FHFA director James B. Lockhart yesterday defended so-called “retention payments” set to be paid to some high-ranking officials at mortgage financiers’ Fannie Mae and Freddie Mac.
The statement was released after CNN discovered that four top executives at Fannie Mae were expected to receive bonuses ranging from $470,000 to $611,000, according to a recent SEC filing.
Executive vice presidents Kenneth Bacon, David Hisey, Michael Williams (COO) and Thomas Lund (oversees single-family mortgage business) will all be receiving bonuses close to half a million dollars, despite the fact that Fannie Mae was recently placed into conservatorship.
“We started to design a retention plan with a compensation consultant even before the conservatorship because it was critical to retain their most important asset – their employees – who are being asked to play a vital role in the nation’s economic recovery,” Lockhart said in a statement.
“As we made clear in congressional testimony last September, FHFA worked with the new CEOs to establish employee retention programs for both senior managers and rank-and-file employees.”
“As the previous senior management teams left, it would have been catastrophic to lose the next layers down and other highly experienced employees” (way to have your backs up against the wall).
Fannie Mae and Freddie Mac purchased a hefty 73 percent of all residential mortgages originated last year, and are vital to the Making Home Affordable program currently underway.
It’s just a shame the pair ignored obvious risks during the housing boom, despite warnings from their risk officers that made it very clear they were playing with fire in a desperate attempt to stay relevant.
“Many employees have received significant pay reductions, with no bonuses for 2008 performance and all past stock grants are virtually worthless. This retention program is pay for specific efforts underway now to meet national goals,” Lockhart concluded.
Last I checked, you don’t receive bonuses the year your company goes under…unless you work for AIG.
(photo: acomment)