Dear Representative Royce,
On behalf of the members of National Taxpayers Union (NTU), I write in strong support of H.R. 2243, the “Equity in Government Compensation Act of 2015.” This legislation would overturn a recent ill-conceived decision made by the Federal Housing Finance Agency (FHFA) to approve dramatic salary increases for the CEOs of Fannie Mae and Freddie Mac, despite the fact that both institutions continue to pose substantial risk to American taxpayers. Simply put, FHFA’s decision would hasten the return to the pre-Great Recession era of privatized profits and public losses with the Government Sponsored Enterprises (GSEs).
The bill was introduced in early May in response to FHFA Director Mel Watt asking Freddie Mac to submit a proposal to increase its CEO compensation up to $7.26 million annually. Now, taxpayers’ worst fears have been confirmed. In recent filings with the Securities and Exchange Commission (SEC), it was revealed that FHFA approved target compensation packages for the CEOs of Fannie and Freddie of $4 million annually beginning July 1, notwithstanding opposition from the White House and the Treasury Department. FHFA’s decision is indefensible given the risk both Fannie and Freddie pose to taxpayers.
Fortunately, the “Equity in Government Compensation Act of 2015” would reverse FHFA’s irresponsible decision by ensuring that Fannie and Freddie executives are not paid more than the highest earning employee at FHFA, which is approximately $250,000 a year. Likewise, the bill places non-executive level GSE employees on the General Schedule pay scale. As an example, GS-15 Step 10 employees, the highest rank, make $132,122 per year. This is a reasonable compensation in light of Fannie and Freddie’s continued support from taxpayers.
FHFA’s reckless action is a stark reminder that Fannie and Freddie should be wound down, which would protect taxpayers and jumpstart a nascent secondary mortgage market. Nevertheless, your legislation is an important opportunity to begin to rein in Fannie and Freddie’s failed model of privatized gains and public losses. NTU is pleased to endorse the “Equity in Government Compensation Act of 2015” and urges all Representatives to co-sponsor the legislation and work toward swift enactment.
Sincerely,
Clark PackardPolicy and Government Affairs Manager