Congress Shocked To Find That Being CEO Of A Bankrupt Company Is The New Killing It

Tyler Durden's picture

Two weeks ago we reported with sheer disgust that the outgoing CEO of bankrupt Freddie Mac, Ed Haldeman, was to pocket over $4 million for his brief two year stay at the nationalized GSE, which money was to reward him for lots of hard work collecting bail out cash from the Treasury. $21 billion to be precise. Apparently it is not easy to beg from Tim Geithner which explains the compensation for a task which is essentially supervising a financial black hole with an attached run off portfolio. Nonetheless the optics of this farce are rather unpleasant which is why we said that this is the (one of many) reason "why people in America are very, very pissed." Today Congress, which has yet to ban itself from trading on inside information, has decided to at least rectify this one sticking point, and moved forward with a "bill to block multimillion-dollar executive pay packages at Fannie Mae and Freddie Mac even as their regulator defended them as necessary to retain top talent and limit taxpayer losses at the bailed-out companies." And where are they going to go: MF Global? Morgan Stanley? RBS? Jefferies? As for what new pay wil be: "The committee adopted an amendment that would use the pay scale that applies to independent financial regulators, such as the Federal Deposit Insurance Corp, which allows for higher pay than at most federal agencies. Representative Al Green, who offered the amendment, said this would have the effect of limiting the highest salaries to about $260,000 per year." While still about 3 times more than what they deserve, this is a good start. And an even better one would be to if not unwind the GSEs, then to at least recognize that their $7 trillion in debt should be counted toward the US Federal debt, as Peter Orzsag suggested once. Naturally were that to happen US total debt/GDP would be over 150%, and the bond vigilantes would suddenly be confused whether their time is not better spent on this side of the Atlantic. Yet the biggest twist in this story, is that not only are the GSEs bankrupt, but as the NYT reported earlier, the FHA itself has a "close to 50% chance of requiring a bailout." Add to that that the corporate retirement guys (PBGC) and the post office (USPS) are now effectively broke as well, and very soon being the CEO of a bankrupt company will be the new killing it.

From Reuters:

Lawmakers from both parties have expressed shock at revelations the two government-owned mortgage finance firms, which have been propped up with about $169 billion in federal aid, were paying out $12.79 million in bonuses for 10 executives. "The taxpayer-funded bailout of Fannie Mae and Freddie Mac is the biggest bailout in history," said Representative Spencer Bachus of Alabama, chairman of the House panel. "Adding insult to injury, the top executives of these failed companies receive multi-million-dollar pay packages."

One wonders, inversely, just how shocked the public would be to find out how many congressmen and women traded in advance of congress itself legislating new rules as relate specifically to the GSEs.

The response, of course, is that nobody would ever surf porn all day for the paltry sum of $260,000:

DeMarco said the firms, the top two providers of funding for U.S. mortgages, need to be able to compete with other financial service companies for highly skilled executives.

 

"We have an entire competitive marketplace in the industry that suggests compensation is an important factor in attracting and retaining top talent," he said.

 

As the regulator, DeMarco has broad authority to direct the companies' activities, and he approved the pay in consultation with the Treasury Department. The pay packages have followed the same pattern over the last few years; the structure was set in 2009.

 

He said one of the "biggest concerns that has driven" the the executive compensation packages is an apprehension that the two companies will lose key staff if they are not fully compensated for their marketable skills. As employees leave, DeMarco has tried to reduce pay levels for their replacements.

 

Senate Banking Committee Chairman Tim Johnson, a South Dakota Democrat, expressed concern that tying pay to a government scale could do more harm than good.

 

"I fear that the federal pay scale will chase away the knowledgeable people we have and rely on to do a great job in a highly complex situation," he told Reuters.

 

Acording to DeMarco it is best to phase in reforms ala Italy: 2 years over 15 years or something.

DeMarco told the Senate committee any changes in pay should not be a "sudden shock" and said the best way to reduce compensation would be for lawmakers and the Obama administration to agree on a future course.

