I mean, he was the picture of righteous indignation:
President Obama said Monday he will attempt to block bonuses to executives at ailing insurance giant AIG, payments he described as an “outrage.”
“This is a corporation that finds itself in financial distress due to recklessness and greed,” Obama told politicians and reporters in the Roosevelt Room of the White House, where he and Treasury Secretary Tim Geithner were unveiling a package to aid the nation’s small businesses.
The president expressed dismay and anger over the bonuses to executives at AIG, which has received $173 billion in U.S. government bailouts over the past six months.
“Under these circumstances, it’s hard to understand how derivative traders at AIG warranted any bonuses, much less $165 million in extra pay. I mean, how do they justify this outrage to the taxpayers who are keeping the company afloat?”Obama was referring to the bonuses paid to traders in AIG’s financial products division, the tiny group of people who crafted complicated deals that wound up shaking the world’s economic foundations.
But when it comes to the millions of dollars in compensation, regular and bonus, paid to executives of Fannie Mae and Freddie Mac, the two Government-Sponsored Enterprises (GSEs) that were at the very center of the sub-prime mortgage-bundling that poisoned the financial system and took down companies such as AIG, Obama’s outrage is… strangely mute:
That’s from the House Oversight Committee, chaired by Rep. Darrell Issa (R-CA), who must really be Obama’s favorite congressman right about now. The committee is holding hearings today on the compensation scheme at the two GSEs and have issued a staff report in advance. Here’s an excerpt:
When the bubble burst in 2007, Fannie and Freddie began to lose billions of dollars of investments in mortgage-backed securities (MBS) guarantees. In September 2008, the Federal Housing Finance Agency (FHFA) took Fannie and Freddie into conservatorship as a result of mounting losses stemming from the financial crisis.The Enterprises became de facto government entities, funded by preferred stock purchase agreements from the Department of the Treasury (Treasury). Today, the Enterprises remain a multi-billion-dollar drag on the federal government’s finances. Since they entered conservatorship, Treasury has provided $169 billion to Fannie and Freddie – and the payouts are scheduled to continue with no end in sight. According to recent FHFA projections, by the end of 2014, Treasury assistance to the Enterprises will total $220 billion to $311 billion.
Since the Enterprises have become government-funded entities, lavish payment packages have been doled out to their senior executives, and taxpayers have been footing the bill. In 2009and 2010, the Enterprises’ top six officers were given a total of more than $35 million in compensation. Of that amount, a total of $17 million in compensation was given to the CEOs of the Enterprises. Additional bonus installments for 2010 may still be forthcoming, and the two CEOs stand to make a total of $12 million in 2011. In addition, an executive has been awarded a substantial signing bonus – $1.7 million – upon joining the Fannie Mae. As these figures indicate, senior executives at Fannie Mae and Freddie Mac have become the highest compensated workers on the federal payroll – making as much as eight times more than the President of the United States. The executives even make more than their conservator, FHFA Acting Director Edward J. DeMarco.
The outrageousness here is almost beyond measure. Again, these agencies were at the heart of the financial crackup. When the Clinton administration altered the CRA to pressure banks into making questionable loans via then-HUD Secretary and now NY Governor Andrew Cuomo, the two GSEs used the bundling and government-backed resale of these securities as a sugarcoating for the bitter pill they were making the banks swallow. Democrats desperately defended this practice against three different efforts at reform under the Bush administration.
And yet now, instead of being spun-off as wholly private enterprises or just shut down, and while they are still being bailed out by billions in taxpayer dollars, their executives are being rewarded with tens of millions in salary and bonuses — all funded by the taxpayer.
And Barack Obama is silent, his outrage nowhere to be seen.
Ed Morrissey is right: the reason is simple. Obama and the (Social) Democrats are quiet on this because they want to keep Fannie and Freddie around so they can use them as instruments for progressive social engineering — such as making even more sub-prime loans, which caused the problem in the first place.
But he’s only partly right; there’s another reason. For Obama to get angry over these bonuses and attack the GSEs would be to admit that government and Democratic Party policies, implemented in the 90s in concert with ACORN and other Socialist advocacy groups, were as much to blame for what has happened as the financial companies he loves to demonize — if not more so. And Barack Obama cannot do that.
Hence, the silence. A silence that speaks volumes.
RELATED: For an excellent book on the causes of the financial disaster, see Reckless Endangerment, by NY Times reporter Gretchen Morgenson and writer Joshua Rosner.
(Crossposted at Sister Toldjah)