Hoeven, Bipartisan Group of Senators Challenge Fannie Mae, Freddie Mac Executive Bonuses
WASHINGTON – Senator John Hoeven and a bipartisan group of 60 senators, 35 Republicans and 25 Democrats, today challenged the Federal Housing Finance Agency’s (FHFA) approval of more than $12 million in bonuses for ten Fannie Mae and Freddie Mac executives. Fannie Mae and Freddie Mac, government-sponsored enterprises (GSE), have received nearly $141 billion in taxpayer-provided bailout funding, but marked losses of approximately $235 billion since the beginning of 2009. Freddie Mac lost $4.4 billion in the third quarter of 2011, and will request an additional $6 billion in federal funding to offset this year’s losses.
In a letter to FHFA Acting Director Edward Demarco the senators asked for “substantial changes to the executive compensation policies to more accurately reflect the public mission of your agency and the fiscal reality facing the GSEs and the federal government.”
“As American families are tightening their belts in light of the struggling economy, the federal government must take steps to ensure that the conservatorship is receiving proper oversight,” the senators wrote. “The wasteful nature of these bonuses, however, is a step in the wrong direction. The idea that Fannie Mae and Freddie Mac, which rely on taxpayer funding to stay afloat, must offer excessive bonuses to its executives to attract effective management strains credulity.”
Hoeven and the senators also asked for an update on steps that have been taken to address concerns raised by the FHFA Inspector General’s March 2011 report, “Evaluation of Federal Housing Finance Agency’s Oversight of Fannie Mae’s and Freddie Mac’s Executive Compensation Programs.” The report cited a “lack of standardized evaluation criteria, documentation of management procedures and internal controls” at the agency.
The Inspector General’s report found that the FHFA has not reviewed issues necessary to determine whether the approved compensation packages are reasonable, that the agency lacks key controls necessary to monitor ongoing compensation decisions, and that it doesn’t provide sufficient transparency to the public about the executive compensation programs.
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