 

"Then we could have a final resolution of Fannie Mae and Freddie Mac in conservatorship, which would resolve the compensation issue once and for all," he said.

Because who knows what chaos would ensue if the overseer of a bunch of insolvent loans with massive negative equity decided to go wild and act all irresponsible. Let's see: none?

And in other news, while the expert insider traders squabble over other people's pay, even as they "hit the bid" all day long, yet another housing entity is about to get the chop... and thus billions more in taxpayer funds.

The Federal Housing Administration has a “close to 50” percent chance of requiring a bailout if the housing market deteriorates next year, the agency’s independent auditor said in a report released Tuesday.

 

The F.H.A., which offers private lenders guarantees against homeowner default, has just $2.6 billion in cash reserves, the report found, down from $4.7 billion last year.

 

The agency’s woes stem from the national foreclosure crisis. In the last three years, the F.H.A. has paid $37 billion in insurance claims against defaulting homeowners, shrinking its cash cushion. 

 

The auditors determined the agency’s level of supplemental cash reserves by projecting losses on its mortgage portfolio and counting them against expected premium revenue. This year, the audit found that the F.H.A. supplemental reserve was less than one-quarter of a percentage point of its current portfolio: $2.6 billion against a $1.1 trillion mortgage portfolio, as of Sept. 30. Legally, the housing agency is required to keep a 2 percent cash buffer, a target it has not met since 2008.

 

F.H.A. officials argue that the likelihood the 77-year-old agency will need its first taxpayer bailout is slim. “It would take very significant home price declines to create a situation in which the portfolio would require any additional support,” said Carol Galante, acting commissioner. “There is no evidence or widespread prediction that home prices are going to decline to the kind of levels” requiring a bailout, she said.

Where does one even start...

Maybe by pointing out that in addition to all of the above, both the PBGC and the USPS are also bankrupt.

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Seasmoke's picture

i always thought that was everyones goal in life

WestVillageIdiot's picture

How does the level of disgust at this whole fucking debt-driven farce rise any higher?  Every time you think you can't be any more sick of this fucking shit, they turn over another rock and more cockroaches go scurrying.  And where the fuck is Mister Hope and Change and "I didn't get elected to help fat-cat bankers"?  Where the fuck is that guy and his transparency?  Oh, that's right, he is too busy trying to figure out how to get the NBA going again.

And on top of the fucking debacle that are Fannie and Freddie we all know that the FHA has been the world's largest dumping ground the past 3 years in any attempt to keep housing unaffordable while still spending billions and billions for "affordable housing".  It is sick in every fucking sense of the word.  Fuck this fucking fuck of a fuck. 

And the helicopters hover over the Financial District.  Probably to keep tabs on some rag-tag "protestors" while the rapists continue to sodomize the economy and walk off with huge rewards for fucking everybody in the shower.  And the police are just there to make sure are rights are not exercised in any way that threatens their masters. 

Nice job, you fascist fucks that like to have your pictures taken and pretend you are human.  And fuck your children, too.  We all know they will be as fucking disgusting as your are. 

route40misery's picture

sad to say, but in remembering Marie Antoinette, the whole family was disposed of. I don't advocate killing, but possible imprisonment of their whole genetic line (will rid us of most sex offenders/incestual sick mother fuckers).  Suggestions include waterboarding the Blankfeins???  Just food for thought.......

 

Amanda

trav7777's picture

ROTFL..."top talent" in organizations that are fucking 55% black??!?!  WTF, talk about does not fucking compute.

FNM/FRE are diversity dumping grounds full of complete incompetence.

And Bachus can go fuck himself along with the entire Congress.  Fucking new rules going into effect to shut down coal plants, driven by the NE demofags.  Where the fuck is their electricity supposed to COME FROM?  Fucking FAIRIES?

