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r3020
Senior Advisor

Freddie/fannie still doing what they do

The very people who drove the world economy into oblivion still receiving benefits. Not much talk of changes either. Government still backing worthless loans.

 

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The taxpayer rescue of Fannie and Freddie in September 2008 has cost $137 billion so far. While this has been paid down from an initial $187.5 billion, taxpayers aren’t likely to get their money back anytime soon. Last fall, the regulator charged with overseeing Fannie and Freddie estimated that the taxpayer billfor the companies could be $200 billion by the end of 2015.       

Still, Washington has shown little interest in winding down Fannie and Freddie. The ostensible reason is that there would be no mortgage market without them; private lenders are still unwilling to make home loans that they want to hold as investments, so Fannie and Freddie still have to buy or guarantee them.       

But doing nothing also serves other interests. Since 2011, any increase in the guarantee fees the companies receive when backing a mortgage goes to the Treasury, not to repay taxpayers. The companies, therefore, have become a government piggy bank.       

There is another group that would prefer Fannie and Freddie to remain as is: the former executives who still receive benefits from the companies and the taxpayers who own them.       

According to documents reviewed by The New York Times, $25.3 million in pension payments went to 1,785 former Fannie executives last year; an additional $12.7 million went to 871 former Freddie officials.       

Had the companies not been rescued and instead filed for bankruptcy, the former executives’ pensions would be the obligation of the Pension Benefit Guaranty Corporation, financed by corporations whose plans it backs. Instead, taxpayers have been on the hook for five years.       

Among the retirees receiving pensions courtesy of the taxpayer are Franklin D. Raines, Fannie Mae’s former chief executive; J. Timothy Howard, the company’s former chief financial officer; and Leland C. Brendsel, former chief executive of Freddie Mac.       

All three men were ousted from their companies amid accounting scandals — Freddie’s in 2003 and Fannie’s a year later. All were paid handsomely through their tenures. Between 1998 and 2004, for example, Mr. Raines received $90 million in compensation, regulators found. Mr. Howard received $30 million over the period. When Mr. Brendsel left Freddie Mac, he was earning $1.2 million a year in salary.       

Even so, Mr. Raines receives a pension of $2,639 from taxpayers each month, the documents show; Mr. Howard receives $4,395 and Mr. Brendsel $8,039. Requests for comment from the former executives’ lawyers were not returned.       

The documents show that taxpayers spent $11 million last year on medical costs for 1,392 Fannie and Freddie retirees. And from September 2008 through 2012, taxpayers also spent $114 million for legal bills racked up by former executives and directors testifying in lawsuits relating to the accounting scandals or financial crisis inquiries.

 

http://www.nytimes.com/2013/03/24/business/fannie-mae-freddie-mac-and-the-same-old-song.html?src=twr...

1 Reply
Faust100F
Advisor

Re: Freddie/fannie still doing what they do

3020 - what is going on in our government right now, is exactly what is going on in Cypress, Greece, and the other European Countries.   The only people being benefited  by not chopping out dead wood, bad programs, or not adopting austarity programs are the government employees.  Like in Cyprus they will steal the citizens money, and even seize his property to perpetuate their well being.   

 

What you have in Freddie and Fanny is a group of government employees, supported by other government employees, supported by our congressmen and our President.  In short we are screwed.  They will ride this dead horse as far as it will go, and when the reach the end of the trail, we will be a Weimar Republic.     Adios Amigo. John