Demonstrating again that politics make strange bedfellows -- especially when executive compensation is involved, and in a rare show of bipartisanship, a unanimous U.S. Senate voted to suspend new compensation arrangements for the CEOs of Fannie Mae and Freddie Mac, the government-controlled mortgage finance companies. The bill, which was sponsored by Republican David Vitter (R-LA) and Democrat Elizabeth Warren (D-MA), offered a powerful rebuke of the planned pay increase for the two company's CEOs which will reinstate a $600,000 pay cap in lieu of a planned increase to $4 million. The pay raises had been approved this year by the Federal Housing Finance Administration, which oversees the agencies, which viewed the increases as necessary to better align pay structures with private sector compensation arrangements. However, given that the Federal government had to bail out the agencies in 2008, the argument fell on deaf ears of Congressional Republicans and the White House. In a press release, Senator Vitter stated that "[g]iving massive taxpayer-funded pay raises to Fannie Mae and Freddie Mac isn’t just out of touch – it’s downright offensive." Bloomberg reported this week that “the mortgage-finance firms have returned to the Treasury Department far more than they received in federal aid to stay afloat during the crisis.”
Similar legislation, the “Equity in Government Compensation Act,” H.R. 2243, by Rep. Ed Royce (R-CA), passed the House Financial Services Committee by a vote of 57-1 in July. If the House passes the bill, it would be signed into law by President Obama.