"This has been a tough week for Fannie Mae. But whatever you want to say about the company, its foundation has consistently been on the front lines of corporate giving in Washington. This was a record year for Fannie's Help the Homeless Program that enlisted more than 110,000 people for various walkathons and raised $6.5 million for local programs." Charity That Defies Economics, The Washington Post, December 24, 2004

When I first read the words above I was surely impressed. By raising $6.5 million for programs -- that's $59.09 for each of those 110,000 walkathon participants -- the Fannie Mae Foundation has certainly shown that housing issues interest many people. But I wonder if there could have been even more impact had the sponsoring company used its funds and energy somewhat differently.

For instance....

Imagine how much more Fannie Mae could have donated to its foundation had the company not doled out an estimated $245 million in bonuses to top executives in recent years?

Resigned CEO Franklin Raines was paid $11.6 million in salary and other compensation in 2003 according to Forbes Magazine, good enough to rank among the 65 highest paid executives that year.

Consider how much more would have been available to help those with housing needs had Mr. Raines' 2003 compensation been reduced to $4 million -- a mere 10 times the annual salary of the President of the United States.

While it would be great to see the anonymous and selfless giving favored in the Eight Degrees of Charity described by Maimonides in 1201, today we accept that donor recognition often creates a substantial public benefit -- just think of the Carnegie, Hughes, Pew, Gates and Rockefeller foundations or university buildings named for donors. The good news is that millions more may soon be available to fund the good work of the Fannie Mae Foundation.

It seems 749 lucky Fannie Mae employees received an average bonus of $86,952.56 in 2003 under the firm's annual incentive plan -- that's a total of $65,127,468 according to Representative Richard H. Baker (R-LA), bonuses which may need to be re-calculated given that Fannie Mae must now show some $9 billion in previously unreported losses during the past few years.

Already, Fannie Mae has told the Securities & Exchange Commission that millions of dollars originally earmarked for executive bonuses in 2004 will not be paid. As well, the new non-executive Chairman of the Board, Stephen B. Ashley, will receive just $500,000 annually.

Fannie Mae says that its mission is to "provide access to 'The American Dream' and the opportunity for homeownership for more Americans." But surely more dollars would be available for this important purpose if salaries for a "government sponsored enterprise" or "GSE" were limited to the same wages and benefits paid to government workers generally.

Why should Fannie Mae leaders receive huge bonuses but not those with comparable responsibilities at Ginnie Mae, the FHA, the VA or the Office of Federal Housing Enterprise Oversight (OFEHO)? What exactly is it that entitles Fannie Mae's leadership to vast salaries when the very same dollars could be used to advance the organization's stated mission?

Before you answer, take a look at the salaries we pay those in uniform -- many of whom are away from their communities at this moment dodging munitions, mines and mortars in Iraq and Afghanistan.

Federal credit guarantees, tax benefits and other GSE privileges give Fannie Mae and Freddie Mac huge marketplace advantages, advantages which lead directly to immense profits. Recognizing the value of such benefits, why not offer continued GSE status in exchange for a series of public benefits, including an assurance that every service member wounded in Iraq and Afghanistan gets cash toward the purchase of a home or the reduction of a mortgage? Say $86,952.56 -- a nice round number with a familiar ring.

The money is there -- the only question is who should get it.

For more articles by Peter G. Miller, please press here.

Published: January 25, 2005

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