Thursday, March 19, 2009

Obama, Frank, Dodd and AIG

Yesterday Congressman Barney Frank and Senator Chris Dodd were lashing insurance giant AIG for the bonuses paid to keep high level employees working on a selloff of assets so it could repay money loaned to it by taxpayers.

Yesterday Fannie Mae and Freddie Mac, the government sponsored firms for which Frank and Dodd helped in their cover-up of disastrous lending and accounting and which they sheltered from the eyes of regulators, disclosed that they were paying millions in bonuses to hundreds of top employees.

Fannie Mae, the government mortgage company will pay chief operating officer Michael Williams a retention award of $611,000 this year, more than double his award last year. His base salary $676,000 a year. For leading the operations that cost tax payers billions, Mr. Williams will receive over $1 million this year. Vice president David Hisey will get a $517,000 bonus and two other vice presidents will get $470,000 each. Freddie Mac has not yet revealed its bonuses.

What is the reason employees of these government firms that have been big donors to the campaigns of Frank, Sen. Dodd and Sen. Obama will get such rewards for losing $108 billion of taxpayer money last year? The same reason that AIG gave for its bonuses.

James Lockhart directs the Federal Housing Finance Agency, or FHFA, which regulates Fannie and Freddie, and explains that, "it would have been catastrophic to lose the next layers down and other highly experienced employees." In addition the government has promised each of its companies $200 billion more of taxpayer money.

Barney Frank called for the names of all AIG employees who received bonuses despite several threats against their lives. Will he also call for the names of hundreds of Fannie and Freddie employees? While he’s at it, will he also reveal to which members of Congress they gave donations?

Perhaps it will take presidential pressure. President Obama has also has called for AIG executives to give back their bonuses. “It's about our fundamental values," he said.

As a brand new Senator Obama somehow quickly became the recipient of FNMA’s second largest campaign donations. AIG’s new Chief Executive asked for his employees to return their bonuses. Will our new chief executive in the White House ask the same of his employees? Private enterprise has set the example but so far the President has failed to follow. Are we too audacious to hope for change?

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