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Rep. Ed Royce explains why the house is looking to stop bonuses and reduce pay at Fannie Mae and Freddie Mac.
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Compensation packages.
Simply do not make sense or are appropriate for taxpayers we're talking about.
The taxpayer money and the downside risk of course went to the taxpayer but the upside was in their compensation packages.
The balance our analysts and how congress is demanding -- -- -- the big payouts house the committee of voting to stop the multimillion dollar bonuses significantly cut executive -- At Fannie Mae and Freddie Mac -- bill now going to a full house vote but California Republican Ed.
Right says that this is definitely not be a debate is a no brainer us.
Hard earned income tax dollars should be going to bridge to -- -- -- that entities that are still way way way deep and all.
To taxpayers to the tune of 150 billion box at the very least congressman what kind of reaction -- -- Well I think we made our points in committee and we'll pass this out the question is will the senate seat at the same way we do.
Remember this is a situation where these extravagant bonuses were part of a plan for privatize profits.
That went to shareholders and management.
With an expectation -- losses would be -- would go to the tax -- public.
And I think this is the most egregious part of that even after.
We've seen what's anticipated to end up being a 300.
Billion dollar hit to the taxpayers.
We still haven't been able to change the culture the culture over there.
And get these employees paid like other government employees because defect though they've become that haven't -- You know the argument for.
Giving them these bonuses I think with something like this.
They stopped the bloodletting.
By comparison.
It's it's no longer free fall that would be akin -- -- -- get a bonus because I'm still breathing but but.
That was kind of the the the argument for the.
What do you say that.
And I think you might be able to convince me there'd be something to that except that they're not the only federal institution managing these portfolios now.
FHA manages a portfolio like this the VA does as well and in both of those cases they received an average you know employee's salary.
Rather than multimillion dollar bonuses so I I don't think that holds water and neither does the inspector general who.
Took a look at this and said that the institution itself.
Isn't equipped to manage these say extensive compensation packages that they're they're not resisting the way they should.
And this is why the House of Representatives of stepped in with this bill which -- -- Bombed it like is it might get -- and make progress in in in the house I don't see going -- and learned in the senate I could be wrong but but.
Having said that.
Is it about Fannie and Freddie that always managed to avoid.
Much federal scrutiny even being left out of the finance -- reform law.
I don't get I understand they control -- close to nine added ten.
Mortgages out there are very huge beast you can't get to obesity -- to be -- I don't know what the argument is.
But it's almost as if those guys -- photographs I have no idea what it is but no one to.
-- It is this is the importance of the firewall.
You know between a market based system and government interference because it went both ways right.
You had the government.
-- the market through Fannie and Freddie zero down payment loans sure you can now.
You can over leverage you know as long as -- it in sub prime.
And the other way you had Fannie and Freddie.
The biggest lobby up here on the hill would all of their influence over members of the house why.
Because for their executives.
If they could leverage -- a hundred to one.
If if if half of this had to be in some primal it -- enormous risks but -- enormous enormous returns to them personally.
This is the whole problem with the government intervention it leads to this.
And with tying the hands of regulators you and I remember I mean I had legislation to try to regulate them for systemic risks with the regulatory community.
Could bring down those portfolios shed those sub prime loans.
And it was Barney Frank and Chris Dodd that -- that.
Now I remember that very well you're ahead of this I gotta give you credit congress and always good.
