* House committee to vote on bill to suspend compensation
* Senators seek to block bonuses for government-held cos
* Pay packages were approved by Fannie, Freddie regulator
By Margaret Chadbourn
WASHINGTON, Nov 9 U.S. lawmakers on Wednesday
ramped up efforts to block multimillion-dollar bonuses for
executives at Fannie Mae and Freddie Mac ,
the government-controlled mortgage finance firms that just this
month have sought billions more in taxpayer-funded assistance.
Lawmakers in both chambers and in both parties have
expressed shock at revelations the firms, which have been
already propped up with about $169 billion in taxpayer aid,
were paying out $12.79 million in bonuses for 10 executives.
House Financial Services Committee Chairman Spencer Bachus,
an Alabama Republican, said his committee would meet on Nov. 15
to vote on a bill to suspend compensation packages for
executives at the two companies.
Under the House bill, which was approved by a subcommittee
on a bipartisan vote in April, other employees at Fannie Mae
and Freddie Mac would have their salaries tied to government
Meanwhile, a bipartisan group of senators said they will
file a similar measure in their chamber this week.
Republican Senator John McCain of Arizona and Democratic
Senator Jay Rockefeller of West Virginia plan to introduce an
amendment backed by seven of their colleagues that prohibits
top employees at the firms from receiving lucrative bonuses as
long as the companies remain in conservatorship.
"It's outrageous that Fannie Mae and Freddie Mac executives
would expect multimillion-dollar bonuses after $170 billion in
taxpayer bailouts and one in every four homeowners' mortgage
underwater," McCain said in a statement.
Fannie Mae and Freddie Mac, the two biggest sources of
funding for U.S. mortgages, were taken over by the government
in 2008 as soured home loans threatened insolvency. Given the
central role they play in the U.S. mortgage system, the
Treasury offered them an unlimited credit line through next
year to protect that already battered housing sector.
Both Fannie and Freddie in recent days reported substantial
third-quarter losses and said they would seek more money from
the federal government. Fannie, the biggest source of money for
U.S. home loans, on Tuesday reported a quarterly loss of $5.1
billion and said it needed a further $7.8 billion in federal
aid to stay afloat.
Freddie Mac last week reported its worst quarterly loss in
more than a year, at $2.5 billion, and said it needed to borrow
another $6 billion from the federal government.
The pay packages approved by their regulator, the Federal
Housing Finance Agency, have followed the same patterns over
the last few years. The bulk of the pay is set by the boards of
Fannie Mae and Freddie Mac and approved by FHFA in consultation
with the Treasury Department.
Nonetheless, the pay packages have drawn fierce criticism.
Executive pay for 2012 has not yet been determined.
The acting director of the FHFA, Edward DeMarco, has been
summoned to appear on Capitol Hill next Tuesday and Wednesday
to answer questions from lawmakers about the bonuses. The
Senate Banking Committee will hold an FHFA oversight hearing on
Tuesday, followed by a House Government Oversight Committee
hearing on Wednesday
"This is unacceptable and must change immediately,"
Rockefeller said in a statement. "It's inexcusable that anyone
would think it's OK to hand out these bonuses."
A bipartisan group of 60 senators sent a letter to DeMarco
and Treasury Secretary Timothy Geithner on Friday demanding
changes to the executive compensation practices.
The letter, spearheaded by Republican Senator John Thune of
South Dakota and Democratic Senator Mark Begich of Alaska,
called the reported bonuses "wasteful" and asked that they be
brought into line with the "fiscal reality" facing the two