House Bill Would Tax 90% of Fannie, Freddie 'Retention Bonuses'

The House of Representatives is weighing legislation that would place a 90% tax on any retention bonuses paid to officials at American International Group as well as Fannie Mae and Freddie Mac. If the bill becomes law it would affect some of Fannie's top executives including chief operating officer, Michael Williams, who is entitled to retention-related pay of $1.48 million. Kenneth Bacon, EVP of housing and community development for the GSE would be taxed on almost $1 million worth of retention pay. At least two other Fannie executives would face the tax: single-family chief Thomas Lund and CFO David Hisey who stand to receive retention pay of $1 million, and $577,526, respectively. The four are set to receive some of their payouts in April. Congress was spurred to consider the tax after public anger rose in the wake of news that AIG officials received $165 million in bonuses even though the company accepted $182 billion in taxpayer funds. At press time no retention bonus figures were available on Freddie Mac's executives. GSE regulator James Lockhart issued a statement saying he supports the retention bonuses, noting that, "As the previous senior management teams left, it would have been catastrophic to lose the next layers down and other highly experienced employees."