House Committee Votes GSE Pay Cuts
Executives at Fannie Mae andrnFreddie Mac are one step closer to a massive pay cut following a vote by thernHouse Financial Services Committee to suspend the current compensation packages</bat the two government sponsored enterprises (GSEs) that have been under federalrnconservatorship since August 2008.</p
The Committee, on Tuesday, voted 52rnto 4 to send HR1221, the Equity in Government Compensation Act to the fullrnHouse. The bill, sponsored by SpenserrnBachus (R-AL) the Committee Chairman, will reduce the compensation of the GSErnexecutives and employees to bring it into line with the compensation of Federalrnemployees. </p
According to the Federal HousingrnFinancial Agency which is conservator for the GSEs, the CEOs of Freddie Mac andrnFannie Mae received $5.4 million and $5.6 million respectively in compensationrnthis year. Under HR1221 the total compensationrnof each would have been $218,978. BothrnCEOs and most of the high-level executives at the two firms were hired afterrnthe companies were placed in receivership.</p
The total compensation paid inrn2010 by Fannie Mae to six executives was $15.4 million in salaries and bonusesrnwhile Freddie Mac paid five executives $18.5 million. These executives will now be paid accordingrnto the government’s Executive Pay Scale and lower level employees will be paidrnaccording to the governments General Pay Scale. </p
“Today thernCommittee approved a bill to stop rewarding the executives of these bailed outrncompanies,” Bachus said. “Never againrnshould Americans be forced to send their hard earned tax dollars to be wastedrnon multi-million dollar pay packages for Fannie and Freddie executives.” </p
FHFA had argued that thernexecutives accepted employment with the GSEs at considerable future riskrnbecause of the uncertainty of the programs’ futures and were subject to muchrnscrutiny and considerable negative commentary from various sources. Restoring the GSEs’ credibility and financialrnstability, the Acting Director Edward J. DeMarco has said, requires that therernbe capable persons running the program with the ability and motivation tornremain in those positions.</p<prnrnrnrnrnrnrnrnrnrnrn
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