WASHINGTON --- Mortgage finance giants Fannie Mae and Freddie Mac plan to pay more than $210 million in bonuses through next year to give workers the incentive to stay in their jobs at the government-controlled companies.
The retention awards for more than 7,600 employees were disclosed in a letter from the companies' regulator released Friday by Sen. Charles Grassley of Iowa, the senior Republican on the Senate Finance Committee. The companies paid out nearly $51 million last year and are scheduled to make $146 million in payments this year and $13 million in 2010.
"It's hard to see any common sense in management decisions that award hundreds of millions in bonuses when their organizations lost more than $100 billion in a year," Mr. Grassley said in a statement. "It's an insult that the bonuses were made with an infusion of cash from taxpayers."
Fannie and Freddie declined to comment Friday. Fannie had disclosed that it plans to pay four top executives at least $1 million each in retention payments that run through February. Freddie has yet to report on which executives are in line for the awards.
The companies' federal regulator, James Lockhart of the Federal Housing Finance Agency, defended the bonuses in a March 27 letter to Mr. Grassley, noting that the collapse of the company's stock prices "destroyed years of savings for many" workers. The companies' stocks now trade below $1, down from more than $60 in fall 2007.
More than 70 percent of new loans in recent months have been backed by Fannie and Freddie. They own or guarantee almost 31 million mortgages worth about $5.5 trillion, more than half of all U.S. home loans.
Keeping the companies "operating at full speed was best for the housing markets and best for the economy," Mr. Lockhart wrote. "That would only be possible if we retained the Fannie and Freddie teams."
Many lawmakers have little sympathy for that argument amid a public outcry over $165 million in bonuses paid out last month by bailed-out insurance giant AIG.
This week, the House passed a bill that aims to keep bailed-out financial institutions from paying hefty bonuses after lawmakers had second thoughts about their vote two weeks ago to tax the bonuses away. The bill would allow the bonuses if the Treasury and financial regulators determine they are not "unreasonable or excessive."
The two companies, hobbled by skyrocketing loan defaults, were seized by regulators last fall and operate under close federal oversight with new chief executives installed by the government. Since the takeover, Fannie Mae has received $15 billion in federal aid and Freddie Mac has received nearly $45 billion.