Oh, but look, NG is so cheap, let's put EVERY single watt of generation capacity onto that...so when it peaks and declines savagely we can all go fucking dark in an instant.  JFC, these morons all need to be locked in a room and burnt to death.  I mean, they are so sick and revolting that you kind of demand a really tortuous death for them.

whstlblwr's picture

Guess you make living from dirty coal.

Just reading about clusters of asthma in hundreds of children from West Virginia.

francis_the_wonder_hamster's picture

Trav, please read "The Delinquent Teenager".....just got finished with it and it gives you great "reasonable" discussion points to deal with those energy idiots.

SilverRhino's picture

You're still a bit of a dick but +1 for goddamned style / being dead on target on this one!

BailoutBandit's picture

A bit of a dick? This guy is a fucking nazi.  Diversity dumping grounds?  Yeah, well, like the point of the article was that the good ole white boys at the top who are killing it aren't exactly role models for work ethic, neither are they successful at running the company, or smart.  In fact they're incompetent morons who lucked into a bailout bonanza.  Guess you missed that point.  Go fuck yourself.

BailoutBandit's picture

http://en.wikipedia.org/wiki/Charles_E._Haldeman

 

Good ole white boy from Pennsylvania.  MBA from Harvard.  Diversity dumping ground. JFC.  Trav you are mentally handicapped.  You probably could get diversity hired for that.  Should really look into it.  Fucking tard.

 

lotsoffun's picture

some chinese friends of mine taught me this one, which they explained basically implied f-you and your family all the back to the cave.

 

#5. "Fuck the 18 generations of your ancestors" (Cao ni zu zong shi ba dai)

Read more: The 9 Most Devastating Insults From Around the World | Cracked.com http://www.cracked.com/article_16275_the-9-most-devastating-insults-from-around-world.html#ixzz1dpkxHUNe

nmewn's picture

"One wonders, inversely, just how shocked the public would be to find out how many congressmen and women traded in advance of congress itself legislating new rules as relate specifically to the GSEs."

Hold me closer tiny dancer...

Former White House Chief of Staff Rahm Emanuel is the latest lawmaker to get caught up in allegations of insider trading while a member of Congress.

 

Then-Rep. Emanuel reportedly sold up to $250,000 in Freddie Mac stock on February 21, 2003 days before it dropped by 10 percent — and weeks before it was publicly revealed that the entity was under criminal investigation for inflating earnings.

Read more: http://www.businessinsider.com/book-rahm-emanuel-dumped-tons-of-freddie-mac-stock-days-before-it-collapsed-2011-11#ixzz1dp54abbP

nmewn's picture

I didn't see Bwaney Fwank.

Has he turned his other cheek? ;-)

francis_the_wonder_hamster's picture

Rahm Emanuel is corrupt? 

Damnit, my faith in our system is slipping.

sosoome's picture

"...eliminate the money motive from politics."

No amount of new laws or regulations will achieve such a goal. Money and power will always be linked. The penners of the constitution understood that, and offered no provision for gubermint funded housing schemes. If we'd just pay attention to that document in the first place, most of these human greed issues would be kept at a minimum.

Contra_Man's picture

Agreed... nothing is perfect.  However, it's much better than the Status Quo if everyone has an equal, democratic voice, no?   So then, should we rotate the political term limits of public service for the rich and powerful pocket politicians?  Hard annual "date certain" service limits would aid in breaking up crony relationships as mentioned, allowing us all to participate, at some time or another, with introducing legislation favouritism now given only to the powerful elite? Perhaps, only then can we remove legislative corruption and power from the all powerful Corporate Entity.  Proportional Representation Bitchez!

sosoome's picture

Throw out the illgotten 16th and 17th amendments as a first step. Those two have screwed us more than we know. Let's try it as it was intended before trying to erect some new "system". We haven't had a constitutional republic since 1913.

pvzh's picture

You are delusional if you think that

Hard annual "date certain" service limits would aid in breaking up crony relationships

Because politicians will be in a hurry to pilfer as much as they could in the short time they have. Corruption will be far more overt, rampant, and pervasive.

francis_the_wonder_hamster's picture

Perhaps not.  There is a precedent of citizen government with limited terms that lasted for quite some time. 

