To suspend the current compensation packages for the senior executives of Fannie Mae and Freddie Mac and establish compensation for such positions in accordance with rates of pay for senior employees in the Executive Branch of the Federal Government, and for other purposes.

Summary: Equity in Government Compensation Act of 2011 - Requires the Director of the Federal Housing Finance Agency to: (1) suspend the compensation packages approved for 2011 for the executive officers of the Federal National Mortgage Association (Fannie Mae) and the Federal Home Loan Mortgage Corporation (Freddie Mac) (government-sponsored enterprises or GSEs); and (2) establish, in lieu of such packages, a compensation system for such officers in accordance with the schedules of compensation and benefits established and adjusted pursuant to the compensation schedule comparability requirements of the Financial Institutions Reform, Recovery, and Enforcement Act of 1989.

Expresses the sense of Congress that each executive officer of Fannie Mae and Freddie Mac performing services for an enterprise on the date of enactment of this Act whose compensation package is suspended should return to the Secretary of the Treasury (clawback) any compensation earned in 2010 and 2011 that was in excess of the maximum annual rate of basic pay authorized for a position in level I of the Executive Schedule.

Instructs the Secretary of the Treasury to transfer any such amounts returned to the Secretary to a specified account in the Treasury for receiving gifts and proceeds from their sale or redemption, and dedicated to reducing the public debt.

Subjects Fannie Mae and Freddie Mac executive officers to the executive compensation requirements of the Emergency Economic Stabilization Act of 2008.

Prohibits the compensation of any executive officer of Fannie Mae or Freddie Mac whose compensation package is suspended under this Act from exceeding the compensation of the highest compensated employee of the Federal Housing Finance Agency.

Establishes requirements for determining compensation rates for GSE employees according to the General Schedule for federal civil service employees.

Declares that Fannie Mae and Freddie Mac employees shall not be considered federal employees.

SECTION 1. SHORT TITLE.

    This Act may be cited as the ``Equity in Government Compensation 
Act of 2011''.

SEC. 2. CONGRESSIONAL FINDINGS.

    The Congress finds that--
            (1) the Federal National Mortgage Association (known as 
        Fannie Mae) and the Federal Home Loan Mortgage Corporation 
        (known as Freddie Mac), which are both privately owned but 
        publicly chartered Government-sponsored enterprises (GSEs), 
        were at the center of the mortgage market meltdown that caused 
        the financial crisis that commenced in 2008;
            (2) the failures of Fannie Mae and Freddie Mac helped 
        precipitate the deepest economic decline since World War II;
            (3) in September 2008, the Bush Administration, Federal 
        Reserve Board, and Federal Housing Finance Agency (FHFA) 
        exercised authority granted by the Congress to place the two 
        GSEs in conservatorship, a form of nationalization that puts 
        the regulators firmly in control of the GSEs' daily operations;
            (4) in September 2008, the Bush Administration established 
        a $200 billion facility to purchase senior preferred stock in 
        the enterprises to backstop their losses;
            (5) in February 2009, the Obama Administration raised the 
        senior preferred stock purchase commitment to $400 billion;
            (6) on Christmas Eve 2009, the Obama Administration removed 
        any limits on the use of Federal funds to cover losses at the 
        enterprises, significantly expanding a commitment that has 
        resulted in the expenditure of so far nearly $175 billion in 
        taxpayer funds to purchase senior preferred stock in the two 
        enterprises;
            (7) as a result of the Government's actions, the taxpayers 
        of the United States now own nearly 80 percent of the two GSEs;
            (8) the Congressional Budget Office has concluded that 
        Fannie Mae and Freddie Mac have effectively become Government 
        entities whose operations should be included in the Federal 
        budget;
            (9) the GSEs are expected to be a long-term drain on the 
        taxpayers as a result of market conditions and the political 
        and public policy mandates imposed on them by the 
        Administration and the Congress;
            (10) in spite of these liabilities, the Treasury Department 
        and FHFA approved compensation packages for the chief executive 
        officers of Fannie Mae and Freddie Mac in 2009, 2010, and 2011 
        that were nearly 15 times greater than the annual compensation 
        of the President of the United States and 30 times greater than 
        the annual compensation of a Cabinet Secretary;
            (11) the Treasury Department and the FHFA also approved 
        multi-million dollar compensation packages for a number of the 
        GSEs' top executives, payable in cash rather than in the type 
        of stock options that have characterized compensation 
        arrangements at other large financial institutions that have 
        received extraordinary government assistance;
            (12) on September 17, 2008, FHFA determined that no 
        executive officer of Fannie Mae or Freddie Mac would be 
        entitled to receive a cash bonus or long-term incentive awards 
        for 2008;
            (13) FHFA's five-year Strategic Plan for Fannie Mae and 
        Freddie Mac includes a commitment that the GSEs will operate in 
        a safe and sound manner; and
            (14) section 1318(c) of the Federal Housing Enterprises 
        Financial Safety and Soundness Act of 1992 (12 U.S.C. 4518(c), 
        as added by section 1113(a)(4) of the Housing and Economic 
        Recovery Act of 2008 (Public Law 110-289; 122 Stat. 2678)), 
        permits the Director of FHFA to withhold any payment, transfer, 
        or disbursement of compensation to an executive officer, or to 
        place such compensation in an escrow account, during the review 
        of the reasonableness and comparability of compensation.

