See the below WSJ article after reading my opinion.
The
whole outrage about bonuses is a rouse to take America’s attention away from
things that really do matter! Like why
did we bail these people out to begin with?
Why are we pouring 100’s of Billions more in? Like why is $20BB given to AIG going to foreign
banks? Why is $15BB going to Goldman
Sachs through AIG?
The
fact is, these people receiving bonuses are the people who do the real work
that HAS to be done if we have any hope of getting through this crisis the way
we have chosen to try to get through it.
You have to have these talented and experienced people, who are used to
being paid large $$$. They could leave
and then who would do what they know how to do?
A congressman? A bureaucrat? Someone who has no idea what a Credit Default swap actually is?? How it works? What it is worth? How to unwind it? Negotiate it?
It
is a farce and outrage to castigate the very people you need to fix the problem. These people did not create the problem,
their CEO’s and upper mgt did (most often at the urging of laws passed by congress
and congressman themselves.) These
people executed the plans laid out by the Execs, most of whom have quit or have
been fired!! It is somewhat like firing
a Professional Coach, and then refusing to pay the contracts of the players because they
have been losing! You can’t. You have to pay their contracts! It is that simple. Otherwise contracts and contract law mean
nothing.
If congress and this
administration manages to destroy contract law and property rights law in
America, then America as we know and love it will cease to exist.
Bonuses Expected at Fannie, Freddie
By JAMES R. HAGERTY and AARON LUCCHETTI
More financial companies that are being propped up with federal money are
facing political heat over bonus payments to executives.
Fannie Mae is due to pay retention bonuses of as much $470,000
to $611,000 this year to some executives despite enormous losses at the
government-backed mortgage company. Fannie's main rival, Freddie Mac, also plans to pay such bonuses but hasn't yet
provided details.
Fannie's bonuses are smaller than ones paid by American International Group Inc. that have caused a political
firestorm for that company. Seventy-three AIG executives got retention payments
of $1 million or more recently, according to New York Attorney General Andrew
Cuomo.
But the Fannie bonuses are still considerable and come at a time when Fannie
and Freddie are receiving increasing amounts of funding from the Treasury. For
2008, Fannie and Freddie reported combined losses of about $108 billion,
largely stemming from a surge in home-mortgage defaults. The U.S. Treasury has
agreed to provide as much as $200 billion of capital apiece to Fannie and
Freddie in exchange for preferred stock. The two companies have said they will
need a combined $60 billion of that money to cover their losses so far.
Bonuses for executives at companies that have received federal backing are
"definitely wrong," said U.S. Rep. Edolphus Towns, a New York
Democrat. "They are
rewarding folks who have not done a good job." Rep. Towns also questioned
whether executives would bolt if they didn't get retention bonuses. "Where
are these people going?" he asked. "Everybody's laying off." (Stupid
politician!! There are ALWAYS places for
talented people to go and earn what they are worth! He is clueless!!)
On Tuesday, Sen. Robert Menendez (D., N.J) wrote to Treasury Secretary
Geithner, asking him to "use every legal means available" to stop $3
billion in previously disclosed retention payments to brokers at the new joint
venture being formed by Morgan Stanley and Citigroup's Smith Barney unit.
"These payouts constitute misuse of taxpayer money and are an insult to
hardworking families who are saving every penny," wrote Sen. Menendez.
Morgan responded in a statement that the payments aren't bonuses, but loans
that won't start paying until 2010 and cannot be kept in full unless the broker
stays at the firm for nine years. "The program is necessary because our financial advisers are being
poached by competitors," the statement added.
Morgan and Smith Barney's venture will be jointly owned by Morgan and
Citigroup, both of which have taken an investment from the U.S. government
after they ran into trouble during the credit crisis. But unlike some of the
people who have received bonuses at AIG, the brokers getting extra money at the
new Morgan Stanley Smith Barney haven't been directly involved with billions of
dollars in write-downs at their parent companies.
James Lockhart, director of the Federal Housing Finance Agency, of FHFA,
which regulates Fannie and Freddie, said the bonuses they are paying are "critical" to retain
people needed to support the mortgage market
and work on foreclosure-prevention efforts. After the companies' chief
executives were ousted in September, "it would have been catastrophic to lose the next layers down and
other highly experienced employees," he said. Mr. Lockhart added
that compensation has declined for many employees because other types of
bonuses weren't paid last year and "past stock grants are virtually worthless."
A recent Fannie securities filing says that Michael Williams, the company's
chief operating officer, is due to receive cash retention awards of $611,000
this year, atop a similar award of $260,000 in 2008. His base salary is
$676,000 a year.
The company also disclosed plans to pay retention awards this year of
$517,000 to David Hisey and $470,000 each to Thomas Lund and Kenneth Bacon. All
three of them are executive vice presidents.
The bonuses this year are to be paid in two installments, one in April and
the second in November. Those installments are to be paid only if the
executives remain in their posts at the payment dates.
Hundreds of other Fannie employees also are eligible for retention awards,
but the company disclosed only the largest of the bonuses. It said there are no
plans for a retention bonus for the chief executive officer, Herbert Allison,
who elected to serve without any salary or bonus in 2008.
Freddie has a similar retention-bonus plan but hasn't yet disclosed the
amounts due to be paid to its top executives. That disclosure is due by the end
of April.
The regulator seized management control of Fannie and Freddie in September
under a legal process called conservatorship. That resulted in a crash of the
companies' stock prices to less than $1 as investors concluded that the
companies will be unable to pay dividends to common shareholders again for
years, if ever, as they struggle to support preferred-stock dividend payments
to the Treasury. Until last year, Fannie and Freddie executives were
compensated largely in the form of common stock, no longer an appealing option.