First a word about retention bonuses. There are times when they are necessary, for example, if there are individuals with knowledge about unique transactions or processes that are critical to business combinations or other special situations. However, to offer such incentives to 7,600 employees, as is being done at FNMA and FHLMC, defies any measure of common sense. Does anyone really think that all of these thousands of employees possess information that is essential to propping up the two mortgage giants? Does someone fear that these employees will jump to other companies? If that is a real possibility, then please tell us where those other jobs are. The unemployment rate must be grossly overstated.
If these employees do leave there will be many former Wall Street and financial industry workers ready to take their place, either as temporary contractors or regular employees. What’s more, they will be as productive, if not more. I have been there. In 1991-1992, as a contractor, I was part of a small team that accounted for the final liquidation of what was the largest banking failure in the history of the United States through that time- Gibraltar Savings. All of the key staff and most of the regular employees of Gibraltar Savings had been gone for a long time before we came on the scene. The Resolution Trust Corporation was desperate to account for the remaining assets of the institution but had failed to do so for the prior two years despite their best efforts. Within one year, we accomplished what the RTC could not. We did it without access to the knowledge that had slipped out the doors of the institution.
As outrageous as these mass bonuses are, even more egregious is this rationale offered by the federal regulator overseeing Fannie and Freddie: “The companies’ federal regulator, James Lockhart of the Federal Housing Finance Agency, defended the bonuses in a March 27 letter to (Senator) Grassley, noting that the collapse of the company’s stock prices “destroyed years of savings for many” workers. The companies’ stocks now trade below $1, down from more than $60 in fall 2007.”
Well, who hasn’t seen their retirement accounts clobbered? Are we going to receive bonuses to offset some of our losses? Where do we sign up?
I urge you to write to Senators Feinstein and Boxer, as well as your Representative in the House, to express your outrage at this injustice. Attach the article and feel free to include any of my points.
Paul Hatfield, CPA
Treasurer, NC Valley Village
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