed its retention payments, yet. It is expected to do so in coming months, and its payments should resemble those at Fannie Mae.

Insiders say that a few hundred people at Fannie Mae and Freddie Mac will receive bonuses, and the average bonus should be in the mid-five figures.

It’s a big contrast to what Fannie Mae and Freddie Mac employees experienced in the past, when their shares were skyrocketing and stock-based awards were a popular way to compensate employees, from entry-level secretaries to senior staff.

Many of those employees lost small fortunes when the companies’ shares collapsed. Stock grants play no role in current compensation practices at the firms.

Wapo

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