November 8– - U.S. Senators Johnny Isakson, R-Ga., and Saxby Chambliss, R-Ga., have joined 58 of their Senate colleagues in sending a letter to Federal Housing Finance Agency Acting Director Edward DeMarco and Treasury Secretary Timothy Geithner, objecting to the recent news that nearly $13 million in bonus pay was approved for 10 executives at Fannie Mae and Freddie Mac.
The letter calls the bonuses “wildly imprudent” and urges the housing finance agency to make “changes to the executive compensation policy to more accurately reflect the mission of the agency and the fiscal reality facing the GSEs and the federal government.” Secretary Geithner was included in the letter because of the role the Treasury Department plays in overseeing taxpayer dollars that were used to bail out Fannie and Freddie.
The letter was spearheaded by Senators Begich, D-Alaska, and Thune, R-S.D., and has received bipartisan support from 25 Democratic and 35 Republican Senators in total.
The full text of the senators’ letter is included below.
November 4, 2011
Mr. Edward DeMarco, Acting Director
Federal Housing Finance Agency
1700 G Street, NW
Washington, DC 20552
Dear Mr. DeMarco:
On November 1, 2011, it was reported that the Federal Housing Finance Agency (FHFA) approved $12.79 million in bonus pay for ten executives at Fannie Mae and Freddie Mac, the Government Sponsored Enterprises (GSEs). At a time when these entities have received nearly $141 billion in taxpayer-provided bailout funding, such excessive compensation seems wildly imprudent. Moreover, the full cost of conservatorship remains a moving target.
We are sincerely concerned about the message this sends to millions of American families when the unemployment rate stands at 9.0% and the housing market remains very weak. As American families are tightening their belts in light of the struggling economy, the federal government must take steps to ensure that the conservatorship is receiving proper oversight. The wasteful nature of these bonuses, however, is a step in the wrong direction.
The idea that Fannie Mae and Freddie Mac, which rely on taxpayer funding to stay afloat, must offer excessive bonuses to its executives to attract effective management strains credulity. We therefore urge you to make substantial changes to the executive compensation policies to more accurately reflect the public mission of your agency and the fiscal reality facing the GSEs and the federal government. We also request an update regarding your actions to reform compensation package protocol and what steps have been taken to address the concerns raised by the FHFA Inspector General in the March, 2011 report “Evaluation of Federal Housing Finance Agency’s Oversight of Fannie Mae’s and Freddie Mac’s Executive Compensation Programs.”