[Congressional Record (Bound Edition), Volume 161 (2015), Part 13]
[House]
[Pages 18173-18175]
[From the U.S. 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 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

[[Page 18174]]

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. 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

[[Page 18175]]

     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.
  Mr. ROYCE. Mr. Speaker, I strongly support the Equity in Government 
Compensation Act.
  This bill is based on legislation I authored which passed out of the 
House Financial Services Committee by a vote of 57 to 1 earlier this 
year. Similar text was approved by the Senate unanimously.
  This legislation will eliminate multi-million dollar salaries for the 
CEOs of taxpayer-bailed out and taxpayer-backed Fannie Mae and Freddie 
Mac, payouts that are an affront to the American people.
  To the naysayers that claim that the GSEs have already ``repaid'' the 
taxpayers for their bailouts, I asked Treasury Secretary Jack Lew about 
this very theory.
  He responded clearly that that ``the risk [for Fannie and Freddie] is 
being borne by taxpayers on an ongoing basis and the conservatorship is 
not over.''
  The quantifiable toll taken by the financial crisis and the GSEs' 
actions on the American people is staggering: over 4 million Americans 
lost their homes; 8.8 million Americans lost their jobs; and $19 2 
trillion was lost in household wealth.
  We have a duty and obligation to our constituents to protect them 
from a return to the GSEs' pre-crisis model of private gains and public 
losses.
  To those who discuss the need for GSE reform during debate of this 
bill, I say: I agree with you that it's time to put our housing system 
on a firmer foundation. I will put my record in support of reforming 
the GSEs up against that of any Member of Congress.
  The status quo of Fannie Mae and Freddie Mac dominating 90% of the 
secondary mortgage market is unsustainable.
  My ultimate goal is still comprehensive housing finance reform that 
brings private capital into the system to eliminate the boom-and-bust 
cycle that wreaked havoc on the American economy; a task that takes on 
all the more urgency as Fannie and Freddie slip into the red and invite 
new taxpayer bailouts.
  However, this bill is about CEO pay today at the GSEs, not what we 
want them to look like tomorrow.
  Four million dollar a year salaries at the GSEs are simply symptoms 
of a disease. While we work on finding a cure, we should treat the 
patient. This bill will do just that.
  Mr. Speaker, I thank the gentleman from Texas for his leadership on 
this issue as Chairman of the Financial Services Committee, the 
gentleman from New Jersey for his support on this bill, and the senior 
Senator from Louisiana for his quick action.
  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.

                          ____________________