SEC. 3. DEFINITIONS.

    In this Act:
            (1) Director.--The term ``Director'' means the Director of 
        the Federal Housing Finance Agency.
            (2) Employee.--The term ``employee'' means an employee of 
        an enterprise, except that such term does not include any 
        employee who would be defined as a prevailing rate employee (as 
        defined in section 5342(2) of title 5, United States Code) if 
        such employee were employed by an agency (as defined in 
        paragraph (1) of such section).
            (3) 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.
            (4) Executive officer.--The term ``executive officer'' has 
        the same meaning as is given such term in section 1303(12) of 
        the Federal Housing Enterprises Financial Safety and Soundness 
        Act of 1992 (12 U.S.C. 4502(12)).

SEC. 4. REASONABLE PAY FOR EXECUTIVE OFFICERS.

    (a) Suspension of Current Compensation Packages.--The Director 
shall suspend the compensation packages approved for 2011 for the 
executive officers of an enterprise and, in lieu of such packages, 
subject to the limitation under subsection (d), establish a 
compensation system for the executive officers of such enterprise in 
accordance with the schedules of compensation and benefits established 
and adjusted pursuant to section 1206 of the Financial Institutions 
Reform, Recovery, and Enforcement Act of 1989 (12 U.S.C. 1833b).
    (b) Clawback of 2010 and 2011 Compensation.--
            (1) Sense of the congress.--It is the sense of the Congress 
        that each executive officer performing services for an 
        enterprise on the date of the enactment of this Act whose 
        compensation package is suspended under subsection (a) should 
        return to the Secretary of the Treasury any compensation earned 
        in 2010 and 2011 that was in excess of the maximum annual rate 
        of basic pay authorized for a position in level I of the 
        Executive Schedule.
            (2) Use to reduce national debt.--The Secretary of the 
        Treasury shall transfer any amounts referred to in paragraph 
        (1) that are returned to the Secretary to the special account 
        established by section 3113(d) of title 31, United States Code 
        (relating to reducing the public debt).
    (c) Additional Requirement.--An executive officer of an enterprise 
shall be subject to section 111 of the Emergency Economic Stabilization 
Act of 2008 (12 U.S.C. 5221), which relates to executive compensation 
and corporate governance.
    (d) Limitation on Compensation.--An executive officer of an 
enterprise whose compensation package is suspended under subsection (a) 
shall not be compensated more than the highest compensated employee of 
the Federal Housing Finance Agency.

