Lawmakers on Capitol Hill are up in arms over the news that the ""Federal Housing Finance Agency"":http://www.fhfa.gov (FHFA) approved $12.79 million in bonus pay for 10 executives at ""Fannie Mae"":http://www.fanniemae.com and ""Freddie Mac"":http://www.freddiemac.com.
[IMAGE]Sixty senators put their partisan differences aside and presented a united front in a letter to FHFA Acting Director Edward DeMarco and Treasury Secretary Timothy Geithner.
Spearheaded by Sens. ""Mark Begich"":http://begich.senate.gov (D-Alaska) and ""John Thune"":http://thune.senate.gov (R-South Dakota), 34 more Republicans and 24 other Democrats signed on to the letter. In it, they criticized ""such excessive compensation"" as ""wildly imprudent,"" considering the GSEs have received nearly $141 billion in taxpayer support over the last three years.
Begich says he ""was floored"" to hear of these bonuses being doled out. Thune called the pay ""undeserved.""
""We are sincerely concerned about the message this sends to millions of American families when the unemployment
[COLUMN_BREAK]rate stands at 9.0 percent and the housing market remains very weak,"" the ""60 senators wrote"":http://www.scribd.com/doc/71601953/Fannie-Freddie-Bonus-Letter-11-4-2011.
""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,"" they said.
FHFA has defended the multi-million dollar bonuses by pointing to the fact that executive compensation is only about 60 percent of pre-conservatorship levels.
According to the GSEs' ""2010 annual filings"":http://sec.gov/Archives/edgar/data/310522/000095012311017972/w81665e10vk.htm with the Securities and Exchange Commission (SEC), executive compensation is directly tied to the companies' business objectives of supporting the housing and mortgage markets while minimizing credit losses from delinquent mortgages.
The GSEs' say their corporate performance goals are grounded in ""providing liquidity, stability, and affordability"" to the market. ""[O]ur performance against these goals was strong,"" the companies state.
The senators, however, disagree. They are calling on FHFA and Treasury to ""make substantial changes"" to the executive compensation policies in place at Fannie and Freddie so that they ""more accurately reflect the public mission of your agency and the fiscal reality facing the GSEs and the federal government.""
Senate Banking Committee ""Chairman Tim Johnson"":http://banking.senate.gov/public/index.cfm?FuseAction=Newsroom.PressReleases&ContentRecord_id=6a0682d0-0b5f-b00f-4727-ac39f2e04017&Region_id=&Issue_id (D-South Dakota) says he plans to summon DeMarco before the committee ""as soon as possible"" to explain the bonus packages awarded to Fannie Mae and Freddie Mac executives.