Freddie Mac, on taxpayer support, pays big bonuses
Freddie Mac, Fannie Mae defend $13 million in bonus payments. Executives tell House committee that bonuses needed to keep qualified staff at Freddie Mac and Fannie Mae.
Top executives at Fannie Mae and Freddie Mac Wednesday defended their companies' pay practices from attack by lawmakers angry that the government-controlled firms were paying out nearly $13 million in executive bonuses.Skip to next paragraph
Subscribe Today to the Monitor
The chief executives of Fannie Mae and Freddie Mac's argued the compensation structures at the mortgage finance firms were needed to retain and attract qualified staff.
A bill to block the pay packages was approved by the House Financial Services Committee on Tuesday in a 52-4 vote. The full House must still vote on the measure. A similar bill has been introduced in theSenate.
The two money-losing firms have been propped up by about $169 billion in federal aid since they were rescued by the government in 2008.
In testimony before a House committee, the executives said cutting compensation at their firms would be disruptive and limit their ability to attract skilled management.
``We need to compensate our executives and employees to ensure that we have and keep the leadership we need to continue our progress,'' Fannie Mae CEO Michael Williams told the HouseOversight Committee.
Republicans and Democrats in the House and Senate have expressed chagrin that the companies, the two largest sources of U.S. mortgage finance, were paying out $12.79 million in bonuses for 10 executives.
``Congress and the president passed a law directing FHFA, Fannie Mae, and Freddie Mac to 'maximize assistance for homeowners.' This has not happened,'' said Representative Elijah Cummings, the panel's top Democrat. ``And nobody should be receiving million-dollar bonuses by claiming it has.''
Democrats and Republicans agree the firms eventually need to be shuttered, but lawmakers are moving cautiously given the central role the companies play in the housing finance system.
Williams argued that without legislative direction from Congress on the future of the two government-sponsored enterprises, it was ``difficult to attract and retain employees with highly specialized skills, expertise and experience.''