CNN Money: Why Fannie, Freddie execs get paid a lot
Executives at Fannie Mae and Freddie Mac need big pay packages to protect taxpayers from losing more of the billions spent to rescue the mortgage finance companies, according to the head of the agency that sets pay at the beleaguered firms.
“Taxpayers. . . would not be better off if we provoke a rapid turnover of senior management by further slashing compensation,” said Edward DeMarco, acting director of the Federal Housing Finance Agency, in testimony Tuesday before the Senate Banking Committee. He said pay cuts and senior management turn-over could “increase the risk of higher losses,” he added.
The net cost of the taxpayer bailout of Fannie Mae and Freddie Mac is about $124 billion — dwarfing bailouts to any other financial firm. Those firms bought up many of the bad and underwater mortgages from Wall Street banks — such as Bank of America (BAC, Fortune 500), Citigroup (C, Fortune 500) and Goldman Sachs (GS, Fortune 500) — during the height of the financial crisis.
