A congressional move to limit the salaries for the CEOs of Fannie Mae and Freddie Mac moved a step closer Tuesday night when the U.S. Senate unanimously passed a version of the House’s Equity in Government Compensation Act of 2015.
The Senate version of the bill is similar to the measure introduced by U.S. Representative Ed Royce, R- Calif.
U.S. Sen. David Vitter, R-La., Sen. Elizabeth Warren, D-Mass., are coauthors of the Senate version of the bill.
"Near universal support in both the House and Senate for capping GSE CEO pay is proof positive that multi-million dollar raises at taxpayer bailed-out and backed organizations are unconscionable ” said Rep. Royce. "I applaud Senator Vitter for his quick work in getting this bill through the Senate and will work to replicate his success in the House.”
The bill is part of a larger suite of legislation designed to “jumpstart GSE reform,” but other elements of the suite have stalled in the Senate.
Rep. Royce introduced the GSE CEO cap bill to end the proposed $3 million pay hikes for the CEOs of Fannie Mae and Freddie Mac, and it passed the House Financial Services Committee July 29 by a vote of 57-1.
The legislation was amended during the Committee markup per negotiations with Ranking Member Maxine Waters, D-Calif.
Royce's bill as amended, like Sen. Vitter's version, suspend the recently announced $4 million a year compensation packages for the CEOs at Fannie Mae and Freddie Mac and limit their total compensation to the prior level of $600,000 a year each.
Earlier this year, Federal Housing Finance Agency Director Mel Watt authorized the GSEs to propose new executive compensation plans for the position of CEO that may be as high as the 25th percentile of the market, or approximately $7.26 million a year.
The GSEs shortly thereafter announced that their CEOs would receive $4 million a year compensation packages, a dramatic raise from their prior annual salaries of $600,000 at a cap set by former FHFA Director Edward DeMarco.
The U.S. Department of the Treasury has stated it "does not support FHFA’s new approach to CEO compensation at Fannie Mae and Freddie Mac and urged the agency to reject any increase."
White House Press Secretary Josh Earnest also stated "I think it is entirely legitimate for the executives at those institutions to be subject to compensation limits" when asked about the White House's view on executive raises at the GSEs.