Sen. Elizabeth Warren (D-MA) has teamed with Republican colleague Thom Tillis of North Carolina to introduce the Respect the Caps Act, a bill designed to create a salary cap for the executives running the government-sponsored enterprises (GSEs).
The senators stated their bill came in response to a recent report by the Federal Housing Finance Agency’s (FHFA) Inspector General, which concluded the regulatory agency enabled the compensation levels for executives at Fannie Mae and Freddie Mac to rise above Congressionally-mandated limits. The senators added that the FHFA worked around these limits by separating the roles of chief executive and president role at Fannie Mae and Freddie Mac, thus transferring CEO duties to the president and raising the president’s salary.
The Respect the Caps Act prevents the FHFA from transferring the duties of GSE CEO to another position and would mandate the removal of the FHFA Director if compensation is approved for an amount higher the cap of $600,000 a year.
“Following the financial crisis, Congress passed my bipartisan bill to cap pay raises for executives at Fannie Mae and Freddie Mac,” said Warren. “Instead of enforcing the law, the FHFA has allowed executive compensation at Fannie to increase by $3.6 million and at Freddie, by $3.25 million. My new bill with Senator Tillis is designed to close the loophole used to more than triple CEO salaries and keep Fannie and Freddie in check.”