The housing bill brings up a number of important questions about the risks and rewards that result from government subsidy and bail outs.
One recent market commentator pointed out that Fannie Mae and Freddie Mac executives were allowed to keep the big bonuses they made engineering the housing bubble and bankrupting the companies.
One of the examples given was Jamie Gorelick, (1, 2) who joined Fannie Mae as Vice Chairman from 1997 to 2003 after engineering the move to private for-profit prisons as Deputy Attorney General in the Clinton Administration. Gorelick’s name received national attention as a member of the 9-11 Commission and close advisor to Hillary Clinton.
Gorelick got Fannie Mae compensation and bonus payments of $26 million which she gets to keep.
However, the bill stipulates that Americans at risk of foreclosure who get a mortgage workout must share future equity capital gains with the government.
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