IG: No one watching Fannie, Freddie
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dribin's housing blog
Fannie Mae and Freddie Mac received lax and deferential oversight from the federal agency in charge of the two mortgage giants, according to a government report released Tuesday.
The Federal Housing Finance Agency set a pattern of “giving undue deference” to the troubled companies under government conservatorship since September 2008, the agency’s inspector general said in a semi-annual report to Congress.
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Republican and Democratic lawmakers have recently blasted the FHFA for approving executive bonuses tied to less than stellar performance goals as the housing market struggles to shake off its slump.
The House Financial Services Committee moved a bill earlier this month to put Fannie and Freddie employees—-who manage a combined $5 trillion worth of mortgage-related assets—-on a government pay scale.
In the case of executive compensation and the companies’ role in a special government program to help modify mortgages, the FHFA “relied upon review and corporate governance processes already in place” at Fannie and Freddie, when those matters were “sufficiently important to warrant greater involvement and scrutiny by the Agency,” the report said.
The FHFA - starved for financial examiners - did not properly review Freddie’s $1.35 billion repurchase claim involving Bank of America, possibly costing taxpayers a substantial amount of money.
When it came to compensation packages that awarded a total of $35 million to the top 6 executives at Fannie and Freddie in 2009 and 2010, the agency neglected to consider whether salaries should be discounted to reflect the significant level of financial support from the government.
The companies have received roughly $170 billion in taxpayer funding so far, as part of an effort to stabilize home prices after the sub-prime bubble popped almost four years ago.
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Readers' Comments (4)
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skint
Party: Independent
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Nov. 29, 2011 - 1:58 PM EST
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jmowens
Party: Conservative
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Nov. 29, 2011 - 2:58 PM EST
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nudnik
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Nov. 29, 2011 - 3:35 PM EST
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foius
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Nov. 29, 2011 - 3:56 PM EST
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Read all 4 comments in our forumDo people know that Elizabeth Warren was the Overseer and then removed only to become Obamas Czar on Barney and Dodds banking bill?......disguised as a "Consumer protection artist".
The taxpayers bailing out Fannie/ Freddie could more than double over the next three years, making it the most expensive of all the bailouts.
Their purpose was to make it easier to buy homes in America by buying or guaranteeing mortgages
How did they do this?
They forced banks to make loans and then bought those loans knowing they were bad.
Fannie, is the nation's biggest underwriter of home mortgages, had been under increasing pressure from the Clinton Administration to expand mortgage loans among low and moderate income people and felt pressure from stock holders to maintain its biggest growth in profits ===GREED.
Liberals in Congress and their special interest community organizing friends such as ACORN pushed for more subprime lending for their politically correct friends.
So they used the old tactics that they still use.......Marching ON Banks....Protesting banks...Sit Ins in banks.
Congess members such as Barney Frank and Chris Dodd threaten banks that "THEY" (Barney and Chris and Schumer) would with- hold any expansion .....a bank wanted to make into another state.
That they would challenge their bookeeping and keep them in limbo doing so.
That Congress members awareness of the poor business practices of Fannie/ Freddie at the same time as certain key members of Congress continued to block attempts to regulate them......Barney Frank.
On top of all the taxpayer money they LOST on Fannie/Freddie they actually gave them huge bonuses in the MILLIONS for doing so.
Talk about GREED.
Ask questions about the SEIU sit in's.
Protest right in front of the Fannie/Freddie buildings IF you dare.
But I thought lax oversite only happened under W?
Fannie and Freddie now exist for one purpose. That is to insure that banks profit from the real estate bubble.
As we can clearly see, the degree to which regulatory oversight is utilized by Congressional Committees which have that responsibility has not been properly used at Fannie Mae and Freddie Mac. Since most of our representatives in Congress are lawyers, it seems to me that th;ey use their legal training to thwart the will of the American people. The ovewwhelming evidence that Fannie Mae and Freddie Mac have not carried out their Fiduciary duties to the American people has already been examined during the economic meltdown of 2009 and the Multi-Trillion Dollar CDO secondary market travesty which set the stage for the "too big to fail" TARP bailout funds. A much more efficient use of those taxpayer funds should have been used to broker an exchange that would have written down the vast majority of the affected mortgages that were packaged into CDO"s, while simultaneously restoring credit worthiness to the millions of Americans who were unable to obtain the necessary credit to purchase homes (1st Time Buyers), or to stop foreclosure proceedings by the Banks, Wall Street Brokerage Houses, and S&L's who owned most of those delinquent financial instruments. Our Congressional representatives have shown us whom they truly represent and that is the upper 1% !!!!! Kudos to OWS protesters for raising the bar of our financial, and economic discussions.
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