New Legislation Seeks to Limit GSE Exec Salaries
U.S. Rep. Ed Royce (R-CA) has authored legislation, HR 2243: The Equity in Government Compensation Act of 2015, to limit salaries at the government-sponsored enterprises (GSEs), Fannie Mae and Freddie Mac. The House Financial Services Committee (HFSC) announced that it will markup HR 2243. 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.
“Congress needs to put a stop to the planned multi-million dollar paydays at Fannie Mae and Freddie Mac," said Rep. Royce. "Holding compensation packages at taxpayer-backed organizations to responsible limits is in the interest of the public trust. I thank Chairman Hensarling for advancing this legislation and look forward to building the bipartisan backing it previously garnered.”
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.
Originally introduced on May 8, 2015, HR 2243 suspends the compensation packages for executives at Fannie Mae and Freddie Mac and limits salaries to the highest level paid at the Federal Housing Finance Agency (FHFA), which was estimated at $255,000 a year by the Congressional Budget Office in 2011. The bill also places non-executive GSE employees on the General Schedule (GS) pay scale, the highest rank being $132,122 per year.
The House Financial Services Committee voted on similar legislation, the Equity in Government Compensation Act of 2011, on January 17, 2012. The bill passed the committee on a bipartisan vote of 52-4, with current FHFA Director and former Committee member Mel Watt voting against the legislation.
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