U.S. Sen. Charles Grassley, R-Iowa, shot back Friday in a battle
over the propriety of bonuses for employees of government-backed
housing financiers Fannie Mae (FNM) and Freddie MAC (FRE), telling
CNBC that scrapping the extra pay would help steer corporate
America toward a needed overhaul.
James Lockhart, director of the Federal Housing Finance Agency,
which regulates Fannie and Freddie, said in a letter to Grassley
this week that the bonuses, totaling $210 million, were justified.
About $51 million was paid out in late 2008 with the rest to be
disbursed this year and early in 2010. A total of about 7,600
employees are affected, with a maximum for any single bonus of $1.5
million, according to a copy of the letter obtained by The Wall
Street Journal.
But Grassley isn't buying Lockhart's argument that the bonuses
are needed to entice Fannie and Freddie employees not to quit their
jobs at a time when their expertise is needed to help the troubled
firms unwind their money-losing positions.
"It doesn't matter what I think or what Mr. Lockhart said,"
Grassley told CNBC. "We have high unemployment. ... Are you going
to lose all the people? I don't think so."
Still, the Republican senator thanked Lockhart - an appointee of
former president George W. Bush - "for being transparent and
getting the information out."
The larger issue, he stressed, is that taxpayers are outraged
their money is being used to enrich people at companies whose
failures helped cause the economic crisis.
"I'm trying to change the corporate structure of America so we
feel a little bit of remorse and hear a little bit of apologies for
the way these leaders have run these corporations into the ground.
And I've not heard that yet."
Web site: www.cnbc.com
-Dow Jones Newswires; 201-938-5500