The House Financial Services Committee passed a bill to suspend the multi-million dollar salaries for Freddie and Fannie execs and use a compensation system based on the federal pay scale instead.
Freddie Mac and Fannie Mae have received $169 billion from the Treasury Department as part of bailout funds. Of that, $35 million went to compensation for the top six executives.
The bill passed Tuesday in the Financial Services Committee by a vote of 52-4. The bill would establish a compensation system for Freddie Mac and Fannie Mae similar to the pay scale in the General Schedule and the Senior Executive Service. It would cap top executive pay at under $219,000. Also, pay increases would be based on performance.
Rep. Spencer Bachus (R-Ala.), bill sponsor and chairman of the committee, called the current compensation to Freddie and Fannie executives “unfair, unreasonable and unjust to the taxpayers whose assistance is the only things keeping Fannie and Freddie afloat.”
House Oversight Chairman Rep. Darrell Issa (R-Calif.) criticized the two organizations for having “scant documents” on executive performance.
“Vague assertions that what one needs to do can be met simply because you were there does not pass the sniff test,” Issa said in the hearing.
Committee member Rep. Joe Walsh (R-Ill.) questioned that Fannie and Freddie could find capable executives only if they were compensated millions of dollars.
“Are you telling me, that unlike Congress and some departments in government, we’re fundamentally not able to find people who need to do what they need to do at less than the amount of money in base pay and bonuses we’re paying folks?” Walsh said.
In his testimony, Charles Haldeman, chief executive officer of Freddie Mac, said he understood the outrage over executive pay, but added that the positions required “highly skilled, sophisticated, seasoned people” who could take high-paying jobs elsewhere.