Government regulators approved the issuing of millions of dollars to top executives of Fannie Mae and Freddie Mac despite the fact that the government provided hundreds of billions of dollars to the mortgage lending institutions to keep the solvent. This revelation comes from a new report from March 31st by the Federal Housing Finance Agency.
The top six executives at the companies received $35.4 million over the two years. Since Fannie Mae and Freddie Mac were taken over in September 2008, the companies’ mounting mortgage losses have required a $153 billion infusion from taxpayers. Total losses may reach $363 billion through 2013, according to government estimates. – New York Times
The report denoted a lack of internal control by the government regulators in issuing the bonuses to top Fannie and Freddie executives, and has led Congress to propose legislation to slowly dissolve the mortgage giants over the next 10 years.
Fannie Mae and Freddie Mac have expanded to 'too big to fail' status thanks to many Congressional Democrats, and a mandate under the Clinton administration to try to provide housing to many families who could not afford it. The influx of money by Congress and Federal Reserve policy and subsequent derivative schemes that helped fuel the housing bubble also led to Fannie and Freddie coming to the brink of insolvency, and the need for the government to provide massive bailouts after the credit crisis of 2008.
For government regulators to signoff on massive executive bonuses, paid in taxpayer dollars to the same people who helped bring Fannie and Freddie to the edge of bankruptcy, deserves a serious look at potential criminal and ethical charges from Congress on both the companies, and regulators who approved them.