AIG has been criticized for paying approximately $165 million on contractually obligated retention bonuses after receiving about $175 billion in government capital injections We’ve blogged a half dozen times on the subject.
The Wall Street Journal reports that Fannie Mae and Freddie Mac are contractually obligated to pay $210 million in retention bonuses. Both government-sponsored enterprises have been placed in conservatorship. Members of Congress have demanded that these bonuses be rescinded along with those due to AIG employees.
H.R. 1664, the second bill passed by the House to regulate compensation received by employees of firms receiving government capital injections, would prohibit these retention bonuses. Compensation would be limited to salary and “performance-based” bonuses, a term that the bill would direct the Treasury Department to define by regulation.
Today’s Journal story reports on a letter send by the government’s senior regulatory official for GSEs defending the Fannie Mae and Freddie Mac retention bonuses, reiterating a statement he issued on March 18th. This places him at odds with both H.R. 166 and the the Obama administration, which has demand that retention bonuses not be paid, be rescinded, or be returned.