Fannie Mae executives will get retention bonuses of $1 million – while Congress votes to tax the AIG retention bonuses at 90%
Queue up the communist clown parade. This is great stuff. Full story here.
Fannie Mae plans to pay retention bonuses of at least $1 million to four key executives as part of a plan to keep hundreds of employees from leaving the government-controlled company.
Rival mortgage-finance company Freddie Mac is planning similar awards, but it has not yet reported on which executives will benefit.
The two companies, which together own or back more than half of the home mortgages in the country, have been hobbled by skyrocketing loan defaults. Fannie recently requested $15 billion in federal aid, and Freddie has asked for a total of almost $45 billion.
Fannie Mae disclosed its “broad-based” retention program in a recent regulatory filing with the Securities and Exchange Commission. The company was required to disclose only the amounts for the top-paid executives, who will pocket at least $470,000 on top of their base salaries.
The bonuses are more than double last year’s, which ranged from $200,000 to $260,000. Another round of bonuses ranging from $330,000 to $429,000 are planned for next February.
The bonuses were authorized last year by the Federal Housing Finance Agency, which seized control of Fannie and Freddie in September and fired the companies’ former CEOs.
“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,” James Lockhart, the agency’s director, said.
Now while Fannie and Freddie are ready to pay out those bonuses it appears Nancy Pelosi is preparing to tax the crew at AIG. Full story here from Market Watch.
Speaker Nancy Pelosi issued the following statement tonight on legislation the House will vote on tomorrow to hold companies, including American International Group (AIG), accountable for the bonuses that were paid to their executives. The legislation will recover the bulk of these bonuses by taxing them at a rate of 90 percent. Below the Speaker’s statement is a brief fact sheet on HR 1586 and click here to view the text of the bill.
“We must stabilize the financial system in order to strengthen our economy and create jobs. We must also protect the American taxpayer from executives who would use their companies’ second chances as opportunities for private gain.
“Because they could not use sound judgment in the use of taxpayer funds, these AIG executives will pay the Treasury in the form of this tax. I urge all my colleagues to vote in favor of this legislation and in favor of recovering taxpayer dollars and protecting Americans from the continued poor judgment of some of America’s largest companies.”
Here’s the meat of the bill per Pelosi’s office:
As a result of extraordinary abuses of the public trust by companies rewarding employees with excessive compensation while receiving billions in taxpayer assistance, Congress introduced legislation to recover taxpayers’ dollars.
The bill would apply a separate income tax rate of 90 percent to bonuses received by individuals from companies which have received at least $5 billion from TARP. It would also apply to bonuses paid by Fannie Mae and Freddie Mac.
For this purpose, bonuses will be defined as any retention payment, incentive payment, or other bonus which is in addition to regular employee compensation payable on a periodic basis.
The special tax rate only would apply to individuals and families with overall income (including income other than bonuses) in excess of $250,000.
The bill applies to payments received after December 31, 2008.
SOURCE Office of the Speaker of the House
I’m not sure whether to laugh or cry at this circus.