[Congressional Record Volume 161, Number 168 (Monday, November 16, 2015)]
[House]
[Pages H8221-H8223]
From the Congressional Record Online through the Government Publishing Office [www.gpo.gov]
EQUITY IN GOVERNMENT COMPENSATION ACT OF 2015
Mr. HENSARLING. Mr. Speaker, I move to suspend the rules and pass the
bill (S. 2036) to suspend the current compensation packages for the
chief executive officers of Fannie Mae and Freddie Mac, and for other
purposes.
The Clerk read the title of the bill.
The text of the bill is as follows:
S. 2036
Be it enacted by the Senate and House of Representatives of
the United States of America in Congress assembled,
SECTION 1. SHORT TITLE.
This Act may be cited as the ``Equity in Government
Compensation Act of 2015''.
SEC. 2. DEFINITIONS.
In this Act:
(1) Director.--The term ``Director'' means the Director of
the Federal Housing Finance Agency.
(2) Enterprise.--The term ``enterprise'' means--
(A) the Federal National Mortgage Association and any
affiliate thereof; and
(B) the Federal Home Loan Mortgage Corporation and any
affiliate thereof.
SEC. 3. REASONABLE PAY FOR CHIEF EXECUTIVE OFFICERS.
(a) Suspension of Current Compensation Package and
Limitation.--The Director shall suspend the compensation
packages approved for 2015 for the chief executive officers
of each enterprise and, in lieu of such
[[Page H8222]]
packages, subject to the limitation under subsection (b),
establish the compensation and benefits for each such chief
executive officer at the same level in effect for such
officer as of January 1, 2015, and such compensation and
benefits may not thereafter be increased.
(b) Limitation on Bonuses.--Subsection (a) shall not be
construed to affect the applicability of section 16 of the
STOCK Act (12 U.S.C. 4518a) to the chief executive officer of
each enterprise.
(c) Applicability.--Subsection (a) shall only apply to a
chief executive officer of an enterprise if the enterprise is
in conservatorship or receivership pursuant to section 1367
of the Federal Housing Enterprises Financial Safety and
Soundness Act of 1992 (12 U.S.C. 4617).
SEC. 4. FANNIE AND FREDDIE CHIEF EXECUTIVE OFFICERS NOT
FEDERAL EMPLOYEES.
Any chief executive officer affected by any provision under
section 3 shall not be considered a Federal employee.
The SPEAKER pro tempore. Pursuant to the rule, the gentleman from
Texas (Mr. Hensarling) and the gentlewoman from Wisconsin (Ms. Moore)
each will control 20 minutes.
The Chair recognizes the gentleman from Texas.
General Leave
Mr. HENSARLING. Mr. Speaker, I ask unanimous consent that all Members
may have 5 legislative days within which to revise and extend their
remarks and include extraneous material on the bill.
The SPEAKER pro tempore. Is there objection to the request of the
gentleman from Texas?
There was no objection.
Mr. HENSARLING. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I rise in support of S. 2036, the Equity in Government
Compensation Act. I would like to thank the gentleman from California
(Mr. Royce) for his diligent work to craft the language which is the
basis for this bill.
Mr. Speaker, S. 2036 will simply reinstate the limits on the salaries
of the CEOs at the government-sponsored enterprises Fannie Mae and
Freddie Mac that were eliminated earlier this year.
Since entering a Federal conservatorship in September of 2008, Fannie
Mae and Freddie Mac have received nearly $187.5 billion in taxpayer
money making the GSE conservatorship by far the costliest of all
taxpayer bailouts due to the financial crisis.
This is not the first time there has been public outcry over the
compensation of Fannie Mae's and Freddie Mac's CEOs during their
conservatorship. Following several years of substantial salaries and
bonuses, congressional and public concern caused then-FHFA Director Ed
DeMarco to cap the compensation for the GSE's chief executives at
$600,000. Earlier this year, now-FHFA Director Mel Watt repealed those
salary caps allowing the GSEs to raise their CEO pay to as much as the
25th percentile of comparable companies. This ultimately allowed both
GSEs to increase their CEO pay from the previous cap of $600,000 to $4
million annually, all at the expense of the American taxpayer who is
still backing these institutions.
Director Watt's decision to eliminate the salary caps has provoked
disapproval not only from Members of Congress but the administration as
well. Notably, both the Treasury Department and the White House opposed
FHFA's decision to raise the GSE's CEO pay. Treasury recommended that
``existing limits on compensation continue given the taxpayers' ongoing
backstop of both enterprises.''
Additionally, White House Press Secretary Josh Earnest expressed the
White House's opposition, adding that ``the reason that these entities
are different than some of the financial entities that you see in the
private sector is they benefit significantly from a backstop that is
provided by the taxpayers. And because of that taxpayer assistance, I
think it is entirely legitimate for the executives of those
institutions to be subject to compensation limits.''
