Fannie Mae and Freddie Mac, the mortgage finance companies under federal control, are planning to pay $210 million in retention bonuses to 7,600 employees over 18 months, the firms' regulator said Friday.
The Federal Housing Finance Agency said $51 million in payouts was given to employees in late 2008 and the remainder would come this year and next. The information was contained in a letter to Sen. Charles E. Grassley (R-Iowa).
Fannie Mae and Freddie Mac's compensation plans drew scrutiny several weeks ago after American International Group Inc. paid $165 million in bonuses to employees of the unit that brought the insurance giant down. The House passed legislation to significantly tax the AIG bonuses, though the measure has been stalled in the Senate.
Grassley and Rep. Barney Frank (D-Mass.) expressed concerns that Fannie and Freddie, which received more than $50 billion in taxpayer dollars, would be paying bonuses. Frank called for bonuses to be withheld. In an earlier letter to Frank, the housing finance agency said that about 3,500 employees at Fannie were getting an average payment of $32,000, and 4,000 employees at Freddie were getting an average of $24,000.
The maximum bonus for any employee will be $1.5 million, the regulator said. Freddie's bonuses are going to 80% of its employees, while Fannie's are going to 61%. Ninety-two Freddie employees will receive bonuses of $100,000 or more in 2009 and 121 Fannie employees will get bonuses of $100,000 or more.
Fannie Mae Chief Operating Officer Michael Williams is in line for a $1.3-million bonus, according to regulatory disclosures.
Grassley criticized the bonuses Friday. "It's hard to see any common sense in management decisions that award hundreds of millions in bonuses when their organizations lost more than $100 billion in a year. And, it's an insult that the bonuses were made with an infusion of cash from taxpayers," he said in a statement.
The regulator who approved the payments defended them in the letter to Grassley.
"Keeping the enterprises operating at full speed was best for the housing markets and best for the economy, which clearly also made it best for the taxpayer. And that would only be possible if we retained the Fannie Mae and Freddie Mac teams. They are an important part of the solution and not the problems of the past," wrote James B. Lockhart, director of the regulatory agency.