The glory of Rome at it's finest......and don't anyone dare disagree without reading Will and Ariel Durant's History of the World......Rome had some non-corrupt centuries.

Contra_Man's picture

That is exactly why we need many more "sosoome's", "pvzh's", "wonder_hampster's" and even more lunchbox "Joe Doe's" elected to be our Reprsentatives, but only elected by "natural persons" - not via 1350 inner-nominated directorships, non-publically elected, corporately-controlled boards of more than 35,000 large scale donation providers/corporate lobbying groups, but rather real people, now the 99%, who have been stuck holding the bag.

So, those newly-elected 99% political leaders, "...will now be in a hurry to pilfer as much as they can in the short time they have.  Corruption will be far more overt, rampant, and pervasive" towards the 99%... and that is by some accounts, a good form of democratically-elected "crony capitalism".   

Theta_Burn's picture

Don't hold back man, tells us how you really feel

Good points all

Many are outraged, but not enough yet. most are worried about the more important things like rent and dinner.

Its clear now that chaos is gaining traction. they will allow a few weeks of protest to let the plebs blow off some steam. then just end it when they see fit.

Pent up disgust will explode from the stupidist thing happening like police brutality or shooting, not from the theft of billions from good ole boys.

O/T its been a while since ive been to the Village, down town, hate the fucking no parking

 

ENJOY http://www.youtube.com/watch?v=kzq4-vgLvzY

 

 

whstlblwr's picture

Here is some GOOD news:

"Senators introduce "STOCK Act" to stop "insider trading" in Congress

http://www.cbsnews.com/8301-503544_162-57325280-503544/senators-introduc...

Some one makes a difference; gets the coverage from 60 minutes show, shines light on crony capitalism.

NotApplicable's picture

Pfft! Pure election-year fodder for the herd, designed to highlight the upcoming election as the "most important one, EVAR!"

 

whstlblwr's picture

Maybe, we can call and show support. Fuck them for profit on inside information that directs course of country.

Congress work is long hours, and less pay, so this nice little perk, fuck them, work for the people.

francis_the_wonder_hamster's picture

Well, the good news is that they may admit that this might be wrong.

The bad news is that there is no mention of trusts (family trusts, "blind trusts", etc...) or the "hey buddie, you might want to put some money into this" bullshart that happens every freakin day.

Ron Paul is right about auditing the Fed.  Who wants to audit Congress? (I'm including all of their non-personal accounts).  Nobody is talking about those.

RafterManFMJ's picture

 

 

Dear .gov

If you let home prices fall to 1x income, where they should be, as you let our incomes fall (currently, incomes are lower than 1973 when adjusted for inflation), I, the RafterMan do solemnly swear to buy a farm with 10 acres for the sum of 35,000 Federal Reserve (redeemable for nothing, nowhere, on demand) Notes.

Until then, I'll quietly vote with my shut pocket-book while you try your damnedest to fuck this nation in the ass and save your bankster buddies by keeping the housing market marked-to-fantasy.

francis_the_wonder_hamster's picture

Great vow, Rafter, and I'd probably enjoy having you as a neigbor.....if you could better define inflation?

RafterManFMJ's picture

Great vow, Rafter, and I'd probably enjoy having you as a neigbor.....if you could better define inflation?

 

Well I'd say inflation is an expansion in the money supply, coupled with a static or increasing velocity of said money.

