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Royce-Vitter GSE CEO Salary Cap Signed Into Law

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Washington, November 25, 2015 | Saat Alety (202-225-4111) | comments

Today, President Barack Obama signed legislation modeled on H.R. 2243, the Equity in Government Compensation Act of 2015, as introduced by U.S. Representative Ed Royce (R-Calif.). The bill, which caps the salaries of the CEOs of Fannie Mae and Freddie Mac, is the first major standalone legislation enacted that deals with the GSEs since they were placed into conservatorship.

"Reaching a similar bipartisan consensus on winding down Fannie and Freddie is critical, as the federal government's dominance of the housing market is unsustainable. We should encourage more private capital in the system to ease the way for future comprehensive housing finance reform," said Rep. Royce.

Rep. Royce 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. U.S. Senator David Vitter (R-La.) authored the Senate version of the bill that passed the Senate by unanimous consent on September 15, 2015. 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.

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. 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.

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