Latest Bonus Outrage

Wall Street isn't alone in having a tin ear when it comes to time to reward the same executives who helped push the country into its financial mess.

Government-controlled mortgage giants Fannie Mae and Freddie Mac are paying six-figure bonuses to retain the executives who presided over the loss of more than $100 billion last year alone, according to regulatory filings.

Even so, those executives are set to receive bonuses of as much as $611,000 each as part of a retention pay package. The bonuses are half the size, or less, than those given to AIG executives, but they are raising eyebrows. Like AIG, the two rival mortgage companies continue to exist because of taxpayer money.

According to filings with the Securities and Exchange Commission, the bonuses will be more than twice as much as last year's average bonus. Michael Williams, who joined Fannie Mae in 1991 and is currently the chief operating officer, will receive the top amount, $611,000 this year. His salary is $676,000.

Executive vice president David Hisey, who joined Fannie Mae in 2005, is set to be paid $517,000. Two other executive vice presidents, Thomas Lund and Kenneth Bacon, are to receive $470,000 each -- on top of their base salaries. Lund came to Fannie Mae in 1995; Bacon in 1993.

Company spokesman Brian Faith did not return a call for comment.

At Freddie Mac, spokeswoman Sharon McHale said the company had paid out the first of four retention payments to its executives in December. Those who stay with the company will receive another 20 percent in August, 25 percent in December and the final 35 percent in March 2010. She said Freddie has until April 30 to file details of its plan.

The payments, she said, replaced annual bonuses. Those were in place before the government seized control of Fannie and Freddie after their fate was threatened by the rise in mortgage defaults.

The U.S. Treasury agreed last September to bail out the companies by infusing as much as $200 billion into each in exchange for preferred stock. Between them, the two companies own or back about half the mortgages in the country.

James Lockhart, director of their regulating body -- the Federal Housing Finance Agency -- told Bloomberg News today that the retention payments program was "a reasonable and well thought-out plan" to protect taxpayer investment.

by Elizabeth Olson