(Adds details about bonuses, paragraphs 3-5)
By Patrick Rucker
WASHINGTON, April 3 Continuing bonuses paid to
employees at Fannie Mae FNM.N FNM.P and Freddie Mac FRE.N
FRE.P are offensive since taxpayers are helping keep the
mortgage-finance companies afloat, a leading Senate Republican
said on Friday.
"It's an insult that the bonuses were made with an infusion
of cash from taxpayers," Charles Grassley of the Senate Finance
Committee said in a statement. "The elite in Washington and New
York need to realize that bonuses for poor performance and at
taxpayer expense do a lot of damage to public confidence."
The bonuses for 7,600 employees will total about $210
million over 18 months, the Wall Street Journal reported on its
website, quoting a letter to Grassley from the director of the
Federal Housing Finance Agency, which regulates the companies.
About $51 million in bonuses was paid in late 2008 and the
rest is to be paid in 2009 and early 2010, the newspaper said,
quoting the letter from James Lockhart.
The largest bonus for any individual will total $1.5
million, the newspaper said.
Grassley, an Iowa lawmaker, has been a strong critic of
executive bonuses paid out by finance companies that have
lately had to rely on government aid.
During a public uproar last month about bonuses paid out at
failed insurance giant American International Group Inc.
(AIG.N), Grassley said executives should "follow the Japanese
example" and "resign or go commit suicide."
AIG was under fire for paying out $165 million of bonuses
despite a series of taxpayer bailouts for the company totaling
$180 billion. Fannie Mae and Freddie Mac have also had to rely
on a huge helping of government aid since they were
nationalized in September.
Still, while several AIG executives received
multimillion-dollar bonuses, the extra pay at Fannie Mae and
Freddie Mac is being spread much more evenly across the
Lockhart wrote that the pay plan includes "many
hard-working lower-level employees which are important to the
mission of providing stability, liquidity and affordability to
the housing market."
Lockhart wrote Grassley last week that bonuses were a key
component of pay for more than 7,500 employees at the two
When other lawmakers have questioned the payments, Lockhart
has defended them as an important defense against employee
Herb Allison, the government-appointed overseer for Fannie
Mae, has also vowed to try and preserve the employees'
"I understand your deep feeling that repudiation of the
terms of the retention plan ... would be a breach of faith,"
Allison wrote in a memo to staff last month.
The blistering public anger over the AIG bonuses has
subsided a bit in the last two weeks after lawmakers vented
voter outrage at congressional hearings and drafted legislation
to tax the payouts.
Congress will be in recess for the next two weeks, so the
political pressure to cancel executive bonuses might further
(Reporting by Patrick Rucker; Editing by Gary Hill)