< Back to H.R. 4476 (111th Congress, 2009–2010)

Text of the Equity in Government Compensation Act of 2010

This bill was introduced on January 20, 2010, in a previous session of Congress, but was not enacted. The text of the bill below is as of Jan 20, 2010 (Introduced).

Source: GPO

I

111th CONGRESS

2d Session

H. R. 4476

IN THE HOUSE OF REPRESENTATIVES

January 20, 2010

(for himself, Mrs. Biggert, Mrs. Capito, Mr. Garrett of New Jersey, Mr. Hensarling, Mr. Neugebauer, and Mr. Paul) introduced the following bill; which was referred to the Committee on Financial Services

A BILL

To suspend the current compensation packages for the senior executives of Fannie Mae and Freddie Mac and establish compensation for such positions in accordance with rates of pay for senior employees in the Executive Branch of the Federal Government, and for other purposes.

1.

Short title

This Act may be cited as the Equity in Government Compensation Act of 2010.

2.

Congressional findings

The Congress finds that—

(1)

the Federal National Mortgage Association (known as Fannie Mae) and the Federal Home Loan Mortgage Corporation (known as Freddie Mac), which are both privately owned but publicly chartered government-sponsored enterprises (GSEs), were at the center of the mortgage market meltdown that caused the financial crisis that commenced in 2008;

(2)

the failures of Fannie Mae and Freddie Mac helped precipitate the deepest economic decline since World War II and the loss of 7,500,000 jobs;

(3)

in September 2008, the Treasury Department, Federal Reserve Board, and Federal Housing Finance Agency (FHFA) exercised authority granted by the Congress to place the two GSEs in conservatorship, a form of nationalization that puts the regulators firmly in control of the GSEs’ daily operations;

(4)

in September 2008, the Administration established a $200 billion facility to purchase senior preferred stock in the enterprises to backstop their losses;

(5)

in February 2009, the Obama Administration raised the senior preferred stock purchase commitment to $400 billion;

(6)

on Christmas Eve 2009, the Obama Administration removed any limits on the use of Federal funds to cover losses at the enterprises, significantly expanding a commitment that has already resulted in the expenditure of more than $110 billion in taxpayer funds to purchase senior preferred stock in the two enterprises;

(7)

as a result of the Government’s actions, the taxpayers of the United States now own at least 80 percent of the two GSEs;

(8)

the Administration is using Fannie Mae and Freddie Mac as instruments of Federal housing policy, making it less likely that they will ever be returned to private ownership;

(9)

the Congressional Budget Office has concluded that Fannie Mae and Freddie Mac have effectively become government entities whose operations should be included in the Federal budget;

(10)

the GSEs are expected to be a long-term drain on the taxpayers as a result of market conditions and the political and public policy mandates imposed on them by the Administration and the Congress;

(11)

in spite of these liabilities, at the end of 2009, the Treasury Department and the FHFA approved compensation packages for 2010 for the chief executive officers of Fannie Mae and Freddie Mac of $6,000,000 each, including incentive pay of $2,000,000 each, which is 15 times more than the annual compensation of the President and 30 times more than the annual compensation of a Cabinet Secretary;

(12)

the Treasury Department and the FHFA also approved multi-million dollar compensation packages for a number of the GSEs’ top executives, payable in cash rather than in the type of stock options that have characterized compensation arrangements at other large financial institutions that have received extraordinary government assistance;

(13)

on September 17, 2008, FHFA determined that no executive officer of Fannie Mae or Freddie Mac would be entitled to receive a cash bonus or long-term incentive awards for 2008;

(14)

FHFA’s five-year Strategic Plan for Fannie Mae and Freddie Mac includes a commitment that the GSEs will operate in a safe and sound manner; and

(15)

section 1318(c) of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4518(c), as added by section 1113(a)(4) of the Housing and Economic Recovery Act of 2008 (Public Law 110–289; 122 Stat. 2678)), permits the Director of FHFA to withhold any payment, transfer, or disbursement of compensation to an executive officer, or to place such compensation in an escrow account, during the review of the reasonableness and comparability of compensation.

3.

Reasonable compensation

(a)

Suspension of current compensation packages

The Director of the Federal Housing Finance Agency shall immediately upon the enactment of this Act suspend the compensation packages approved for 2010 for the executive officers (as such term is defined in section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4502)) of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation and, in lieu of such packages, establish a compensation system for the executive officers of such enterprises in accordance with the rates of pay for positions in the Executive Schedule and the Senior Executive Service of the Federal Government.

(b)

Clawback of 2009 compensation

(1)

Sense of the Congress

It is the sense of the Congress that each executive officer (as such term is defined in section 1303 of the Federal Housing Enterprises Financial Safety and Soundness Act of 1992 (12 U.S.C. 4502)) of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation should return to the Secretary of the Treasury any compensation earned in 2009 that was in excess of the maximum annual rate of basic pay authorized for a position in level I of the Executive Schedule.

(2)

Use to reduce national debt

The Secretary of the Treasury shall transfer any amounts referred to in paragraph (1) that are returned to the Secretary to the special account established by section 3113(d) of title 31, United States Code (relating to reducing the public debt).