U.S. Move to Cover Fannie, Freddie Losses Stirs Controversy (Nothing to see here, move along.)

The Obama administration's decision to cover an unlimited amount of losses at the mortgage-finance giants Fannie Mae and Freddie Mac over the next three years stirred controversy over the holiday.

The Treasury announced Thursday it was removing the caps that limited the amount of available capital to the companies to $200 billion each.

Unlimited access to bailout funds through 2012 was "necessary for preserving the continued strength and stability of the mortgage market," the Treasury said. Fannie and Freddie purchase or guarantee most U.S. home mortgages and have run up huge losses stemming from the worst wave of defaults since the 1930s.

"The timing of this executive order giving Fannie and Freddie a blank check is no coincidence," said Rep. Spencer Bachus of Alabama, the ranking Republican on the House Financial Services Committee. He said the Christmas Eve announcement was designed "to prevent the general public from taking note."

Fear not Congressman Bachus, the general public has taken note.

Here are institutions that are failing yet they're handing out bonuses to their senior management totalling more than $40 million.

Just as a reminder, here are the pay-outs filed with the SEC on Christmas Eve.

Fannie Mae 2009 Executive Compensation

Name & Title	2009 Base Salary	2009 Bonus	2009 LT Incentive


Michael J. Williams, President & CEO	$900,000	$3,100,000	$2,000,000
David M. Johnson, EVP & CFO	$650,000	$1,700,000	$1,150,000
Kenneth J. Bacon, EVP—Housing & Community Dev.	$475,000	$1,125,000	$800,000
David C. Benson, EVP—Capital Markets	$500,000	$1,369,667	$930,333
David C. Hisey, EVP-Deputy CFO	$425,000	$1,045,000	$730,000
Timothy J. Mayopoulos, EVP, General Counsel & Sec.	$500,000	$1,469,667	$980,333
Kenneth J. Phelan, EVP & Chief Risk Officer	$500,000	$1,369,667	$930,333

Explanations for the Fannie Mae compensation categories are as follows:

An annual base salary.
Bonus: Deferred pay, which generally will be paid in four equal quarterly installments in March, June, September and December 2010.
LT Incentive:In the event that the executive officer and Fannie Mae achieve performance measures established by Fannie Mae and approved by FHFA, a long-term incentive award, payable in cash, with 50% of the award payable in 2010 and the remaining 50% of the award payable in 2011.

Federal largesse was not limited to Fannie Mae. No my friends, Freddie Mac was equally generous for their executives as well.

**Freddie Mac 2009 Executive Compensation**
Name & Covered Officer	Title	Semi-Monthly Base Salary	Deferred Base	Incentive Comp	Target TDC

Charles E. Haldeman, Jr	CEO	$900,000	$3,100,000	$2,000,000	$6,000,000
Bruce M. Witherell	COO	$700,000	$2,300,000	$1,500,000	$4,500,000
Ross J. Kari	CFO	$675,000	$1,658,333	$1,166,667	$3,500,000
Robert E. Bostrom	EVP & Gen’l Counsel	$600,000	$1,260,000	$930,000	$2,790,000
Paul G. George	EVP – HR	$550,000	$1,250,000	$900,000	$2,700,000

The various compensation categories are defined as follows for Freddie Mac:

Total Direct Compensation (TDC): Two thirds of the target total direct compensation (TDC) of Covered Officers will consist of a Base Salary and one third will consist of a Target Incentive Opportunity.
Base Salary: Base Salary for each year will consist of two components. One component will be paid in cash on a semi-monthly basis during the calendar year earned (the Semi-Monthly Base Salary) and the other component will be earned on a semi-monthly basis during each calendar year, but will be paid out on a deferred basis (the Deferred Base Salary) as discussed below.
Deferred Base Salary: The portion of Base Salary that is not paid in Semi-Monthly Base Salary will be delivered in the form of Deferred Base Salary. Deferred Base Salary earned during each calendar quarter of 2009 will be paid on the last business day of the corresponding quarter of 2010, provided the Covered Officer is actively employed by the Company on such payment date…
Target Incentive Opportunity: Annual Target Incentive Opportunity (think bonus here), which will be equal to one-third of the Covered Officer’s TDC. A Covered Officer will be eligible to be paid 50% of their annual Target Incentive Opportunity no later than March 15 of the calendar year immediately following the performance year (the First Incentive Opportunity Payment), and the remaining 50% no later than March 15 of the second calendar year immediately following the performance year (the Second Incentive Opportunity Payment).

Seems like the only group not making a killing in our current financial crisis is the taxpayer!

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