No matter how much lobbying Federal Housing Finance Agency head Mel Watt did, he wasn’t going to change many votes in Congress on a bill that would roll back the large pay increases Watt had granted the CEOs of quasi-public GSEs Fannie Mae and Freddie Mac. Paying the heads of quasi-public firms like Fannie, Freddie multi-million dollar salaries so they would be “competitive with the private sector” is simply not acceptable in today’s political climate, and it looks like Congress has called Watt’s bluff.
The U.S. Senate approved a bill limiting GSE CEO pay to $600,000 on Tuesday night, the salary before plans were approved earlier this summer to return exec compensation to historic levels of close to $4 million. However, it looks like Americans aren’t ready for high-paid quasi-public CEOs just yet as a similar measure also passed the House Financial Services Committee a couple of months ago by a landslide vote of 57-1.
Given the high likelihood that the House passes the bill limiting Fannie, Freddie CEO salaries, it will then be sent to President Obama who is expected to sign the measure into law.
More on bill to limit Fannie, Freddie CEO salaries to $600,000 a year
The Senate bill was approved by a unanimous vote. The measure was sponsored by the unlikely duo of David Vitter, a Louisiana Republican and Elizabeth Warren, a Massachusetts Democrat.
Mel Watt, who oversees the GSEs as director of the FHFA, had already signed off on major raises for Fannie Mae’s Timothy Mayopoulos and Freddie Mac’s Don Layton. Watt’s plan, however, was opposed by both Republican lawmakers and the Obama White HJouse.
The battle over Fannie and Freddie CEO pay increases is part of the continuing debate over executive compensation at Fannie Mae and Freddie Mac, which have been managed under a conservatorship overseen by the FHFA since the 2008 financial crisis.
Watt Claimed the GSE execs needed higher salaries in order to bring in the best talent from the private sector.
FHFA spokeswoman Stefanie Johnson had comment on the Senate bill at the current time. Of note, White House press secretary Josh Earnest said at the beginning of the summer that Fannie Mae and Freddie Mac should be treated differently than other firms because they “benefit significantly from a backstop that is provided by the taxpayer.”
Statement from Republican Senator David Vitter
“Giving massive taxpayer-funded pay raises to Fannie Mae and Freddie Mac isn’t just out of touch – it’s downright offensive,” Vitter commented in a statement after the vote Tuesday evening.