 

Von Mises says:

"Inflation, as this term was always used everywhere and especially in this country, means increasing the quantity of money and bank notes in circulation and the quantity of bank deposits subject to check. But people today use the term `inflation' to refer to the phenomenon that is an inevitable consequence of inflation, that is the tendency of all prices and wage rates to rise. The result of this deplorable confusion is that there is no term left to signify the cause of this rise in prices and wages. There is no longer any word available to signify the phenomenon that has been, up to now, called inflation. . . . As you cannot talk about something that has no name, you cannot fight it. Those who pretend to fight inflation are in fact only fighting what is the inevitable consequence of inflation, rising prices. Their ventures are doomed to failure because they do not attack the root of the evil. They try to keep prices low while firmly committed to a policy of increasing the quantity of money that must necessarily make them soar. As long as this terminological confusion is not entirely wiped out, there cannot be any question of stopping inflation."

 

So I suppose I am close to correct.  Let me know where that plot of land is, I have experience in small scale farming and a 6.8 SPC AR platform rifle; and much more! Contact for resume. :)

TheFourthStooge-ing's picture

WestVillageIdiot figured it out:

Fuck this fucking fuck of a fuck. 

And the helicopters hover over the Financial District.  Probably to keep tabs on some rag-tag "protestors" while the rapists continue to sodomize the economy and walk off with huge rewards for fucking everybody in the shower.  And the police are just there to make sure are rights are not exercised in any way that threatens their masters. 

Nice job, you fascist fucks that like to have your pictures taken and pretend you are human.  And fuck your children, too.  We all know they will be as fucking disgusting as your are.

+6.02x10^23

"Here's to your fuck, Frank."

 

Bicycle Repairman's picture

"Fuck this fucking fuck of a fuck."

Yes.

JuicedGamma's picture

Classic " Fuck this fucking fuck of a fuck. "!

thebark's picture

your response contained a bit of foul langaue...but I couldnt agree more! Its an absolute joke the shit thta goes on in this country...but the day is coming when these financial wizards will be drug from their homes and then beaten and burned!

francis_the_wonder_hamster's picture

WVI, I am the one who voted your wonderful rant down.  As of this post, 60 people liked your rant, and I'm the only one who voted it down....for the love of gawd, man, you should have used the word f$ck more often......I'm disappointed you held back.

And of course I agree with everything you said.

The Big Ching-aso's picture

 

 

"Winning by fucking-up as often as possible!!!"

TheJokingJollyRoger's picture

If the post office goes bankrupt will we finally send everything to email?

 

*Snarks*

The Big Ching-aso's picture

 

 

Banana Republics reward incompetence and cronyism like capitalism used to reward hard work and brains.

Guess what kind of Republic we're now.

 

francis_the_wonder_hamster's picture

"If the post office goes bankrupt will we finally send everything to email?"

2002 missed this post.

(Translation.....that's when the post office "officially" went bankrupt.)

 

Cdad's picture

Man, you kill me, Tyler.  Lolololol.

Where can Cdad get one of these CEO jobs?  

topcallingtroll's picture

You could do it.
I could do it.

A rolloff or runoff portfolio doesnt require two million per year salary.

Can you do basic financial math?
Do you understand the concept of convexity?
You are hired. Congratulations

Cdad's picture

Sweet!  Where is my corner office, and how hot is my secretary? 

Grinder74's picture

You get Sharon Buy-a-lick

Cursive's picture

@Cdad

Where can Cdad get one of these CEO jobs?  

There's a long initiation ritual.  For starters, you need to find a first-born and eat it.  Later stages require a lot of sodomy (pitch AND catch) and lots of feces eating.

Eireann go Brach's picture

Cue James Brown singing "Killing it in America!

Snakeeyes's picture

Seriously, look at the HUD/FHA forecast of hoime prices. +6.1% in 2014 NO MATTER WHAT SCENARIO OCCURS (Euro meltdown, etc).

HUD Release FHA Annual Report – Optimistic House Price Assumptions (Pollyanna Ignores Europe)

http://confoundedinterest.wordpress.com

These clowns will say anything to stay in the game.

NotApplicable's picture

What else can they do? Admit incompetence?

TheFourthStooge-ing's picture

Admit it? They can't even spell it.

 

nasdaq99's picture

We're pissed about the $14B LOSS BEING REPORTED BY THE USPS today also.......