A bill that would eliminate the proposed $3 million pay raises for the CEOs of Fannie Mae and Freddie Mac is now one step closer to becoming law, as the bill advanced past the markup stage and is now set for a full vote of the House Financial Services Committee with bipartisan support in tow.
The Equity in Government Compensation Act of 2015, introduced by Rep. Ed Royce, R-CA, originally called for a limit to the salaries of Fannie Mae CEO Timothy Mayopoulos and Freddie Mac CEO Donald Layton to $255,000 – a level equal with the “highest level paid” at the Federal Housing Finance Agency, the conservator of Fannie and Freddie.
According to Royce’s office, after discussions Tuesday with Ranking Member Rep. Maxine Waters, D-Calif., Royce introduced an amendment to the Equity in Government Compensation Act of 2015, which would cap the GSE CEO’s pay at its current level – $600,000.
The bill was successfully amended and is now due for a full vote of the House Financial Services Committee on Wednesday.
“Congress needs to put a stop to the planned multi-million dollar paydays at Fannie Mae and Freddie Mac. Holding compensation packages at taxpayer-backed organizations to responsible limits is in the interest of the public trust,” Royce said in advance of his bill being marked up.
“I thank Chairman Hensarling for advancing this legislation and look forward to building the bipartisan backing it previously garnered,” Royce said.
Fannie Mae and Freddie Mac paid top executives a combined $35 million in 2009 and 2010, while the CEOs at Fannie and Freddie earned a combined salary of $17 million with options to take home $24 million.
When the GSE CEO pay raises were announced, FHFA Director Mel Watt said in a statement that the current CEO compensation framework limits the ability of the boards of directors at Fannie Mae and Freddie Mac to promote retention of their CEOs, to develop reliable CEO succession plans and to ensure continuity of operations and organizational stability.
“All regulators require the boards of their regulated entities to have viable succession plans,” Watt said. “While the enterprises remain in conservatorships, continuity and stability are integral to the ability of FHFA to fulfill its statutory responsibility to ensure Fannie Mae and Freddie Mac operate safely and soundly and foster liquidity in the national housing finance markets.”
The FHFA said in May that it was considering pay raises for Mayopolous and Layton, a move that was met with criticism from the housing industry, members of Congress and even the U.S. Treasury.
"Treasury has consistently communicated to FHFA that a change in CEO compensation at Fannie Mae and Freddie Mac is not appropriate, given that taxpayers continue to backstop both enterprises,” Adam Hodge, a spokesperson for the U.S. Treasury, said at the time.
“Ultimately, FHFA, not Treasury, has sole authority over executive compensation at Fannie Mae and Freddie Mac,” Hodge continued. “Nonetheless, Treasury strongly recommends that FHFA continue its existing limits on CEO compensation.”
Now, Royce’s bill is closer to making those limits a law.