Tester hammers housing exec on multi-million dollar compensation
Senator cosponsors bipartisan measure to prevent Fannie Mae and Freddie Mac bonuses
(U.S. SENATE) – After cosponsoring a bipartisan measure to prevent taxpayer-funded bonuses for Fannie Mae and Freddie Mac, Senator Jon Tester pulled no punches questioning the head of the Federal Housing Finance Authority about “excessive” compensation recently awarded to executives of the two government-sponsored housing organizations.
During a Senate Banking Committee hearing, Tester today said that Montanans struggling to pay their bills cannot understand why executives backstopped by taxpayers are receiving multi-million dollar salaries – as well as “performance” bonuses – in the midst of a struggling economy.
Tester highlighted the fact that the CEO of Fannie Mae—a government-sponsored organization—made $12.2 million in 2009 and 2010. The Federal Housing Finance Authority approves compensation for Fannie Mae and Freddie Mac executives.
“Did it ever even cross your mind when dealing with these compensation packages to say, ‘Hey, this is a tough year. The housing market’s in a bad place. The taxpayers are on the hook. Let’s revisit this, use some common sense on the executive pay this year?’” Tester asked Acting Finance Authority Director Edward DeMarco. “Wouldn’t it have been more prudent to say, ‘Let’s take a step back; we’re dealing with the worst economic problems since the Great Depression?’”
DeMarco agreed with Tester that compensation was large, but stated that Fannie Mae and Freddie Mac must compete with the private sector and that executives manage complex institutions.
Tester replied that when the nation’s economy is struggling, it makes perfect sense to “dial back” executive compensation. He also noted that insolvent government-sponsored organizations shouldn’t be compared to profitable, private companies.
“I would just say this: $12.2 million is a pile of money,” Tester said. “And when we’re dealing with folks in the State of Montana that are having a hard time paying their electric bills, or paying for their prescription drugs, or making their books balance at the end of the month—and they see these kind of compensations come down, utilizing taxpayer dollars—there’s a reason people are protesting on the streets.”
DeMarco said he understood and told Tester he will “continue to focus on this issue.”
Tester noted that some Senators “want to see Fannie Mae and Freddie Mac done away with, so that there is no backstop on housing,” adding that the controversy over executive compensation “doesn’t help” Fannie Mae or Freddie Mac, which were created to guarantee 30-year mortgages.
Earlier today, Tester cosponsored bipartisan legislation to prevent bonuses while both government-sponsored organizations are under conservatorship. Tester supported putting both Fannie Mae and Freddie Mac in conservatorship in 2008 in order to stabilize the housing market and to protect their role in guaranteeing home ownership for American families.
The Senate Banking Committee called today’s hearing at Tester’s request after reports of the “performance” bonuses came to light.
Tester is a strong advocate for accountability and transparency in government. His recent demand for detailed information about the bonuses for government executives is online HERE.
Video of Tester’s hearing is available online HERE.