A House committee approved a suspension of bonus packages for executives at Fannie Mae and Freddie Mac, the two mortgage firms currently under the control of the U.S. government. The House Financial Services Committee, responding to lawmaker anger over compensation at Fannie Mae and Freddie Mac, approved a measure that would suspend the compensation packages for executive officers at the companies. The bill also would require employees of the two firms to be moved onto a pay scale that lines up with federal financial regulators including the Federal Deposit Insurance Corp. and Office of the Comptroller of the Currency.
“Awarding lavish pay packages to the heads of these companies that have accepted $170 billion in taxpayer cash can’t be defended,” Representative Spencer Bachus of Alabama, the panel’s chairman and sponsor of the bill, said today.
The panel approved the measure 52-4, sending it to the House floor.
The committee’s approval comes amid heightened criticism of the companies’ bonuses and pay. Edward J. DeMarco, chief regulator of the two firms, approved packages in 2009 that awarded a total of $17 million over two years to chief executive officers Michael J. Williams of Fannie Mae and Ed Haldeman of Freddie Mac.
Compensation for the companies’ top six executives totaled $35 million for 2009 and 2010, according to a report from the FHFA Office of Inspector General.
DeMarco, acting director of the Federal Housing Finance Agency, has argued that the compensation is necessary to attract and keep executives and employees with the skills to manage a portfolio of more than $5 trillion in mortgage assets. He told senators today that pay will decline over time.
“My plan for executive compensation is to continue to seek opportunities for gradual reductions, particularly when executives leave,” DeMarco said in written testimony today to the Senate Committee on Banking, Housing and Urban Affairs.
“This approach is consistent with the administration’s notion of a gradual wind down” of Fannie and Freddie, which are now in government conservatorship, DeMarco said.
