Lockhart Supports GSE Bonuses

Ending retention bonuses at Fannie Mae and Freddie Mac as demanded by a powerful House Democrat would be "extremely detrimental" to the companies' and government's efforts to stabilize the housing finance system, according to Federal Housing Finance Agency director James Lockhart. "I believe FHFA would be violating its duties as conservator to end the retention plans and allow Fannie Mae and Freddie Mac to be hollowed out," the GSE regulator said. He noted in a letter to House Financial Services Committee chairman Barney Frank, D-Mass., that Fannie and Freddie employees are working longer hours for less compensation these days. And there is a "great risk" key employees will walk away if incentives are terminated. "If we don't provide existing employees incentives to stay, we will have a serious problem," Mr. Lockhart said. FHFA is preparing detailed information on the retention bonus plans for the committee chairman.