Mortgage

House to vote Monday on limiting GSE CEO pay

Senate version passed unanimously, similar support expected in House

After being delayed two weeks by a busy Congressional calendar, the House of Representatives is scheduled to vote Monday evening on a bill that would limit the compensation packages of Fannie Mae CEO Timothy Mayopoulos and Freddie Mac CEO Donald Layton.

The House of Representatives was due to vote in late October on limiting the pay of the Fannie and Freddie CEOs, but that vote was delayed by a combined house budget vote, a vote on reopening the federal Export-Import Bank, and a vote on electing Rep. Paul Ryan, R-Wis., as the new Speaker of the House.

According to the legislative schedule listed on the website of House Majority Leader Kevin McCarthy, R-Calif., the House is set to vote Monday on the “Equity in Government Compensation Act of 2015,” which would cap the GSE CEOs' pay at its current level, which is $600,000, instead of the $3 million raises that were awarded to Mayopoulos and Layton earlier this year by the Federal Housing Finance Agency.

The bill is based on legislation authored by Rep. Ed Royce, R- Calif. Monday’s scheduled House vote is on the Senate version of the GSE CEO pay limit bill, which was authored by Sen. David Vitter, R-La., and Sen. Elizabeth Warren, D-Mass., and passed unanimously in the Senate last month.

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.

But the raises for the GSE CEOs were met with a stern rebuke from Congress. Royce’s bill passed out of the House Financial Services Committee by a 57-1 vote on July 29, 2015.

The bill then received unanimous support in the Senate, and is expected to receive similar support in the House.

"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,” Royce said upon the passage of the Senate version of the bill. "I applaud Sen. Vitter for his quick work in getting this bill through the Senate and will work to replicate his success in the House.”

The U.S. Department of the Treasury has stated that it is not in favor of the GSE CEO pay raises either.

"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 earlier this year.

“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.”

The White House appears on board with the bill as well.

Earlier this year, White House Press Secretary Josh Earnest 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.

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