• Compensation measure will head to White House to become law
  • Raises initially approved by FHFA's Mel Watt in July

The chief executive officers of mortgage giants Fannie Mae and Freddie Mac are set to receive a multi-million dollar pay cut.

The House passed a bill Monday night capping CEO pay at $600,000, the amount before plans were approved in July restoring compensation to more historic levels of about $4 million apiece. The measure is now set for White House approval to become law.

The Senate cleared the legislation, S. 2036, in September. The Obama administration had voiced opposition for the pay increases granted by Melvin Watt, who oversees the government sponsored enterprises as director of the Federal Housing Finance Agency. Watt had approved the pay raises for Fannie Mae’s Timothy Mayopoulos and Freddie Mac’s Don Layton, which led to outcry amid Republican lawmakers.

Watt had argued the executives needed higher salaries to compete with the private sector. 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.”

“While this is a victory for taxpayers, the real battle of winding down the GSEs and ending the government’s domination of the housing market remains,” Representative Ed Royce, a California Republican who introduced the House version of the legislation, said in a statement.

Peter Garuccio, an FHFA spokesman, declined to comment on the pay cap bill.

Fannie Mae and Freddie Mac have operated under a conservatorship 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.

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. He made more than $3 million as Fannie Mae’s general counsel before becoming CEO and 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.

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