Reflecting still-simmering anger on Capitol Hill about the collapse of U.S. housing markets, a congressional panel Tuesday voted to suspend lucrative executive bonuses and to cap the salaries of top officials at bailed-out mortgage giants Fannie Mae and Freddie Mac.
The House Financial Services Committee on Tuesday overwhelmingly approved a bill to slash top executive salaries at the two government-backed companies — the two largest beneficiaries of a federal bailout — to just more than $200,000 annually. The bill also would eliminate bonuses that sometimes surpass $1 million and would place employees on a federal pay scale.
A recent federal report said the two companies will require a bailout of some $124 billion through 2014.
“The taxpayer-funded bailout of Fannie Mae and Freddie Mac is the biggest bailout in history,” said committee Chairman Spencer Bachus, Alabama Republican. “Adding insult to injury, the top executives of these failed companies receive multimillion-dollar pay packages, all courtesy of American taxpayers who are having a difficult time making ends meet these days.
The Equity in Government Compensation Act, HR-1221, passed 52-4 and will go to the House floor for a vote. The Senate is working on similar measures.
The bipartisan movement is fueled by congressional outrage that these executives who failed to do their jobs would take so much money from taxpayers.
Rep. Maxine Waters, California Democrat, called it a “slap in the face.”
“I think that showed an insensitivity that changed my mind,” added ranking committee member Rep. Barney Frank, Massachusetts Democrat, who originally opposed the bill but now is supporting it.
These losses haven’t stopped them from awarding big paychecks to themselves. Top executives have received more than $95 million since the bailout.
The leaders of each company are cashing in. Fannie Mae´s CEO received $5.6 million, and Freddie Mac´s CEO received $5.4 million. But the Equity in Government Compensation Act would have ensured that they could only have earned $218,978 this year.
In bonuses alone, these companies plan to award $12.8 million to top executives.
“I think these bonuses just represent a failed grasp of reality on the part of the institutions,” Rep. Edward R. Royce, California Republican, said. “It´s a sad day when common sense must be applied through legislation.”