Selective outrage

White House Bonus Hypocrisy

Public Sector: When bailed-out private Wall Street banks handed out bonuses last year, the president threw a fit. So why is he ignoring the huge executive bonuses at government-owned Fannie Mae and Freddie Mac?

Shortly after taking office, President Obama reacted to Wall Street bonuses handed out in January 2009 with incredibly harsh language, calling them "shameful" and "the height of irresponsibility."

"Folks on Wall Street who are asking for help need to show some restraint and show some discipline and show some sense of responsibility," he said. A few months later, Obama pledged that there would be "no more bonuses for companies that taxpayers are helping out," calling them a violation of "our fundamental values."

In January 2010, Obama was once again in high dudgeon about Wall Street bonuses, blasting "reports of massive profits and obscene bonuses at some of the very firms who owe their continued existence to the American people."

Obama's language succeeded in further demonizing Wall Street and stoking anti-capitalist sentiment in the country, which has found its full flowering in the Occupy Wall Street protests.

But the fact is that the banks — most of which were mere victims of the financial meltdown — have paid back almost all the money they got from taxpayers. The much-ballyhooed $700 billion TARP program will likely end up costing taxpayers as little as $19 billion when all is said and done.

The same cannot be said of mortgage giants Fannie Mae and Freddie Mac.

Not only where they at the epicenter of the housing bubble, but also the government had to take them over, pumping in cash to cover their huge losses on the mortgages they owned and guaranteed. And far from paying taxpayers back, the best-case scenario for Fannie and Freddie is that their bailout will cost over $120 billion.

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But that didn't stop the two agencies from giving their top 10 executives $12.8 million in bonuses for meeting what have been charitably described as "modest goals."

And the White House response to this genuine outrage? Crickets.

When asked about it on Tuesday, press secretary Jay Carney washed the administration's hands of the matter. "These entities are independent and therefore they are independent decisions," he said. "The White House is not involved, and nor should it be."

It's all been too much for Sen. John Barrasso, R-Wyo., who has called on Obama to force Fannie and Freddie to cancel these bonuses. "The president should speak up for what's right and wrong," he told IBD. "And it's wrong to reward failure at Fannie and Freddie after taxpayers paid billions to bail them out."

Barrasso said Carney's claim that these agencies are independent and can't be touched "is not an accurate statement, in my view." Obama, of all people, should know better, he said.

When Obama was running for president, he sent an angry letter to Treasury Secretary Henry Paulson saying that when Congress rescued Fannie and Freddie, "we explicitly included a provision that gave the new regulator the authority to block ... multimillion-dollar severance payments."

But what's the point of complaining now? After all, it's not like blasting Fannie and Freddie will score Obama any points with the anti-Wall Street crowd he's busy trying to woo.

From our perspective, however, failing to protect taxpayer money is a blatant dereliction of the president's duty.