John McCain Calls for FHFA Head's Head

NEW YORK ( TheStreet) -- Senator John McCain (R-Ariz.) on Friday railed against $12.9 million in bonuses being paid-out to executives of Fannie Mae ( FNMA) and Freddie Mac ( FMCC), according to a report in The Hill.

Citing the "outright corruption and blatant abuse of the American taxpayer that's been taking place at the hands of Fannie Mae and Freddie Mac," McCain called for heads to roll, including "the guy who approved these payouts," naming Federal Housing Finance Agency director, "Mr. Edward J. DeMarco."

Fannie Mae and Freddie Mac were taken under government conservatorship at the height of the financial crisis in Sept. 2008, as the mortgage giants were overwhelmed by the decline in housing prices and rise in loan delinquencies. The Federal Housing Finance Agency regulates both government-sponsored enterprises, known as GSEs.

McCain's tongue lashing followed Freddie Mac's report on Thursday of a $4.4 billion third-quarter loss and plans by the FHFA to request another $6 billion in government bailout money for Freddie, in part to cover Freddie's $1.6 billion quarterly dividend payment to the government.

The Hill reported that McCain was pounding the podium while bashing DeMarco for continuing the GSE's tradition of enriching its executives.

The senator said the Senate "should be ashamed if we let this happen," since "every day more and more Americans are losing their jobs and their homes, and we're allowing these people to take home annual salaries of $900,000 and bonuses of millions of dollars, all the while they ask the taxpayers for $6 billion today."

Referring to the $900,000 base salary of outgoing Freddie Mac CEO Ed Halderman, who, received an additional bonus of $2.3 million this year, McCain said "I bet you there are some patriotic, talented Americans that would be willing to serve on Fannie and Freddie without being paid $900,000 a year and millions of dollars in bonuses, I really believe that."

The FHFA on Oct. 27 said that Fannie and Freddie had borrowed $169 billion from the U.S. Treasury, and projected that "cumulative Treasury draws," or borrowings of taxpayer funds, would "range from $220 billion to $311 billion."

The agency hopes to recoup some of the GSEs' losses, with its September lawsuits against 17 large banks -- including Bank of America ( BAC), JPMorgan Chase ( JPM), Goldman Sachs ( GS), Morgan Stanley ( MS), and Citigroup ( C) -- to demand full rescission and recovery of losses sustained by the GSEs from the purchase of nearly $200 billion in mortgage-backed securities from the banks.

-- Written by Philip van Doorn in Jupiter, Fla.

To contact the writer, click here: Philip van Doorn.

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Philip W. van Doorn is a member of TheStreet's banking and finance team, commenting on industry and regulatory trends. He previously served as the senior analyst for TheStreet.com Ratings, responsible for assigning financial strength ratings to banks and savings and loan institutions. Mr. van Doorn previously served as a loan operations officer at Riverside National Bank in Fort Pierce, Fla., and as a credit analyst at the Federal Home Loan Bank of New York, where he monitored banks in New York, New Jersey and Puerto Rico. Mr. van Doorn has additional experience in the mutual fund and computer software industries. He holds a bachelor of science in business administration from Long Island University.

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