[Congressional Record Volume 158, Number 16 (Wednesday, February 1, 2012)]
[Senate]
[Pages S262-S263]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]

      By Mr. BEGICH (for himself, Mr. Thune, Mr. Tester, Mr. Blunt, 
        Mrs. McCaskill, Mr. Grassley, Mr. Hoeven, Mr. Brown of 
        Massachusetts, Mr. Baucus, Mr. Enzi, Mr. Johanns, Mr. Casey, 
        Mr. McCain, Mr. DeMint, Mr. Roberts, Mr. Johnson of Wisconsin, 
        Mr. Burr, Mr. Risch,

[[Page S263]]

        Mr. Toomey, Mr. Paul, Mr. Coburn, and Mrs. Shaheen):
  S. 2054. A bill to suspend the current compensation packages for the 
senior executives at Fannie Mae and Freddie Mac, and to establish 
compensation for all employees of such entities in accordance with 
rates of pay for other Federal financial regulatory agencies; to the 
Committee on Banking, Housing, and Urban Affairs.
  Mr. BEGICH. The STOP Act is the Stop the Outrageous Pay for Fannie 
and Freddie Act, the bill Senator Thune and I introduced this morning. 
Our bill comes in the aftermath of a series of events that began last 
November when reports surfaced that the Federal Housing Finance Agency, 
FHFA, approved nearly $13 million in bonuses for 10 executives, that 
enterprise that supervises Fannie Mae and Freddie Mac.
  In response, Senator Thune and I spearheaded a bipartisan letter, 
signed by 58 other Senators to the FHFA, Acting Director Edward DeMarco 
and the Treasury Secretary, Timothy Geithner. We expressed outrage over 
these pay levels, and I believe our message was heard. Almost 3 months 
after our letter was sent, the pressure was clearly on. Government 
regulators were cutting the pay of the executives they hired to replace 
the departing heads of Fannie Mae and Freddie Mac.
  Also, in response to our efforts, House Financial Services Committee 
chairman Spencer Bachus introduced legislation suspending these bonuses 
and limiting future compensation packages for Fannie and Freddie 
employees. In November, his committee passed the bill by a vote of 52 
to 4.
  The Begich-Thune STOP Act is a commonsense approach to address the 
outrageous Wall Street-like bonuses and pay that have occurred at 
Fannie Mae and Freddie Mac for far too long and which continue to occur 
to this day, even after billions in taxpayer bailouts. I wish to make 
it clear, this bill will not change the life much for nonexecutives. 
The pay structure for the everyday, hard-working Americans at Fannie 
and Freddie will stay almost as it is today. They are not the target. 
However, it will change the life for executives such as Peter Federico, 
who earned $2.5 million in 2010 and had a target compensation of $2.6 
million in 2011. This was at the same time he was gambling that 
struggling homeowners would be unable to refinance their high-interest 
mortgages to record-low interest rates. This is unacceptable, 
unethical, and I know this body will not tolerate it.
  Here is how our legislation works: It simply places Fannie Mae and 
Freddie Mac employees on the same pay scale as the financial regulators 
at the FDIC and SEC, a pay scale long established in Federal law. It is 
a pay scale called the Financial Institutions Reform, Recovery, and 
Enforcement Act. This is the pay scale we are basing our legislation 
on.
  Under our approach, Fannie Mae and Freddie Mac employees cannot be 
paid more than employees of other Federal financial regulatory 
agencies. Right now the highest paid person under this pay scale makes 
$275,000 a year. This is our pay cap. While this is a lot of money, it 
is not any more than what the cops, as we call them, on the financial 
beat make to ensure that ordinary Americans are protected and get a 
fair shake.
  Our legislation also stops any future bonus payments that go beyond 
the cap established in this legislation. Also, any bonuses that have 
been granted but have not yet been paid will be stopped. Any money in 
excess of the cap we have established will be used to pay down the 
national debt. Finally, our bill requires that Fannie and Freddie 
salaries be made available to Congress and the public through the 
Senate Banking Committee and the House Financial Services Committee.
  I am aware of the criticism of this bill and I would like to address 
them. Senator McCain offered an amendment yesterday that freezes bonus 
pay. I support Senator McCain in his efforts. In fact, I cosponsored 
this very same amendment the last time it was offered. Many of my 
colleagues have asked me why our bill does not freeze bonus pay. Our 
bill is based on a broad-based approach that looks at the entire pay 
structure within Fannie Mae and Freddie Mac.
  While it tackles the huge bonuses and pay policies for executives at 
Fannie and Freddie, we believe the everyday employees earning modest 
salaries should be occasionally rewarded for outstanding work so it 
ensures they get the small bonuses that may be effective for them. But 
to clarify, these would be modest bonuses that would never exceed the 
pay cap established in this bill.
  I have also heard the concern that Fannie and Freddie will not be 
able to attract the right kind of talent if they cannot pay people 
multimillion-dollar compensation packages. I hate to state the obvious: 
Fannie and Freddie have proven the opposite. They paid executives 
outrageous compensation and yet still failed by Alaskans and all 
Americans. They needed hundreds of billions of dollars in taxpayer 
bailouts and still ended up in conservatorship. This sends an 
unsettling message to millions of hard-working people who are 
struggling to make ends meet. They have taken Alaskans' tax dollars in 
the form of bailouts. Yet when my constituents in Anchorage or Kotzebue 
or Fairbanks or Juneau needed help to avoid foreclosure or refinance 
their loans, Fannie and Freddie often turned their backs.
  Finally, I have this response to people who say Fannie and Freddie 
executives need to earn millions: Whatever happened to the concept of 
public service or to the notion that it is an honorable calling to work 
on behalf of your friends and your neighbors? There are lots of 
dedicated, hard-working professionals at Fannie and Freddie who believe 
in that notion, and they are doing their absolute best to help American 
families to afford the American dream of owning and keeping their 
homes.
  The Begich-Thune bill makes sure this hard work continues and that 
their bosses at Fannie and Freddie come to work every day not with 
visions of dollar signs but instead with a clear eye of doing what is 
right for all Americans.
  I urge all Members to support this commonsense bipartisan bill. 
Senators Tester, McCaskill, Baucus, Blunt, Grassley, Hoeven, Enzi, and 
Scott Brown have already joined Senator Thune and me as original 
cosponsors. I wish to thank them for their support.
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