Fannie and Freddie tell Barney "NO"

Washington Post:

House Financial Services Committee Chairman Barney Frank (D-Mass.) demanded yesterday that Fannie Mae and Freddie Mac cancel retention payments being paid to thousands of employees, but the federal regulator that authorized the payments is refusing to comply.

Congress proposed legislation this week that would have severely taxed these payments, in addition to those at American International Group and other big financial firms receiving taxpayer assistance.

Frank, whose committee oversees the mortgage finance companies and their regulator, went further, asking Fannie Mae and Freddie Mac to eliminate all retention payments and claw back those already paid. The companies, seized by the government in September, have received about $50 billion in taxpayer money.

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Writing in response, Lockhart said he told Congress in September that he had instituted retention programs at Fannie Mae and Freddie Mac, in consultation with the Treasury Department. Since then, many employees have helped carry out the Obama administration's housing recovery plan.

"It was very important to work with the current management teams and employees to encourage them to stay and to continue to make important improvements," Lockhart wrote. "In response, most have stayed. Indeed, I can attest that many employees at all levels at each company have been working far more hours, with far less compensation than they did prior" to the government's takeover.

Retention payments are being paid over a 1year period, starting last December. Lockhart said that Fannie Mae has offered 5,000 employees payments averaging $21,000, and that Freddie Mac has offered 4,000 payments averaging $19,000.

...

Legislators seem to have little knowledge of management and compensation issues, but they also seem eager to impose their ignorance on the entities who are trying to workout the bailouts. It is possible that Barney Franks and others will make matters much worse by running off the current employees. They are adding to the impression that the Democrats do not know what they are doing.