Reuters logo
8 years ago
UPDATE 1-Fannie, Freddie regulator defends bonus plan
March 18, 2009 / 6:40 PM / 8 years ago

UPDATE 1-Fannie, Freddie regulator defends bonus plan

2 Min Read

(Adds Lockhart remarks, mortgage insurers comment)

WASHINGTON, March 18 (Reuters) - A compensation plan that will dole out bonuses to thousands of Fannie Mae FNM.N and Freddie Mac FRE.N employees was fair and well thought-out, the regulator for the mortgage-finance companies said on Wednesday.

"I think it's a reasonable and well-thought out plan," James Lockhart, the director for the Federal Housing Finance Agency told reporters at a housing symposium.

The two government-sponsored enterprises were nationalized in September as the companies faced billions of dollars in losses in a declining housing market.

When the companies were seized, Lockhart dismissed some top executives and outlined a compensation plan to retain other, second-tier executives.

"The most important thing in those companies are the human assets," he said. "It was important to us - and we disclosed it at the time - to retain these people. It would have been catastrophic if people had walked out that first day."

Many company employees lost large sums as the value of Fannie Mae and Freddie Mac shares collapsed when the companies were seized. Many rank and file workers have seen their pay slide as the companies' bonus plan has been pared back, Lockhart said.

"The employees now are getting probably fifty percent of what they got in previous years. They're down dramatically," he said.

Mortgage Insurance

Lockhart also said that he sees a continuing role for mortgage insurance companies that shield Fannie Mae and Freddie Mac from some costs of failing loans. Specifically, Lockhart said that he hopes the federal government will give the insurers a capital boost to fortify their balance sheets.

"We're continuing to work with them and Treasury and we're hopeful that we can develop a plan that will work. I think that's an important thing to keep Fannie and Freddie in the game. We need the mortgage insurers there." (Reporting by Patrick Rucker; Editing by Theodore d'Afflisio)

0 : 0
  • narrow-browser-and-phone
  • medium-browser-and-portrait-tablet
  • landscape-tablet
  • medium-wide-browser
  • wide-browser-and-larger
  • medium-browser-and-landscape-tablet
  • medium-wide-browser-and-larger
  • above-phone
  • portrait-tablet-and-above
  • above-portrait-tablet
  • landscape-tablet-and-above
  • landscape-tablet-and-medium-wide-browser
  • portrait-tablet-and-below
  • landscape-tablet-and-below