WASHINGTON Jan 13 Republican lawmakers slammed
Treasury Secretary Timothy Geithner on Wednesday over
multi-million dollar pay packages for executives at
mortgage-finance firms Fannie Mae FNM.N and Freddie Mac
FRE.N, which the government took over during the financial
"Awarding millions of dollars in bonuses on the taxpayers'
dime is unconscionable," Rep. Jeb Hensarling wrote Geithner in
a letter signed by 70 Republicans.
Hensarling, a persistent critic of the two
government-supported mortgage finance agencies, also said he
was troubled at the Treasury's announcement that it would allow
unlimited losses at the two firms. Their losses had been capped
earlier at $200 billion.
Treasury announced both the pay packages and the lifting of
the loss cap on Dec. 24.
Hensarling and others have criticized President Barack
Obama for not offering any proposals about how to structure the
companies in the future.
"The Treasury Department has given them a blank check,
without presenting any proposals for their reform," Hensarling
The White House has promised to make suggestions about the
future of the companies -- which were chartered by Congress to
help boost homeownership -- in its budget proposal, expected in
The top Republican on the House Financial Services
Committee, Rep. Spencer Bachus, urged Committee Chairman Barney
Frank to take up the pay packages at a Jan. 22 hearing on
executive compensation, which Frank has said will focus on
"It is inconceivable to me that, after these institutions
have been given access to unlimited taxpayer funds to cover
losses they have incurred as a result of their reckless
behavior, their top executives would each be awarded
multi-million dollar compensation packages," Bachus said in a
statement. Bachus also signed Hensarling's letter.
The Treasury Department declined to comment.
Fannie Mae and Freddie Mac have Congressional charters to
support mortgage finance by buying mortgages from lenders and
repackaging them as securities for investors.
Because they held lines of credit with the U.S. Treasury,
many investors considered their debt second only in quality to
government debt, and the companies enjoyed a funding advantage
over purely private-sector competitors.
Their quasi-public mission earned them strong support from
politicians of both political parties, and the companies grew
to wield out-sized political and financial clout.
The Bush administration seized the two companies and placed
them in a government conservatorship as the financial storm
reached its climax in September 2008, saying that failure of
either firm could cause unacceptable turmoil in U.S. housing
(Reporting by Mark Felsenthal; Editing by Diane Craft)