Fannie and Freddie and executive pay, oh my


Both Republican and Democratic members of Congress agree that Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) may need a taxpayer-funded bailout. Amounts of the bailout have ranged as high as $25 billion.

While this is a whopping big bucket of money, it pales in comparison to the $217 billion worth of non-agency securities that have fallen in value and the $1.5 trillion in debt downgrades in 2Q alone. In order to mitigate objections from taxpayers opposed to using public monies to bail out a quasi-private industry, those bulwarks of fiscal responsibility in Congress are beginning to draw up plans to curb executive compensation for those who will help Fannie and Freddie crawl out of the hole.

In 2007, Fannie Mae President Daniel Mudd earned a $2.2 million bonus on top of his $10 million salary. Members of Congress want to know why the executives who ran the ship aground were rewarded handsomely for doing so. Some members of Congress have suggested that previous executive bonuses should be given back to the companies. I bet some taxpayers might want to apply this same reasoning to Congressional salaries and perks.

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