While some claim that the GSEs should be able to pay salaries
commensurate with the private sector, these arguments failed to
consider that the GSEs have yet to repay their debt to the U.S.
taxpayers for their unprecedented bailouts. The 2015 New York Federal
Reserve Bank Staff Report stated that taxpayers are entitled to ``a
substantial risk premium,'' and the government has never collected the
commitment fee taxpayers are owed.
Treasury Secretary Jack Lew concurred in his June 17, 2015, testimony
before the Financial Services Committee, which I chair, that ``the risk
is being borne by taxpayers on an ongoing basis, and the
conservatorship is not over.''
Mr. Speaker, while Congress continues to debate the best framework
for comprehensive housing finance reform, enactment of S. 2036 is a
positive step forward based on a simple principle: What people do with
their money is their business; what they do with taxpayer money is our
business.
Mr. Speaker, I ask that my colleagues join me in supporting S. 2036.
Mr. Speaker, I reserve the balance of my time.
Congress of the United States, Committee on Oversight and
Government Reform,
Washington, DC, November 16, 2015.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services.
Dear Mr. Chairman: I write concerning H.R. 2243, the Equity
in Government Compensation Act of 2015. As you know, the
Committee on Financial Services received an original referral
and the Committee on Oversight and Government Reform a
secondary referral when the bill was introduced on May 8,
2015. I recognize and appreciate your desire to bring this
legislation before the House of Representatives in an
expeditious manner, and accordingly, the Committee on
Oversight and Government Reform will forego action on the
bill.
The Committee takes this action with our mutual
understanding that by foregoing consideration of H.R. 2243 at
this time, we do not waive any jurisdiction over the subject
matter contained in this or similar legislation. Further, I
request your support for the appointment of conferees from
the Committee on Oversight and Government Reform during any
House-Senate conference convened on this or related
legislation.
As you know, I introduced H.R. 1577, the Fannie Mae and
Freddie Mac Transparency Act of 2015, which makes those
entities subject to the Freedom of Information Act when in
conservatorship or receivership. The bill shares the same
goal as H.R. 2243 in that it aims to ensure accountability,
transparency and fairness within our Government-sponsored
enterprises. The Committee appreciates your willingness to
examine my bill and work towards its consideration by the
full House.
I would ask that a copy of our exchange of letters on H.R.
2243 be included in the bill report filed by the Committee on
Financial Services, as well as in the Congressional Record
during floor consideration, to memorialize our understanding.
Sincerely,
Jason Chaffetz,
Chairman.
____
U.S. House of Representatives,
Committee on Financial Services,
Washington, DC, November 16, 2015.
Hon. Jason Chaffetz,
Chair, Committee on Oversight and Government Reform.
Dear Chairman Chaffetz: Thank you for your November 16th
letter regarding H.R. 2243, the ``Equity in Government
Compensation Act of 2015.''
I am most appreciative of your decision to forego action on
H.R. 2243 so that it may move expeditiously to the House
floor. I acknowledge that although you are waiving action on
the bill, the Committee on Oversight and Government Reform is
in no way waiving its jurisdictional interest in this or
similar legislation. In addition, if a conference is
necessary on this legislation, I will support any request
that your committee be represented therein.
Finally, I shall be pleased to review H.R. 1577, the
``Fannie Mae and Freddie Mac Transparency Act of 2015,'' for
potential action by the Financial Services Committee. I will
also include your letter and this letter in the Committee's
report on H.R. 2243 and in the Congressional Record during
floor consideration of the same.
Sincerely,
Jeb Hensarling,
Chair, Committee on Financial Services.
Ms. MOORE. Mr. Speaker, we understand that FHFA Director Watt is
doing everything in his power to conserve the assets of the GSEs.
However, I agree with the chairman, Mr. Hensarling, that we disagree
that the CEOs of these two companies in conservatorship, whose
operations are controlled by their regulator, should be paid
multimillion-dollar compensation packages.
The Treasury, which is the GSE's largest shareholder, opposes these
proposed pay packages for the GSE CEOs, and so do we. So, Mr. Speaker,
I therefore support S. 2036 and would urge my colleagues to support
this legislation.
Mr. Speaker, I have no other speakers.
I yield back the balance of my time.
Mr. HENSARLING. Mr. Speaker, I yield such time as he may consume to
the gentleman from Arkansas (Mr.
[[Page H8223]]
Hill), a very hardworking member of the Financial Services Committee.
Mr. HILL. I thank the chairman and appreciate his work on bringing
this important bill to the floor, and I thank my friend, Chairman
Royce, from California, for sponsoring the House version of this
measure, H.R. 2243, and I stand in full support with the Senate version
tonight, S. 2036.
Mr. Speaker, since being placed in voluntary conservatorship, the
Federal Housing Finance Agency, in my judgment, has really abdicated
their responsibility with the Treasury in acting truly as a
conservator. Fannie Mae and Freddie Mac have received almost $200
billion in government assistance, by far our costliest taxpayer bailout
resulting from the financial crisis.
