A congressional push to limit the salaries for the CEOs of Fannie Mae and Freddie Mac moves closer this week when the House version of a bill that already passed the Senate unanimously goes to the House floor for a vote.
The House’s Equity in Government Compensation Act of 2015, introduced by U.S. Rep. Ed Royce, R- Calif., is expected to pass with bipartisan support.
Royce first introduced the Equity in Government Compensation Act of 2015 on May 8, 2015, and it passed out of the House Financial Services Committee by a 57-1 vote on July 29, 2015, and worked with both Chairman Hensarling and leadership to expedite a full House vote on the Senate version. Both Rep. Royce's bill as amended and Sen. Vitter's legislation 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.
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 Senate version of the CEO pay cap bill is part of a larger suite of legislation designed to “jumpstart GSE reform,” but other elements of the suite stalled in the Senate.
Royce’s bill 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, suspended the proposed $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 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."
The White House appears on board with the bill.
White House Press Secretary Josh Earnest has said, "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. The President is expected to sign this bill into law shortly after House passage.