Fannie to pay bonuses despite losses--like AIG!

Report: Fannie to pay bonuses despite losses
Execs at mortgage company to get up to $611,000 in retention pay
msnbc.com news services
updated 1:26 p.m. ET, Wed., March. 18, 2009

Government-backed mortgage company Fannie Mae plans to pay retention bonuses of up to $611,000 each to some executives this year even though it reported huge losses, the Wall Street Journal reported Wednesday.

The newspaper said Freddie Mac, Fannie's main rival, also plans to pay retention bonuses, although it did not detail how much.

Citing a recent Fannie Mae securities filing, the Wall Street Journal said Fannie Mae chief operating officer Michael Williams is due to receive cash retention awards of $611,000 this year, in addition to a similar award of $260,000 in 2008. His base salary is $676,000 a year, the paper said.

It said Fannie Mae also plans to pay retention awards this year of $517,000 to executive vice-president David Hisey. Two other executive vice-presidents, Thomas Lund and Kenneth Bacon, would get $470,000 each.

Fannie and Freddie posted combined losses of about $108 billion in 2008 as mortgage defaults grew to record levels, the paper said.

The news comes as Congress, President Barack Obama and many Americans seethe over $165 million in bonuses paid to executives at a division of American International Group Inc. that was responsible for helping to bring the giant insurer to its knees. The U.S. government owns 80 percent of AIG.

AIG chief executive Ed Liddy, in prepared remarks before testimony to Congress, acknowledged Wednesday that the company’s multimillion-dollar bonuses were “distasteful” to many and had provoked a firestorm of wrath.

Speaking at a press event Wednesday lunchtime on the lawn of the White House, President Obama said Americans are “rightly outraged about the bonuses” paid to AIG employees, adding that he wants to change the culture of excess on Wall Street and wants legislation providing greater control over financial institutions.

The Wall Street Journal said that officials at the Federal Housing Finance Agency, which regulates Fannie and Freddie, had no immediate comment on whether the bonuses will be reconsidered in light of the uproar over the AIG bonuses.
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