This is also not the first time that the GSEs, the government-
sponsored enterprises, were placed in conservatorship and that the FHFA
has been scrutinized for awarding increased pay to the CEOs. That has
been previously discussed in detail here. And largely in response to
that criticism of FHFA's failure to properly administer these entities
in conservatorship, the GSE's CEO compensation was capped in 2012 at
$600,000. Now, miraculously, they are being approved for millions in
pay increases despite the fact that these entities are still, Mr.
Speaker, in conservatorship.
It is for that reason, Mr. Speaker, on July 30 that I wrote Mel Watt,
the Director of the Federal Housing Finance Agency, and awarded him my
monthly Golden Fleece Award for poor stewardship of taxpayer resources.
I include my letter to Mr. Watt in the Record.
July 30, 2015.
Hon. Mel Watt,
Director, Federal Housing Finance Agency,
Washington, DC.
Dear Director Watt: I write today to inform you of my
recent Golden Fleece Award to the Federal Housing Finance
Agency (FHFA) for its approval of approximately $4 million in
raises for each of the CEOs of the government-sponsored
enterprises (GSEs) Fannie Mae and Freddie Mac.
Since being placed in voluntary conservatorship by FHFA in
2008, Fannie Mae and Freddie Mac have received almost $200
billion in government assistance, by far the costliest
taxpayer bailout resulting from the financial crisis. This is
also not the first time since the GSEs were placed in
conservatorship that FHFA has been scrutinized for awarding
increased pay to their CEOs. In 2009, FHFA approved $42
million in pay packages to the GSEs' top 12 executives. In
2011, FHFA approved $12.79 million in bonus pay for some of
the top executives at Fannie and Freddie. Largely in response
to this criticism, the GSEs' CEO compensation was capped in
2012 at $600,000.
Both the U.S. Treasury Department and the White House have
also opposed FHFA's decision to raise Fannie and Freddie
CEOs' salaries. Specifically, Treasury recommended that
``existing limits on compensation continue given the
taxpayers' ongoing backstop of both enterprises,'' while
White House Press Secretary Josh Earnest stated that ``the
reason that these entities are different than some of the
financial entities that you see in the private sector is they
benefit significantly from a backstop that's provided by that
taxpayers. And because of that taxpayer assistance, I think
it is entirely legitimate for the executives of those
institutions to be subject to compensation limits.''
Additionally, Treasury Secretary Jack Lew stated in his June
17, 2015 testimony before the House Financial Services
Committee that ``the risk is being borne by taxpayers on an
ongoing basis and the conservatorship is not over.'' Despite
this opposition, FHFA has once again raised these salaries to
$4 million.
While the recovery of the housing market has helped Fannie
and Freddie repay the federal government, and I fully support
the private sector compensating its executives as it sees
fit, Fannie and Freddie still have taxpayer backing, are not
private companies, and should not be compensated as such.
While Congress still must work to enact necessary reforms
to our GSEs, FHFA must be accountable and responsible for
ensuring the protection of our hardworking taxpayers'
dollars. I am committed to eradicating this type of
inefficient and ineffective policy and regulation by our
federal agencies, and today's Golden Fleece highlights the
clear lack of judgement by FHFA in approving these raises. I
invite your immediate attention to this issue, and please
keep me apprised of your efforts at improvement.
Sincerely,
French Hill,
Member of Congress.
Mr. HILL. Treasury Secretary Jack Lew has given his opposition, the
White House has provided a statement of opposition, and yet Mel Watt
continues. It is for these reasons that I fully support the effort of
Mr. Royce and Mr. Vitter in capping the compensation until these
entities are returned to financial health.
Mr. HENSARLING. Mr. Speaker, I yield myself such time as I may
consume.
Mr. Speaker, I look forward to the day where we can work to have a
sustainable housing finance system in America, one that is sustainable
for homeowners so they are not put into homes they cannot afford to
keep; one that is sustainable for our economy, so that we promote
economic growth and reduce our tendency to have these recessions; and
certainly one sustainable for the taxpayers, because the taxpayers
should never ever again be called upon to bail out government-sponsored
enterprises to the tune of almost $200 billion.
Regardless of how effective the current CEOs are of Fannie Mae and
Freddie Mac, $4 million compensation packages are not part of a
sustainable housing finance system. Again, they are under government
conservatorship. The taxpayer is still at risk. This does not pass the
smell test, it doesn't pass the laugh test, and it certainly doesn't
pass the taxpayer protection test.
So I am very happy with the work by the gentleman of California (Mr.
Royce) that provided the House language that was underpinning the
Senate language that we are debating tonight. I am glad that this is
bipartisan. I don't often find myself in agreement with the
administration, but I am prepared to take ``yes'' for an answer, and I
urge all of my colleagues to adopt this legislation.
Mr. Speaker, I yield back the balance of my time.
The SPEAKER pro tempore. The question is on the motion offered by the
gentleman from Texas (Mr. Hensarling) that the House suspend the rules
and pass the bill, S. 2036.
The question was taken; and (two-thirds being in the affirmative) the
rules were suspended and the bill was passed.
A motion to reconsider was laid on the table.
____________________