ICYMI: Fannie, Freddie bonuses become legislative targets
November 9, 2011 -
By Peter Schroeder
Lawmakers in both the House and Senate are turning their ire towards hefty bonuses handed out to Fannie Mae and Freddie Mac executives into legislation.
Sens. John McCain (R-Ariz.) and Jay Rockefeller (D-W.V.) announced Wednesday that they planned on offering an amendment that would prohibit executives at the troubled mortgage giants from receiving future bonuses so long as they remain on a federal lifeline.
The provision will be attached as soon as an appropriate vehicle hits the Senate floor.
The same day, the House Financial Services Committee announced it would vote on a bill next Tuesday that would suspend the compensation packages of top executives at the troubled mortgage giants and place all other Fannie and Freddie employees on the same pay scale as other federal employees. The bill, offered by Chairman Spencer Bachus (R-Ala.), was approved by a subcommittee in April, garnering bipartisan support.
The legislation comes after lawmakers have fiercely criticized nearly $13 million in bonuses handed out to 10 executives at Fannie and Freddie, which has been under federal conservatorship since September 2008.
“It’s outrageous that Fannie Mae and Freddie Mac executives would expect multi-million dollar bonuses after $170 billion in taxpayer bailouts and one in every four homeowners’ mortgage underwater,” said McCain in a statement.
He also put pressure on the White House to similarly denounce the "absurd and outrageous bonuses."
Rockefeller called the bonuses "inexcusable."
"Families throughout the country and West Virginia are still struggling to pay their bills and many face foreclosure," he said. "Their money shouldn’t support executive bonuses at organizations that have already received billions of taxpayer dollars."
Bachus has long been critical of pay for Fannie and Freddie executives while the institutions were on government support. He originally introduced his bill during the 111th Congress, and re-introduced in March of this year.
“The American people should be outraged at the multi-million dollar taxpayer-funded bonuses given to the executives of Fannie Mae and Freddie Mac. These organizations were ground zero for the mortgage market meltdown, the catalyst for an economic decline that has cost Americans more than seven million jobs,” said Bachus.
On Friday, a bipartisan group of 60 senators demanded the Federal Housing Finance Agency, which regulates Fannie and Freddie, overhaul executive compensation practices to reflect the "fiscal reality" facing the institutions and the federal government.
The bonuses come further under Congress's microscope in the coming days, as FHFA Acting Director Edward DeMarco is slated to testify at two hearings on the issue next week. The Senate Banking Committee will hold a general FHFA oversight hearing Tuesday, while the House Oversight Committee will delve into the bonuses with DeMarco one day later.