It looks like Fannie Mae and Freddie Mac engaged in back flips to avoid government regulations holding senior executive pay to “only” $600,000,00.
Seriously, we need to stop the damn looting: (Also, prison for these rat-f%$#s, including the board, who is in on the conspiracy)
For years, the chief executives of two giant government-controlled companies, Fannie Mae and Freddie Mac, have operated under a strict constraint: They can’t be paid more than $600,000 a year.
The housing companies may have found a way around that congressionally mandated pay cap. Fannie Mae and Freddie Mac created a new job — president — transferring some of the work traditionally done by the CEOs to the new positions, according to government investigators. The presidents will be paid more than $3 million each.
………
At Fannie Mae, five executives earned more than $2 million each last year, while four executives at Freddie Mac earned more than $3 million, according to data compiled by Equilar, a research firm. The total amount spent on salaries for the top executives increased 31 percent at Fannie Mae and 4 percent at Freddie Mac last year, according to the data.
Fannie Mae declined to comment for this report. Freddie Mac challenged the conclusions of an Office of Inspector General report questioning the arrangement. “Simply put, the facts do not support the report’s conclusions,” company spokesman Christopher Spina said.
………
Fannie Mae and Freddie Mac stand as part of the last unfinished business from the crisis. The companies have been under government conservatorship since 2008 and received more than $100 billion in taxpayer bailouts.
………
Running companies of Fannie and Freddie’s size and complexity would typically be a career highlight for an ambitious executive. Fannie Mae has $3 trillion in assets, and Freddie Mac’s assets total $2 trillion. But the relatively low salary and the lack of rich stock options, or even the hope for a bonus, make it a tough sell, executive recruiters say. The companies’ CEOs also have little control over the ultimate fates of the housing giants, which is being debated by Congress and regulators, they say.
I have to note here: Dan Ariely did a study on the effect of bonuses on performance, and discovered that very high levels of remuneration actually DECREASED performance.
Overpaying the executives will actually get you worse performance.
………
The issue became pressing as both companies faced major turnover last year. Fannie Mae’s longtime chief executive, Tim Mayopoulos, announced he would be stepping down before the end of the year.
While deciding how to replace Mayopoulos, now president of a digital lending company, Fannie’s board came up with a plan: The CEO’s pay would remain $600,000, but it would create a new position, president, and that person would earn more than $3 million a year.
………
Both positions were filled by company insiders. Hugh Frater, who had served on Fannie Mae’s board since 2016 and is also the nonexecutive chairman of Vereit, a real estate investment company, was picked to be CEO. David Benson, their chief financial officer, was promoted to president. Less than two months after Benson was appointed, Fannie Mae proposed increasing his salary 11 percent to $3.6 million, the Office of Inspector General noted.
Fannie Mae is now spending $4.2 million for work that used to be done for $600,000 when it had only a CEO, the inspector general’s report concluded.
Gee, they hired insiders.
It’s not like they had to look very far for new presidents
………
Still, the inspector general’s office has challenged the arrangement. Freddie Mac now spends $3.85 million to pay two people for work that used to be done by one person for $600,000, according to the report. Both companies are involved in “financial engineering” meant to allow them to “circumvent” the salary cap put in place by Congress, the report said.
This is not “financial engineering”. It is a criminal conspiracy to break the law.
Prosecute.