Republicans to probe Fannie, Freddie executive pay

Reuters Business News
Posted: Feb 15, 2011 7:58 PM
Republicans to probe Fannie, Freddie executive pay

By Corbett B. Daly

WASHINGTON (Reuters) - A key congressional panel charged with overseeing financial matters plans to question Fannie Mae and Freddie Mac executives over their multimillion-dollar compensation packages paid for by U.S. taxpayers.

Texas Representative Randy Neugebauer on Tuesday said he would bring Fannie Mae chief executive Michael Williams and Freddie Mac chief executive Ed Haldeman before his House Financial Services Subcommittee on Oversight and Investigations.

"I think we will be on a first name basis ... because I think we will have them" testify, Neugebauer, a Republican, told reporters after a feisty hearing on the use of millions of taxpayer dollars to pay legal bills for former Fannie Mae executives accused of accounting fraud.

Fannie Mae and Freddie Mac were seized by the Bush administration in late 2008 amid mounting losses from mortgages gone sour and are controlled by a government conservator, the Federal Housing Finance Agency (FHFA).

Edward DeMarco, the acting director of FHFA, in 2009 approved compensation packages allowing the top executives at each firm to receive as much as $6 million each in annual compensation.

"What is going on over at Freddie and Fannie and what is the conservator doing to make sure the taxpayers are represented?" Neugebauer asked.

The comments come just days after the Obama administration outlined plans to wind-down Fannie and Freddie gradually and to take steps to make the $10.6 trillion U.S. mortgage market less dependent on the government, which now backs more than 85 percent of new home loans in some fashion.

The Texas Republican said business as usual is not acceptable for the so-called government sponsored enterprises because "their business got taxpayers on the hook for a lot of money."

The pair have received more than $130 billion in direct taxpayer aid since being taken over by then Treasury Secretary Henry Paulson. The Obama administration on Monday said that tally could climb to $169 billion next year before slowing shrinking as losses are paid back to Treasury coffers.

"So what we want to make sure is that they understand, and hopefully we will fire a shot here, of whose interests that they need to be most concerned about. It's not the employees or the executives over at Freddie Mac and Fannie Mae, it's the American taxpayers," Neugebauer said.

Asked after the hearing why he deserved to paid more than U.S. President Barack Obama, who earns about $400,000 annually, Williams told Reuters his salary is determined by the government.

"My compensation is determined by the board of directors of FHFA and they determine what the appropriate compensation is for the executives of the company," Williams said.

Lawmakers debated with Williams and DeMarco over whether it was "reasonable" for taxpayers to foot more than $24 million in legal bills for former chief executive Franklin Raines and two other former Fannie executives accused of accounting misdeeds.

Asked by Reuters if his own compensation was "reasonable," Williams replied: "I leave it to them (FHFA) to determine what is appropriate compensation."

DeMarco has consistently said his agency aims to protect taxpayers by making sure the firms have executives with the technical expertise to oversee more than $5 trillion in assets traded in global financial markets.

"We need, in the conservatorship, there to be talented, capable professionals that continue to operate the day-to-day operations of these companies," DeMarco told the panel.

A Freddie Mac spokesman declined comment.

(Reporting by Corbett B. Daly; Editing by Gary Hill)