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Fannie Mae and Freddie Mac Pay Huge Salaries

Posted by Steve Markowitz on December 10, 2012

The Wall Street Journal reported on the compensation of high paid employees of Fannie Mae and Freddie Mac.  Their high compensations indicate a significant problem with the greed of government and the employees who live off of it.

Through much of America’s history, working for the government was considered a public service.  In exchange for this service, those that worked for the government received salaries below that paid for similar jobs in the private sector.  However, these workers enjoyed greater job security.  While the job security remains, many government workers now receive significantly higher total salaries and benefits than their counterparts in the private sector.  No longer can this be considered “public service”

While previously independent, Fannie Mae and Freddie Mac have always enjoyed the financial backing of the US government.  However, through mismanagement and the downturn in the economy, both had to be taken over by the US government four years ago and have cost taxpayers nearly $140 billion.  While one might expect Fannie and Freddie managers to have financially suffered as a result of their mismanagement, that has not been the case.

According to the Journal, for 2011, approximately 330 employees at the vice president level receive a median pay of just under $390,000.  The next level down that includes 1,650 employees considered “directors” had median pays of over $205,000.  These two categories of approximately 2,000 employees accounted about one-sixth of these companies workforce. Adding insult to injury, the 90 highest-paid executives took home over $92 million in pay.

When questioned about the high salaries, a Fannie Mae spokesperson said: “Our employees are managing…significant risk in an operationally complex market.  It is absolutely critical that our compensation is competitive in the market.”  If compensation is a driving force behind a person’s decision to work for the government, then such positions are subject to as much corruption or predatory practices as found in their private counterparts.  This coupled with the reality that government organizations have proven to be bureaucratic and inefficient demands their privatization.

The taxpayer funds dumped into Fannie Mae and Freddie Mac are no different than the bailout of the private banks, General Motors and others.  It is a reward for those that have been inefficient and/or imprudent at the expense of those who have been more successful.  Such bailouts have become the most destructive force against the American capitalism.

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