Equity in Government Compensation Act of 2015

Floor Speech

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Mr. HILL. I thank the chairman and appreciate his work on bringing this important bill to the floor, and I thank my friend, Chairman Royce, from California, for sponsoring the House version of this measure, H.R. 2243, and I stand in full support with the Senate version tonight, S. 2036.

Mr. Speaker, since being placed in voluntary conservatorship, the Federal Housing Finance Agency, in my judgment, has really abdicated their responsibility with the Treasury in acting truly as a conservator. Fannie Mae and Freddie Mac have received almost $200 billion in government assistance, by far our costliest taxpayer bailout resulting from the financial crisis.

This is also not the first time that the GSEs, the government-sponsored enterprises, were placed in conservatorship and that the FHFA has been scrutinized for awarding increased pay to the CEOs. That has been previously discussed in detail here. And largely in response to that criticism of FHFA's failure to properly administer these entities in conservatorship, the GSE's CEO compensation was capped in 2012 at $600,000. Now, miraculously, they are being approved for millions in pay increases despite the fact that these entities are still, Mr. Speaker, in conservatorship.

It is for that reason, Mr. Speaker, on July 30 that I wrote Mel Watt, the Director of the Federal Housing Finance Agency, and awarded him my monthly Golden Fleece Award for poor stewardship of taxpayer resources. I include my letter to Mr. Watt in the Record.

July 30, 2015.
Hon. MEL WATT,
Director, Federal Housing Finance Agency,
Washington, DC.

DEAR DIRECTOR WATT: I write today to inform you of my recent Golden Fleece Award to the Federal Housing Finance Agency (FHFA) for its approval of approximately $4 million in raises for each of the CEOs of the government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.

Since being placed in voluntary conservatorship by FHFA in 2008, Fannie Mae and Freddie Mac have received almost $200 billion in government assistance, by far the costliest taxpayer bailout resulting from the financial crisis. This is also not the first time since the GSEs were placed in conservatorship that FHFA has been scrutinized for awarding increased pay to their CEOs. In 2009, FHFA approved $42 million in pay packages to the GSEs' top 12 executives. In 2011, FHFA approved $12.79 million in bonus pay for some of the top executives at Fannie and Freddie. Largely in response to this criticism, the GSEs' CEO compensation was capped in 2012 at $600,000.

Both the U.S. Treasury Department and the White House have also opposed FHFA's decision to raise Fannie and Freddie CEOs' salaries. Specifically, Treasury recommended that ``existing limits on compensation continue given the taxpayers' ongoing backstop of both enterprises,'' while White House Press Secretary Josh Earnest stated that ``the reason that these entities are different than some of the financial entities that you see in the private sector is they benefit significantly from a backstop that's provided by that taxpayers. And because of that taxpayer assistance, I think it is entirely legitimate for the executives of those institutions to be subject to compensation limits.'' Additionally, Treasury Secretary Jack Lew stated in his June 17, 2015 testimony before the House Financial Services Committee that ``the risk is being borne by taxpayers on an ongoing basis and the conservatorship is not over.'' Despite this opposition, FHFA has once again raised these salaries to $4 million.

While the recovery of the housing market has helped Fannie and Freddie repay the federal government, and I fully support the private sector compensating its executives as it sees fit, Fannie and Freddie still have taxpayer backing, are not private companies, and should not be compensated as such.

While Congress still must work to enact necessary reforms to our GSEs, FHFA must be accountable and responsible for ensuring the protection of our hardworking taxpayers' dollars. I am committed to eradicating this type of inefficient and ineffective policy and regulation by our federal agencies, and today's Golden Fleece highlights the clear lack of judgement by FHFA in approving these raises. I invite your immediate attention to this issue, and please keep me apprised of your efforts at improvement.

Sincerely,

French Hill,
Member of Congress.

Mr. HILL. Treasury Secretary Jack Lew has given his opposition, the White House has provided a statement of opposition, and yet Mel Watt continues. It is for these reasons that I fully support the effort of Mr. Royce and Mr. Vitter in capping the compensation until these entities are returned to financial health.

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