Congress’s bill to tax 90 percent of bonus money received by employees at bailed out companies will severely hurt the good people at Fannie Mae and Freddie Mac, say reports from Fannie Mae and Freddie Mac. Well, actually Zach Goldfarb of the Washington Post reports on anger inside the government-subsidized mortgage giants, each expected to assist in the Treasury Dept’s plan to prevent home foreclosures. "Workers expressed frustration that they may be penalized for decisions made by derivatives traders at AIG and top executives at banks under some of the legislation being contemplated," Goldfarb writes. "One Fannie Mae employee who is a mother in her 30s said she turned down a job at another firm because of the government’s promise and now volunteers her own time to help the housing market."

My first reaction to this is — the nerve of these employees: they’re doing a lot better than most people are in the recession. Also, they’re essentially government workers (and they always were a government-sponsored enterprise). It would be interesting to compare the salaries Fannie and Freddie employees who will have their bonuses taxed with Treasury Dept. civil servants — my guess is the Fannie and Freddie employees still make more money.

On the other hand: maybe employees really will leave for more lucrative jobs creating a brain drain among the group of people supposed to repair the housing market. It seems improbable, but maybe some financial or real estate firm is champing at the bit to get the insider knowledge of Fannie and Freddie workers.

Finally, Fannie and Freddie are not the same as AIG. During Congressional hearings on the financial crisis, Republicans decided to say that the real bad guys were not the credit rating agencies, or the hedge fund managers or even Lehman Bros. and AIG, but Fannie and Freddie. Only that’s not true. The companies have received more guilt-by-association than they deserve. Lumping them in to this bonus-tax bill could prove short-sighted.-MB

Comment RSS - You can skip to the end and leave a response. Pinging is currently not allowed.