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Thursday, March 19, 2009

Fannie and Freddie Paying Bonuses Too

Everyone pull your pants pockets inside out to show Fannie Mae and Freddie Mac that all we have left is pocket lint. Just when the bon fires over AIG are starting to roar, the good folks over at Fannie and Freddie are passing out “Retention” bonuses. Yahoo News and the AP have an interesting piece on it…

This makes no sense to me but you know how them pesky bankers are, they charge you a hefty overdraft fee when you already didn’t have enough money to have the check clear in the first place.

The good folks in the government need to clarify what the term “Retention Bonus” really means. Yesterday on the news they had one congressman drilling AIG CEO Liddy on this practice and he asked one very pertinent question that left Liddy sputtering like Porky Pig. Paraphrasing - “You mean to tell me that with all the layoffs on Wall Street, you can not find anyone qualified to do the same jobs as these people?” Good point Congressman, very good point. As for having to pay “Retention Bonuses” to the very people responsible for the business collapse is frankly idiotic and unethical. I’m pretty sure that anyone is replaceable in any job in America. President Obama or Timmy Geithner could walk down to Wall Street today and put up a help wanted sign for AIG, Fannie, and Freddie and I’m pretty sure a long line of applicants would begin to build. Even without the promise of bonuses!

A few years back I worked for a privately owned manufacturing company that for almost thirty years in a row paid a profit sharing bonus of fifteen percent of your annual gross pay. As long as the company was profitable, employees worked hard, watched out for waste and cost savings then the payments would continue. Long story short, the owner eventually retired and sold the company to a conglomerate where the stock price and quarterly profit were the live by standard. The new owners ran the company on stocks and leveraged the company down the drain. Profit sharing disappeared for the most part with all of the additional executive salaries that were piled on top of the companies bottom line. Ten years after they bought it, the doors to an 800,000 square foot plant were closed and what was once lifetime jobs for some four hundred people were gone.

My point to my little story is this, it wasn’t the people running the machines in the plant that caused its failure, it wasn’t the people in the offices answering the phones or buying the raw materials that caused the failure, it wasn’t even the plant manager or even the general managers fault that the plant failed. It was pure greed from the executives and junior executives that didn’t even have an office at the company that brought about its demise. They had no sense of pride or ownership in the company because all the company was to them was a number on the quarterly profit statement.


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Anonymous Infidel753 said...

I'm not surprised about Fannie and Freddie. It's not just AIG, it's the whole industry (if "industry" is the correct term for it). These malefactors of great wealth live in a completely different world than the rest of us do. Some "retention" bonuses at AIG were paid to people who were already leaving. Bonuses are being paid out to keep supposed top talent who in fact have done such a lousy job that they've steered the economy of the entire world into the quicksand. Bonuses become an entitlement.

If someone wants to use his own money to pay performance bonuses for crap performance, that's his right, but now that we the taxpayers have had to bail out all these Rube Goldberg operations, it's our money, and yes, Congress needs to tell these guys to stop shoveling it into toilets.

7:42 AM  

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