Congress says Fannie Mae and Freddie Mac execs don’t deserve pay raises
The average American is not the only ones to lose pay increases. S. 2036, which passed the Senate and is expected to pass the House, caps pay raises for the chief executive officers of Fannie Mae and Freddie Mac.
Earlier this year the Federal Housing Finance Agency (FHFA) authorized new compensation packages for the CEOs of the two government-sponsored enterprises. S. 2036 would suspend the allotted $4 million increase, which could bring total compensation to over $7 million dollars. Instead, this bill’s passing caps each executive's’ total compensation to the prior level: $600,000 a year.
“Giving massive taxpayer-funded pay raises to Fannie Mae and Freddie Mac [executives] isn’t just out of touch – it’s downright offensive,” said bill sponsor Sen. David Vitter (R-LA).
Vitter’s colleague on the Senate Banking Committee, Sen. Elizabth Warren (D-MA), noted “rather than approving massive pay raises for Fannie's and Freddie's CEOs, FHFA should be working to reduce costs for homeowners and those who hope to own homes.”
S. 2036 is similar to H.R. 2243, introduced by Rep. Ed Royce (R-CA39).
Fannie Mae (officially the Federal National Mortgage Association, or FNMA) and Freddie Mac (officially the Federal Home Loan Mortgage Corporation, or FHLMC) are government-sponsored corporations whose goals are to expand access to home mortgages by buying mortgages from lenders. But the entities came under the control of the FHFA in 2008 when they needed a bailout during the financial crisis.
The summary below was written by the Congressional Research Service, which is a nonpartisan division of the Library of Congress, and was published on Nov 26, 2015.
(This measure has not been amended since it was introduced. The expanded summary of the Senate passed version is repeated here.) Equity in Government Compensation Act of 2015 (Sec. 3) This bill requires the Director of the Federal Housing Finance Agency to suspend the compensation packages approved for 2015 for the chief executive officers of the Federal National Mortgage Association and the Federal Home Loan Mortgage Corporation (government sponsored enterprises or GSEs), and any affiliates, and in lieu of such packages establish the compensation and benefits for each such chief executive officer at the same level in effect for that officer as of January 1, 2015. Such compensation and benefits may not thereafter be increased.
This suspension shall not be construed to affect the prohibition of the STOCK Act against receipt of bonuses by the chief executive officer of each GSE during any period of conservatorship. It shall only apply to such a chief executive officer if the GSE is in conservatorship or receivership as a critically undercapitalized regulated entity pursuant to the Federal Housing Enterprises Financial Safety and Soundness Act of 1992.
(Sec. 4) Any chief executive officer affected by this compensation package suspension shall not be considered a federal employee.