Tester blasts bonuses, calls for Congressional investigation
Senator demands detailed information about bonuses for government housing execs
(U.S. SENATE) – Senator Jon Tester is demanding a Congressional investigation into multimillion-dollar “performance” bonuses reportedly awarded to executives of the nation’s government-sponsored housing organizations.
News reports indicate that the Federal Housing Finance Agency approved bonuses totaling nearly $13 million for top executives at Fannie Mae and Freddie Mac. Tester in 2008 supported putting both government-sponsored organizations in conservatorship in order to protect their role in guaranteeing home ownership for American families.
In a letter to the head of the agency, Tester blasted the decision to award bonuses, calling it a “violation of trust with the taxpayers of this country.”
“Everyone involved ought to be concerned as the rest of us try to understand why these bonuses were awarded and find a solution to prevent this from happening again.,” said Tester, a member of the Senate Banking Committee.
In his letter, Tester demanded detailed information about the approval of the bonuses, when they were paid, and how they were justified. Tester also demanded that all information be posted on the agency’s website, saying “taxpayers have a right to know exactly how their money is being used.”
“To the Montanans that I represent and all Americans, this is simply an unacceptable use of resources,” Tester wrote to the director of the agency. “America’s taxpayers deserve a straightforward explanation as to whether this compensation can be returned and used instead to pay down the deficit and how you will ensure that such taxpayer funds will be protected the future.”
Tester is a strong advocate for accountability and transparency in government. He recently questioned why the head of the U.S. Postal Service made $800,000 in annual pay and benefits while local Montana positions are eliminated and rural post offices are threatened with closure.
Tester’s letter to the director of the Federal Housing Finance Agency appears below.
The Honorable Edward J. DeMarco
Federal Housing Finance Agency
1700 G Street, NW, 4th Floor
Washington, DC 20552
Acting Director DeMarco:
I was troubled by news reports that the Federal Housing Finance Agency (FHFA) had approved bonuses totaling $12.79 million for executives at Fannie Mae and Freddie Mac. The fact that these bonuses were reportedly provided as rewards for meeting performance targets raises serious questions about the FHFA’s role as conservator of these Enterprises and as protector of taxpayer investments.
If true, the decision to award these bonuses is a failure of your role in protecting taxpayer dollars, especially with too many Americans still struggling with a difficult economy and real estate market. It is a violation of trust with the taxpayers of this country, and everyone involved ought to be concerned as the rest of us try to understand why these bonuses were awarded and find a solution to prevent this from happening again.
You have often cited the FHFA’s “preserve and conserve” mandate and have acknowledged that “the Enterprises operate today only with the support of taxpayers” which makes it impossible to comprehend how the approval of these bonuses fits this mandate. I’d like a detailed account in writing from you regarding who authorized the compensation packages in question, when they were approved and paid, what performance metrics were used to justify these decisions as well as an explanation as to how the approval of these compensation packages is consistent with protecting taxpayers. I also expect you to provide assurances that taxpayer funds will be better protected in the future.
A March 2011 FHFA Inspector General Report suggested that your Agency lacks adequate processes to manage and track executive compensation for senior officers. The report cites that in reviewing and approving executive compensations packages, the FHFA failed to consider “the impact that federal financial support has on corporate executive performance and the compensation paid to senior officials.” Furthermore, the report states that the FHFA lacks key controls needed to monitor executive compensation decisions and any requirement that Agency staff verify and test the means by which compensation levels are calculated. Please provide me with an update on the steps FHFA is taking to improve its tracking of executive compensation.
The report also revealed that despite being in conservatorship and the recipient of significant taxpayer support, the Agency fails to provide sufficient transparency. Given that the Enterprises remain in conservatorship, this information should be available to taxpayers on the website of the FHFA or the Enterprises rather than just through public securities filings as taxpayers have a right to know exactly how money is being used. I strongly encourage the FHFA to make this information more accessible to taxpayers and to post it directly on the Agency’s website and look forward to hearing from you about how the FHFA has addressed the deficiencies outlined in the March 2011 FHFA Report.
To the Montanans that I represent and all Americans, this is simply an unacceptable use of resources for Enterprises in government conservatorship. America’s taxpayers deserve a straightforward explanation as to whether this compensation can be returned and used instead to pay down the deficit and how you will ensure that such taxpayer funds will be protected the future. I look forward to your prompt explanation. My constituents and all Americans deserve nothing less.