Top executives at Fannie Mae and Freddie Mac were paid more than $35 million in the past two years while the two bailed-out mortgage finance giants were receiving $153 billion in support from taxpayers.
The huge payouts came to light in a new report published on Thursday by the Federal Housing Finance Agency’s Office of Inspector General.
“Although the Enterprises [Fannie Mae and Freddie Mac] have lost billions of dollars and continue to depend upon federal support to remain in business,” the report states, “their senior executives continue to receive multi-million dollar salaries.”
At Fannie Mae (Federal National Mortgage Association), its chief executive officer received $9.3 million in total compensation in 2009 and 2010, the report reveals. The CEO is Michael J. Williams, who joined the company in 1991.
At Freddie Mac (Federal Home Loan Mortgage Association), CEO Charles E. Haldeman Jr., former head of Putnam Investments, made $7.8 million in the two years since the company was taken over by the federal government.
Fannie Mae’s chief financial officer made $4.6 million, and its chief accounting officer/general counsel received $4.5 million.
At Freddie Mac, the CFO made $3.9 million, and the general counsel/secretary received $5.1 million.
In all, the top six executives made $35.4 million. Meanwhile, total losses at the two companies could reach $363 billion through 2013, according to government estimates.
The pay was approved by the Federal Housing Finance Agency, which is charged with conserving the assets of Fannie and Freddie on behalf of taxpayers, The New York Times noted on Friday.
The FHFA “has a responsibility to Congress and taxpayers to efficiently, consistently, and reliably ensure that the compensation paid to Fannie Mae’s and Freddie Mac’s senior executives is reasonable,” said Steve A. Linick, the newly appointed inspector general of the agency.
“This is especially true when you realize that the U.S. Treasury has invested close to $154 billion to stabilize Fannie Mae and Freddie Mac,” and they “are spending tens of millions of dollars for executive compensation.”
The report pointed to a “lack of standardized evaluation criteria, documentation of management procedures and internal controls” at the oversight agency.
It also noted that the executives were paid far more than their counterparts at other federal housing agencies. The top executive at Ginnie Mae, for example, received an annual salary of less than $200,000.
The inspector general recommended that the FHFA “should establish written criteria and procedures for reviewing performance data, and conduct independent verification and testing of the basis for executive compensation levels. These factors may warrant lower compensation for Enterprise executives.
“Also, to improve transparency, FHFA should post on its website information about executive compensation.”
Brian Foley, a compensation consultant, told the Times that a “fair portion” of the executives’ compensation is paid “without regard to performance.
“If anybody needs to have good long-term performance, isn’t it Fannie Mae and Freddie Mac?”
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