Here's at least one thing Republicans and Democrats can agree on: The big pay raises the CEOs of Fannie Mae and Freddie Mac were awarded earlier this year should go away.
Monday evening, the U.S. House of Representatives voted to approve a bill that would suspend new annual target compensation of $4 million each for Freddie Mac CEO Donald Layton and Fannie Mae CEO Timothy Mayopoulos. If signed into law by President Obama, the bill would return the cap on their pay to $600,000. That level was set in 2012 in the wake of anger over high bonuses that were paid to executives of the housing entities, which were in government conservatorship and had been bailed out by taxpayers.
The bill, first introduced by Rep. Ed Royce (R-Calif.) in May, passed the House Financial Services Committee by a 57-1 vote in July. It was soon followed by a Senate version sponsored by Sen. David Vitter (R-La.) and Sen. Elizabeth Warren (D-Mass.), which passed by unanimous consent in September. The latest House version was a voice vote, a procedure typically used for bills that draw little controversy or on issues where individual Congress members may not want a yea or nay vote recorded.
In July, the director of the Federal Housing Finance Agency, which oversees the two mortgage finance firms, said the bigger paydays were designed to help compete with the private sector for executives. In a statement from July, FHFA Director Mel Watt said the raises were intended "to promote CEO retention, allow reliable succession planning, and ensure the continuity, efficiency and stability of enterprise operations." An FHFA spokeswoman declined to comment Monday on the latest House bill.
Initial frustration with pay levels at Fannie Mae and Freddie Mac erupted in the wake of the financial crisis, after the CEOs of the two housing entities were awarded a total of $17 million in 2009 and 2010. Watt's predecessor pledged to cap pay in 2012 before the raises were awarded this year.
Obama is expected to sign the bill. White House press secretary Josh Earnest has said in the past that "it is entirely legitimate for the executives at those institutions to be subject to compensation limits,” especially given the advantage they have as entities backed by taxpayers.