Thursday, January 14, 2010
Obama Slams Bonuses, Lets Fannie and Freddie Slide
While President Obama slams the banks and Wall Street bonuses, Fannie Mae and Freddie Mac executives will pull down 42 Million in newly funded taxpayer bonuses and be exempt (for the time being at least) from the 15% fee that was announced on January 14. This new fee, called the “financial crisis responsibility fee,” is a 15 basis point surcharge on high-risk transactions, such as Collateralized Mortgage Obligations (CMO’s) and Principle Only (PO’s) and Interest Only (IO’s) Strips. These are the items that lead to the mortgage meltdown. Large banks and financial institutions that engage in these high risk derivatives and debt bond transactions will pay the fee in an effort to collect all of the TARP-derived deficits. It is significant that some the biggest beneficiaries of the TARP (GM, Chrysler, Fannie Mae and Freddie Mac) will not have to pay the fee even though most of the current TARP deficit is linked to the taxpayer-funded bailout of these firms. So despite all of Obama’s rage over the so-far un-announced Wall Street bonuses he is completely silent on the outrageous bonuses for Fannie Mae and Freddie Mac executives, who are not only exempt from what some are calling the revenge tax, but each organization was given over $100B in additional taxpayer funds to maintain operations in the current year. Did I mention they will be eligible for more if needed?