Top cats paid big bucks not to act dumbWASHINGTON - The government regulator of Fannie Mae and Freddie Mac said Thursday that million-dollar bonuses paid to executives at the companies were necessary to keep the mortgage giants running.
Edward DeMarco, acting director of the Federal Housing Finance Agency, sent a letter to U.S. lawmakers saying that paying $12.8 million in bonuses was a way of keeping talented executives with the companies. Without them, U.S. taxpayers would incur greater losses.
“We will need expert management of those guarantees for years to come,” DeMarco wrote in the letter to a bipartisan group of 60 senators who have urged him to stop the bonus payouts.
“Given the amount of money at risk here, small mistakes can be easily amplified to losses far greater than the compensation paid to enterprise executives.”
The government rescued Washington-based Fannie and McLean, Va.-based Freddie three years ago after they nearly folded because of big losses on risky mortgages they purchased.
Taxpayers have spent about $170 billion to rescue the two firms in the most expensive bailout of the 2008 financial crisis.
The government estimates the bailout could reach up to $220 billion through 2014.
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