SEC. 5. COMPENSATION RATE OF EMPLOYEES OF FANNIE MAE AND FREDDIE MAC.

    (a) In General.--During any period that an enterprise is federally 
chartered under the Federal National Mortgage Association Charter Act 
(12 U.S.C. 1716 et seq.) or the Federal Home Loan Mortgage Corporation 
Act (12 U.S.C. 1451 et seq.), the compensation of the positions held by 
employees shall be in accordance with this section.
    (b) Conversion of Compensation Rate for Current Employees.--
            (1) In general.--Except for as provided in section 4, 
        effective for pay periods beginning after the date of the 
        enactment of this Act, the Director shall fix the rate of basic 
        compensation of positions held by employees performing services 
        for an enterprise as of the date of the enactment of this Act 
        in accordance with the General Schedule set forth in section 
        5332 of title 5, United States Code. In fixing such rate--
                    (A) if the employee is receiving a rate of basic 
                compensation that is less than the minimum rate of 
                basic compensation of the appropriate grade of the 
                General Schedule in which his or her position is 
                placed, such employee's rate of basic compensation 
                shall be increased to such minimum rate;
                    (B) if the employee is receiving a rate of basic 
                compensation that is equal to a rate of basic 
                compensation of the appropriate grade of the General 
                Schedule in which his or her position is placed, such 
                employee's rate of basic compensation shall be equal to 
                that rate of basic compensation of the appropriate 
                grade of the General Schedule;
                    (C) if the employee is receiving a rate of basic 
                compensation that is between 2 rates of basic 
                compensation of the appropriate grade of the General 
                Schedule in which his or her position is placed, such 
                employee's rate of basic compensation shall be at the 
                higher of those 2 rates under the General Schedule; and
                    (D) if the employee is receiving a rate of basic 
                compensation that is in excess of the maximum rate of 
                basic compensation of the appropriate grade of the 
                General Schedule in which his or her position is 
                placed, such employee's rate of basic compensation 
                shall be reduced to such maximum rate.
            (2) Not considered transfers or promotions.--The conversion 
        of positions and employees to the appropriate grades of the 
        General Schedule and the initial adjustment of rates of basic 
        compensation of those positions and employees provided for by 
        this subsection, shall not be considered to be transfers or 
        promotions within the meaning of section 5334(b) of title 5, 
        United States Code, and the regulations issued thereunder.
            (3) Credit for increase in compensation before 
        adjustment.--Each employee performing services for an 
        enterprise on the date of the enactment of this Act whose 
        position is converted under this subsection to the General 
        Schedule and who prior to the initial adjustment of his or her 
        rate of basic compensation under paragraph (1) has earned, but 
        has not been credited with, an increase in that rate, shall be 
        granted credit for such increase before his or her rate of 
        basic compensation is initially adjusted under such paragraph.
            (4) Service performed since last compensation increase.--
        Each employee performing services for an enterprise on the date 
        of the enactment of this Act whose position is converted under 
        this subsection to the General Schedule shall be granted 
        credit, for purposes of his or her first step increase under 
        the General Schedule, for all satisfactory service performed 
        since his or her last increase in compensation prior to the 
        initial adjustment of his or her rate of basic compensation 
        under paragraph (1).
            (5) Compensation increase under this section.--An increase 
        in the rate of basic compensation by reason of the enactment of 
        paragraph (1) shall not be considered to be an equivalent 
        increase with respect to step increases for employees whose 
        positions are converted to the General Schedule under authority 
        of this subsection.
    (c) New Employees.--Except for as provided in section 4, the grade 
and rate of basic pay of any individual beginning employment with an 
enterprise after the date of enactment of this Act shall be fixed in 
accordance with the General Schedule set forth in section 5332 of title 
5, United States Code.

SEC. 6. FANNIE AND FREDDIE EMPLOYEES NOT FEDERAL EMPLOYEES.

    Any executive officer or employee affected by any provision under 
sections 4 and 5, respectively, shall not be considered a Federal 
employee.