WASHINGTON — Huge bonuses doled out to executives of bailed-out mortgage giants Fannie Mae and Freddie Mac are outrageous and should be revoked, members of Maine’s congressional delegation say.

Fresh anger bubbled up Tuesday on Capitol Hill about the $12.8 million in performance bonuses for last year granted to 10 executives at Fannie and Freddie.

The companies have been propped up with $169 billion in taxpayer dollars after bad mortgage loans left them teetering on insolvency in 2008 and helped spawn a foreclosure crisis.

“It is absolutely outrageous,” said Sen. Olympia Snowe, R-Maine. “They (the bonuses) should be suspended, and I think that we should take action here in the United States Senate to ensure that these bonuses do not occur.”

Sens. John McCain, R-Ariz., and Jay Rockefeller, D-W.Va., are seeking a Senate vote on a bill blocking bonuses to Fannie and Freddie executives.

Meanwhile, the House Financial Services Committee on Tuesday passed by a 52-4 vote a bill to cap salaries of Fannie and Freddie executives and bring them in line with federal employees as long as the mortgage companies are under federal conservatorship.


U.S. Rep. Mike Michaud, D-2nd District, said he hopes it will be possible to rescind the bonuses and block future excesses.

“Across America, families are being thrown out of their homes,” Michaud said. “It is definitely not the time to be awarding multimillion-dollar bonuses. It is wrong and it is unacceptable.”

According to RealtyTrac, 365 housing units in Maine received a foreclosure filing in October, or one out of every 1,930 housing units. That is lower than the national average of one out of every 563 housing units during October.

Maine’s foreclosure rate ranks 38th nationally, according to RealtyTrac, a California-based foreclosure listing service.

Maine makes up 0.3 percent of Fannie Mae’s $2.8 trillion worth of single-family mortgage unpaid balances on its books, but the company does not break down foreclosure volumes by state, a Fannie Mae spokeswoman said.

Anger has been building on Capitol Hill about the bonuses.


Collins and Snowe joined 58 other senators earlier this month in sending a letter to Edward DeMarco, the head of the Federal Housing Finance Agency that oversees Fannie and Freddie, urging him to “make substantial changes” to the compensation system for Fannie and Freddie executives to better reflect the housing finance agency’s public mission and the fiscal realities facing Fannie and Freddie and the federal government.

DeMarco came to Capitol Hill Tuesday to tell the Senate Banking Committee that the high salaries and bonuses are unpalatable but needed to attract and keep top talent at two mortgage companies holding a combined $5 trillion in mortgage assets and $1 trillion in annual new business now supported by taxpayers.

“Given the amount of money at risk here, small mistakes can easily be amplified to losses far greater than the compensation paid to (Fannie and Freddie) executives,” DeMarco said in his testimony.

DeMarco said that his agency has set a target compensation package of $6 million a year for each mortgage giant’s chief executive officer, $3.5 million for chief financial officers and under $3 million for executive vice presidents and below. He said that rolls back CEO compensation to pre-2000 levels and represents a reduction in “target pay” for all executive officers by an average of 40 percent.

U.S. Sen. Susan Collins, R-Maine, said while there is a need to retain and hire talented people, “it’s outrageous that these executives are receiving these multimillion-dollar bonuses at a time when Freddie and Fannie are both under conservatorship and would not even exist were it not for the infusion of tax dollars.”

Collins added, “I don’t know whether we can recoup bonuses that were already given. I don’t know what the legality of that is, but I certainly am prepared to support legislation that would prohibit any future bonuses until Freddie and Fannie are restored to fiscal health.”


Snowe and Collins are not on the banking committee.

The anger about the bonuses is a rare bipartisan reaction on Capitol Hill.

“There is a universal feeling here that people were outraged when they heard about the bonuses, at this point in time when so many people are underwater and struggling to pay their mortgages,” said U.S. Rep. Chellie Pingree, D-1st District. “There are lots of people in federal agencies who are talented but who don’t get million-dollar-plus salaries. It is not appropriate at this time.”

Jonathan Riskind — 791-6280

[email protected]

Twitter: MaineTodayDC

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