Reports of additional bailout negligence and mismanagement are rocking the Obama administration as lack of oversight has produced one big TARP mess after another, leaving Democrats running for cover. There were more revelations yesterday of excessive executive bonuses from the mismanaged Fannie Mae and Freddie Mac, companies at the very heart of the current financial meltdown, and an announcement from Democrats in Congress that 13 of the financial firms receiving bailout money from taxpayers owe more than $220 million in unpaid back federal taxes.
In an attempt to add some supervision, Sen. Chuck Grassley (R-Iowa), ranking member of the Senate Committee on Finance, sent letters to Herbert Allison, President and CEO of Fannie Mae, and John Koskinen, interim CEO of Freddie Mac, the two nationalized sub-prime mortgage giants most responsible for the sub-prime meltdown, demanding accountability. Grassley is asking the executives to account for their retention bonus programs at a time when these entities continue to lose exorbitant sums of money after accepting taxpayer-funded bailouts.
Fannie Mae reported a loss of $58.7 billion for 2008 and has requested another $15.2 billion from the U.S. Treasury. Freddie Mac reported a loss of $50.1 billion for 2008, and has requested an additional $30.8 billion from the U.S. Treasury.
According to a report in USA Today, “In securities filings, Freddie said it will pay a retention award of $1.5 million to Executive Vice President Michael Perlman by March 2010. Perlman, whose base salary is $500,000, already collected $300,000 of his bonus. Interim CFO David Kellermann will get an $850,000 bonus, and Senior Vice President Michael May will get $700,000.”
“Just as with the extravagant bonus pay at AIG, it’s important to make sure that taxpayer support isn’t enabling unreasonable compensation arrangements that would never have been possible without taxpayer assistance,” Grassley said.
From the Fannie Mae letter:
“Because I am concerned with maximizing taxpayers’ investment in Fannie Mae, I am requesting (1) the official documents outlining the Retention Program and any other bonus compensation arrangements; (2) records of any communications related to the formation and implementation of the Retention Program and other bonus compensation arrangements; and (3) any contracts that have been executed in accordance with the Retention Program or other bonus compensations arrangements that would bind Fannie Mae to making bonus payments in the future.”
In yet another problem with Treasury Secretary and TurboTax cheat Timothy Geithner’s structure of bailouts as head of the New York Federal Reserve, it was disclosed Thursday that at least 13 of the 470 financial firms receiving bailout money from taxpayers owe more than $220 million in unpaid federal taxes. All 470 firms have not yet been vetted. At the time Geithner was head of the New York Fed and acting as the architect of the bailout structure, he was actively participating in serial tax evasion himself. Firms applying for bailout funds were merely required to sign paperwork stating they had paid all of their federal taxes, ironically the same honor system that Geithner used to avoid paying his income taxes.
Rep. John Lewis (D-Ga.), chairman of the House subcommittee tasked with bailout oversight, announced the unpaid tax circumstance to reporters but did not reveal the names of these institutions receiving the bailout funds who are tax delinquent, citing that it was illegal for the committee to do so.
“It’s shameful, it’s a disgrace,” Lewis said to reporters. “If we looked at all 470 recipients, how much would they owe?”
On the AIG bonus scandal front, Republicans yesterday were again warning about the dangers of rushing through Congress massive legislation such as the Democrats did with their “stimulus” bill without giving members of Congress and the public time to actually read the bills.
House Republican leader John Boehner (R-Ohio) told HUMAN EVENTS at a press conference yesterday, “Five weeks ago, when we were debating the stimulus bill, I was making the point that we had an 1,100 page bill that no one had ever read. Clearly, no one had ever read [it]. The President signed this bill into law, and then the President said he didn’t know what was in it. Obviously, they didn’t read it either.”
I asked about the Republican efforts to subpoena AIG and Geithner records and communications in relation to this scandal, and if there was yet any evidence of a quid pro quo as Democrat Sen. Chris Dodd and then Sen. Barack Obama were the two largest recipients of AIG campaign cash last year. Boehner told me, “That’s what we’re trying to find out.”
In a HUMAN EVENTS exclusive interview yesterday with House Republican Whip Eric Cantor (R-Va.), we discussed efforts by Republicans to hold accountable those who have been at best negligent in their bailout oversight roles. “The American people really are beginning to have some buyer’s remorse on what they’ve done,” Cantor said. “And I also believe that it’s important for this system to have checks and balances. Clearly over the last several months this administration’s been here and this crowd’s been in charge, there’s been no check and balance. The way this place has been run, the lack of transparency, they have lacked accountability, and I believe the American people are waking up to that.”
As we watch this daily unfolding of TARP fund mismanagement and negligence, this should serve as a warning to all Americans: when the Obama administration tells you that they are capable of oversight of the massive programs they propose like nationalized health care, look at this shining example of their ability to oversee the 470 financial institutions that have been handed hundreds of billions of taxpayer bailout dollars.