WASHINGTON--(BUSINESS WIRE)--Today, Citizens Against Government Waste (CAGW) slammed executives at the nation’s two largest government-sponsored enterprises, Fannie Mae and Freddie Mac, for pocketing enormous salaries while the two enterprises flounder under government conservatorship. The GSEs collapsed in September 2008 and taxpayers have been forced to pump $153 billion into them to keep them solvent.
The Treasury Department’s Federal Housing Finance Agency (FHFA) is the regulatory body which oversees the GSEs in conservatorship. FHFA’s Office of Inspector General’s report reviewed FHFA’s oversight of the GSEs’ executive compensation packages and found significant weaknesses and excesses. The IG report indicates that in 2009 and 2010, the GSEs’ two CEOs earned a combined salary of $17 million (with options to take home $24 million). The top six executives at both entities (including CEOs, Chief Operations Officers, and Chief Financial officers) were paid a combined total of $35 million, well above executive salaries at the Federal Housing Administration and Ginnie Mae.
The IG report points out that, in 2009 at Fannie Mae, one of the performance benchmarks used to determine salaries was whether Fannie Mae executives would be able to sell a certain level of mortgage-backed securities (MBS). Yet, the Federal Reserve was already planning on purchasing large amounts of Fannie’s MBS as a part of the company’s bailout package, hardly something that should have counted as a performance measure. FHFA’s OIG also recommended that FHFA establish written criteria for their performance goals and robust techniques for measuring those successes to help determine appropriate compensation levels.
“Congress must unwind the GSEs as quickly as is feasible and get the U.S. Treasury and taxpayers out from under this burden,” said CAGW President Tom Schatz. “After more than two years in conservatorship and having soaked the taxpayers for $153 billion, GSE management is still overpaying their executives. In their halcyon days, Fannie and Freddie were notorious for their lavish executive salaries and perks. Old habits die hard; but taxpayers should no longer be forced to foot the bill for GSEs executives’ swanky lifestyles,” concluded Schatz.
Citizens Against Government Waste is a nonpartisan, nonprofit organization dedicated to eliminating waste, fraud, mismanagement and abuse in government. The Spending Cut of the Week calls attention to a federal program that is wasteful or duplicative.