The multi-million dollar pay raises for the chief executive officers of mortgage giants Fannie Mae and Freddie Mac will probably be short lived.
The Senate passed a bill Tuesday night capping CEO pay at $600,000, the level before plans were approved in July restoring compensation to more historic levels of about $4 million apiece. Representative Ed Royce, a California Republican, offered a similar measure that passed the House Financial Services Committee in July by a vote of 57-1. If the House passes the compensation legislation, it will be sent to President Barack Obama to become law.
The Senate bill, which passed unanimously, was sponsored by Senators David Vitter, a Louisiana Republican and Elizabeth Warren, a Massachusetts Democrat. Mel Watt, who oversees the mortgage companies as director of the Federal Housing Finance Agency, had approved plans raising pay for Fannie Mae’s Timothy Mayopoulos and Freddie Mac’s Don Layton, which led to opposition from Republican lawmakers and the Obama administration.
“Giving massive taxpayer-funded pay raises to Fannie Mae and Freddie Mac isn’t just out of touch – it’s downright offensive,” Vitter said in a statement.
The increases reignited a debate over appropriate executive compensation at Fannie Mae and Freddie Mac, which have operated under a conservatorship overseen by the FHFA since they were seized by the federal government during the 2008 credit crisis. The mortgage-finance firms have returned to the Treasury Department far more than they received in federal aid to stay afloat during the crisis.
Watt had argued the executives needed higher salaries to compete with the private sector. Stefanie Johnson, an FHFA spokeswoman, declined to comment on the Senate bill. White House press secretary Josh Earnest said in May that Fannie Mae and Freddie Mac should be treated differently than other companies because the mortgage giants “benefit significantly from a backstop that is provided by the taxpayer.”
Former Fannie Mae CEO Michael J. Williams made $5.3 million in 2011, before compensation was reduced. Mayopoulos became CEO of Fannie Mae in 2012 and his pay was set at $600,000. Earlier in his career he worked at Bank of America Corp. Layton, a former JPMorgan Chase & Co. executive, was appointed CEO of Freddie Mac in 2012. His predecessor, Charles E. Haldeman, made $3.8 million in 2011.