When the bubble burst in 2007, Fannie and Freddie began to lose billions of dollars of investments in mortgage-backed securities (MBS) guarantees. In September 2008, the Federal Housing Finance Agency (FHFA) took Fannie and Freddie into conservatorship as a result of mounting losses stemming from the financial crisis.The Enterprises became de facto government entities, funded by preferred stock purchase agreements from the Department of the Treasury (Treasury). Today, the Enterprises remain a multi-billion-dollar drag on the federal government’s finances. Since they entered conservatorship, Treasury has provided $169 billion to Fannie and Freddie – and the payouts are scheduled to continue with no end in sight. According to recent FHFA projections, by the end of 2014, Treasury assistance to the Enterprises will total $220 billion to $311 billion.
Since the Enterprises have become government-funded entities, lavish payment packages have been doled out to their senior executives, and taxpayers have been footing the bill. In 2009 and 2010, the Enterprises’ top six officers were given a total of more than $35 million in compensation. Of that amount, a total of $17 million in compensation was given to the CEOs of the Enterprises. Additional bonus installments for 2010 may still be forthcoming, and the two CEOs stand to make a total of $12 million in 2011. In addition, an executive has been awarded a substantial signing bonus – $1.7 million – upon joining the Fannie Mae. As these figures indicate, senior executives at Fannie Mae and Freddie Mac have become the highest compensated workers on the federal payroll – making as much as eight times more than the President of the United States. The executives even make more than their conservator, FHFA Acting Director Edward J. DeMarco.
Yeah, I know, I’m tap-dancing in a mine field for even bringing this stuff up. Somebody will point to this as evidence we’re all a bunch of tea-kissing whip-baggers or something. But since everybody already hates us what the fuck.
I’ve been trying to figure out the housing crash/financial meltdown for a couple years now. Here’s what I know:
1) It didn’t happen overnight, it took years for everything to get in place. Democrats and Republicans are both in it up to their eyeballs. Banks were involved but they weren’t the only ones.
2) I’ve read lots of explanations for what went wrong. All of them seem to make sense, but none of them seem to agree with the others. I’m not an expert so I don’t know who is telling the truth. Maybe none of them.
3) Cry racism all you want, but when you make loans to people who can’t afford to pay them back you’re going to have a high rate of defaults. On the other hand it makes no sense to pay bonuses to executives who drove their companies into a ditch.
4) Things aren’t going to change as long as we keep sending the same people back to Washington.
5) Obama is the worst president ever.
Filed under: 2012 Elections, Barack Obama, Corruption, Crony Capitalism, Democratic Party, Financial Meltdown, Housing Bubble, Politics, Racism, Republican Party, Uncategorized, Wall Street Banks Tagged: | Barack Obama, Financial Meltdown, Housing Bubble