The U.S. Senate Banking Committee will hold a hearing on bonuses paid to executives of Fannie Mae and Freddie Mac as congressional lawmakers increase scrutiny of the two government-controlled companies.
Fannie Mae and Freddie Mac continue to suffer losses three years after being taken under government conservatorship. Today, Freddie Mac reported a $4.4 billion, third-quarter loss and said it will seek $6 billion from the U.S. Treasury Department to eliminate a net-worth deficit. Combined, the two companies have required about $145 billion in taxpayer aid since 2008.
Although it relies on taxpayer support, Fannie “is functioning with a ‘business as usual’ mentality,” Neugebauer wrote in a Nov. 2 letter to Edward J. DeMarco, acting director of the Federal Housing Finance Agency, which regulates the mortgage companies. Neugebauer leads the oversight panel of the House Financial Services Committee.
Senator Tim Johnson, the South Dakota Democrat who leads the banking committee, said in a written statement today that his panel, which hasn’t set a date for the hearing, will call DeMarco to testify.
DeMarco said Fannie Mae and Freddie Mac continue to use compensation programs created in 2009, after losses from subprime lending forced them into government conservatorship.
“These are not rewards for the individuals who were running the companies when the problems were created,” DeMarco said in an e-mailed statement today.
“Fannie Mae and Freddie Mac have more than $5 trillion in mortgage assets, all of which are at risk to taxpayers,” he said. “It is critical that we protect taxpayers by having highly qualified executives running these companies.”
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