U.S. Representative Ed Royce (R-Calif.) released the following statement after the House Financial Services Committee voted 57-1 today to advance his legislation, the Equity in Government Compensation Act of 2015, to limit compensation packages for the Chief Executive Officers of Fannie Mae and Freddie Mac:
“Multi-million dollar paydays for the CEOs of Fannie and Freddie represent a failed grasp of reality on the part of both the GSEs and their regulator,” said Rep. Royce. “At a time when American families are still struggling, members of both parties clearly find it incomprehensible that the FHFA would authorize the taxpayer-backed GSEs to hand out $4 million compensation packages to their CEOs.”
Earlier this year, Federal Housing Finance Agency (FHFA) 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. This month, the GSEs announced that their CEOs would receive $4 million a year compensation packages, a dramatic raise from their current annual salaries of $600,000 at a cap set by former FHFA Director Edward DeMarco.
The U.S. Department of the Treasury recently 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 has 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.
The Equity in Government Compensation Act of 2015, introduced by Rep. Royce on May 8, 2015, was amended during the Committee markup yesterday per negotiations with Ranking Member Maxine Waters (D-Calif.). As amended, the bill suspends the $4 million a year compensation packages for the CEOs at Fannie Mae and Freddie Mac and limits their total compensation to the prior level of $600,000 a year each.
The House Financial Services Committee voted on similar legislation, the Equity in Government Compensation Act of 2011, on November 15, 2011. The bill passed the committee on a bipartisan vote of 52-4, with now-FHFA Director and former Committee member Mel Watt voting against the legislation, and spurred former FHFA Director DeMarco to institute salary limits at the GSEs.