I deliberately waited to post this news because our government made this announcement during the holidays knowing damn well all of us would be busy celebrating and NOT paying any attention. Nothing has changed for Fannie and Freddie. They are still doing business as usual, repeating the very business practices that got us all in this mess in the first place! Has our government NOT LEARNED ANYTHING?!
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The Boston Globe
written by J.W. Elphinstone
Friday December 25, 2009
NEW YORK - The Treasury Department has removed the $400 billion financial cap on how much money it will provide to the beleaguered mortgage giants Fannie Mae and Freddie Mac, a step taken to keep the companies from failing.
So far, taxpayers have shelled out $111 billion to the pair.
Yesterday, Treasury officials said the cap would be replaced with a flexible formula. The goal is to ensure the two agencies can stand behind the billions of dollars in mortgage-backed securities they sell to investors.
Fannie Mae and Freddie Mac provide vital liquidity to the mortgage industry by purchasing home loans from lenders and selling them to investors. Together, they own or guarantee almost 31 million home loans worth about $5.5 trillion, or about half of all mortgages.
Without government aid, the firms would have gone broke, leaving millions of people unable to get a mortgage.
The biggest headwind facing the housing recovery has been the rise in foreclosures amid high unemployment. The Treasury’s latest move could allow Fannie and Freddie to play a bigger role in restructuring mortgages for troubled borrowers.
The news follows the announcement Thursday that Fannie’s and Freddie’s chief executives could be paid as much as $6 million for 2009, despite the companies’ dismal performances this year.
Fannie’s CEO, Michael Williams, and Freddie CEO Charles “Ed’’ Haldeman Jr. each will receive $900,000 in salary, $3.1 million in deferred payments next year, and another $2 million if they meet certain performance goals, according to documents filed with the Securities and Exchange Commission.
The pay packages were approved by the Treasury Department and the Federal Housing Finance Agency, which regulates Fannie and Freddie.
That pay is far less than what their predecessors earned. Fannie CEO Daniel Mudd received $10.2 million in 2008, and Freddie CEO Richard Syron pocketed $13.1 million. Both were ousted when federal regulators seized the companies in September 2008. The federal government blocked exit packages for the pair worth up to $24 million.
The chief executives’ pay could spark new criticism about government bailouts, but that may be unfounded, said Mark Borges, principal with management consulting firm Compensia.
Fannie Mae and Freddie Mac declined to offer details on CEO performance goals.
The Obama administration has yet to offer long-term plans for the companies.
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