Senators blast Fannie, Freddie bonuses

Nearly two-thirds of the nation’s senators are demanding to know why executives at troubled mortgage giants Fannie Mae and Freddie Mac recently received millions in bonuses even as taxpayers keep the two entities afloat.

In a letter sent Friday, the bipartisan group of 60 senators demanded an overhaul for how executives at the two government-sponsored enterprises (GSEs) are compensated, so as to reflect the “fiscal reality facing the GSEs and the federal government.” The letter was sent to Edward DeMarco, acting director of the Federal Housing Finance Agency, which regulates Fannie and Freddie.

The letter came about after it was revealed that 10 executives at Fannie and Freddie received a total of $12.79 million in bonuses. The Senate Banking, Housing and Urban Affairs Committee is examining the issue, and has called DeMarco to testify on the matter.

“As American families are tightening their belts in light of the struggling economy, the federal government must take steps to ensure that the conservatorship is receiving proper oversight,” the senators wrote in their letter. “The wasteful nature of these bonuses, however, is a step in the wrong direction. The idea that Fannie Mae and Freddie Mac, which rely on taxpayer funding to stay afloat, must offer excessive bonuses to its executives to attract effective management strains credulity.”

Fannie and Freddie have been on government support since September 2008, when they were brought under federal conservatorship. All told, they have received about $141 billion in government funds.

The letter came one day after Freddie Mac announced it had lost $4.4 billion in the third quarter of the year, and was requesting another $6 billion in support from the Treasury Department.

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