Lawmakers slam Fannie Mae, Freddie Mac CEOs over pay and bonuses
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The chief executives of Fannie Mae and Freddie Mac faced bipartisan outrage Wednesday over multimillion-dollar salaries and large bonuses at the seized housing finance giants, which still owe the government a combined $150 billion in the largest financial crisis bailout.
‘Should you profit while the taxpayer is paying the bill?’ asked Rep. Darrell Issa (R-Vista), chairman of the House Oversight and Government Reform Committee.
He summoned Fannie Mae CEO Michael Williams and Freddie Mac CEO Charles ‘Ed’ Haldeman Jr. to testify before his committee. The hearing came a day after another House panel voted overwhelmingly to suspend large executive compensation packages at the two companies and align their salaries with that of government employees.
The total compensation for the top six executives at Fannie and Freddie for 2009 and 2010 was $35.4 million, with Williams and Haldeman receiving about half of that. Each of them could take home as much as $6 million apiece in salary and bonuses in 2011.
Rep. Carolyn Maloney (D-N.Y.) said taxpayers were upset because Fannie and Freddie continue to lose money and require additional bailout money.
‘It’s hard for them to understand how executives get $6 million in pay for a failing entity,’ she said.
The salary and compensation were defended by Williams, Haldeman and Edward DeMarco, the latter of whom is the acting director of the Federal Housing Finance Agency, which has overseen Fannie and Freddie since they were put in a government conservatorship in 2008 because they were on the brink of failure.
The three said executive compensation has been dramatically reduced since the companies were seized but that it remained important to attract and keep skilled people to manage the firms’ combined $5 trillion in mortgage-backed securities to prevent further taxpayer losses and additional damage to the housing market.
‘I understand the outrage,’ Haldeman said. ‘We have significantly reduced executive compensation and overall spending at Freddie Mac, but we have tried to do it in a way that does not risk disrupting the functioning of the company.’
DeMarco, who earns $239,555 a year as the independent government regulator of Fannie and Freddie, said that the top executives who caused the problems at Fannie and Freddie before 2008 are no longer there and that it was difficult to find qualified people to help run the companies.
‘Others may believe that this sort of talent is easily and quickly hired at compensation far below that of competing private firms, but I do not,’ DeMarco said.
But that didn’t satisfy some lawmakers, who said Fannie and Freddie should be able to find people who do not need to make six-figure salaries.
Rep. Trey Gowdy (R-S.C.) said that there have been complaints for years about the pay of federal judges compared with that in the private sector and that those jobs are still coveted by lawyers.
‘I find it bitterly ironic that the total compensation for the United States Supreme Court justices is less than [what] either of these two men made,’ Gowdy said.
-- Jim Puzzanghera in Washington