Press Releases

Frank Calls on Lockhart to Cancel Fannie and Freddie Bonuses

f t # e
Washington, DC, March 20, 2009 | comments

House Financial Services Committee Chairman Barney Frank (D-MA) today sent a letter to Federal Housing Finance Agency Director James Lockhart asking him to cancel planned bonuses to executives at Fannie Mae and Freddie Mac.  In the letter, Frank states:  “I am writing to urge strongly that you rescind the retention bonus programs at Fannie Mae and Freddie Mac, prohibit any further payment of bonuses to executives under that program, and pursue repayment of any already-paid bonuses.  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.”

 

The text of the letter follows:

March 19, 2009

Dear Director Lockhart:

I am writing to urge strongly that you rescind the retention bonus programs at Fannie Mae and Freddie Mac, prohibit any further payment of bonuses to executives under that program, and pursue repayment of any already-paid bonuses.  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. 

Fannie Mae and Freddie Mac have said that their retention program awards were structured in a way that would recognize the “unsatisfactory performance” of the companies, coupled with the “urgent need to retain people in the most critical positions.”  I remain very skeptical that retaining and rewarding people who made the mistakes that contributed to the unsatisfactory performance is a good idea.  Further, in this troubled economy, and in this job market, it is difficult to imagine that the companies would not be able to find competent and talented replacements for anyone who chooses to leave. 

Congress gave the Federal Housing Finance Agency (FHFA) broad general authority under the Housing and Economic Recovery Act to approve, disapprove or modify compensation paid by Fannie and Freddie.  In its role as conservator, the FHFA has complete authority over compensation practices and already has exercised that authority to recover previously agreed-upon compensation from some executives.  I urge you to use that authority now to reconsider the retention programs at Fannie Mae and Freddie Mac, cease any further payments, and recover previous payments under those programs.

BARNEY FRANK

f t # e



Subscribe for Updates

Twitter Feed