25 Dec 2009

$US6 million pay for heads of mortgage agencies

1:15 pm on 25 December 2009

The heads of two mortgage companies widely blamed for helping cause a collapse in US property values that triggered the global financial crisis, are to receive salaries of up to $US6 million for their work this year.

The Government-controlled mortgage agencies, Fannie Mae and Freddie Mac, fund three quarters of all the mortages in the United States.

The federal government has put $US111 billion into them since taking them over and the awards go against moves to curb lavish pay packages.

But the BBC reports the regulator which decided the pay levels said the awards were 40% lower than before the government bailout.

It argued the sums involved reflect the need to attract and retain talent.

In another development, a $US400 billion financial cap to keep the two companies from failing, is to be removed.

Treasury officials said it would be replaced with a flexible formula to ensure the companies could stand behind the mortgage-backed securities they sell to investors.