I 

111TH CONGRESS 

2D SESSION H. R. 4476 

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. 

IN THE HOUSE OF REPRESENTATIVES 

JANUARY 20, 2010 

Mr. BACHUS (for himself, Mrs. BIGGERT, Mrs. CAPITO, Mr. GARRETT of New 

Jersey, Mr. HENSARLING, Mr. NEUGEBAUER, and Mr. PAUL) introduced 

the following bill; which was referred to the Committee on Financial Services 

A BILL 

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. 

1 Be it enacted by the Senate and House of Representa2 tives of the United States of America in Congress assembled, 

3 SECTION 1. SHORT TITLE. 

4 This Act may be cited as the ‘‘Equity in Government 

5 Compensation Act of 2010’’. 


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1 SEC. 2. CONGRESSIONAL FINDINGS. 

2 The Congress finds that— 

3 (1) the Federal National Mortgage Association 

4 (known as Fannie Mae) and the Federal Home Loan 

5 Mortgage Corporation (known as Freddie Mac), 

6 which are both privately owned but publicly char7 tered government-sponsored enterprises (GSEs), 

8 were at the center of the mortgage market meltdown 

9 that caused the financial crisis that commenced in 

10 2008; 

11 (2) the failures of Fannie Mae and Freddie 

12 Mac helped precipitate the deepest economic decline 

13 since World War II and the loss of 7,500,000 jobs; 

14 (3) in September 2008, the Treasury Depart15 ment, Federal Reserve Board, and Federal Housing 

16 Finance Agency (FHFA) exercised authority grant17 ed by the Congress to place the two GSEs in con18 servatorship, a form of nationalization that puts the 

19 regulators firmly in control of the GSEs’ daily oper20 ations; 

21 (4) in September 2008, the Administration es22 tablished a $200 billion facility to purchase senior 

23 preferred stock in the enterprises to backstop their 

24 losses; 


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1 (5) in February 2009, the Obama Administra2 tion raised the senior preferred stock purchase com3 mitment to $400 billion; 

4 (6) on Christmas Eve 2009, the Obama Admin5 istration removed any limits on the use of Federal 

6 funds to cover losses at the enterprises, significantly 

7 expanding a commitment that has already resulted 

8 in the expenditure of more than $110 billion in tax9 payer funds to purchase senior preferred stock in 

10 the two enterprises; 

11 (7) as a result of the Government’s actions, the 

12 taxpayers of the United States now own at least 80 

13 percent of the two GSEs; 

14 (8) the Administration is using Fannie Mae and 

15 Freddie Mac as instruments of Federal housing pol16 icy, making it less likely that they will ever be re17 turned to private ownership; 

18 (9) the Congressional Budget Office has con19 cluded that Fannie Mae and Freddie Mac have ef20 fectively become government entities whose oper21 ations should be included in the Federal budget; 

22 (10) the GSEs are expected to be a long-term 

23 drain on the taxpayers as a result of market condi24 tions and the political and public policy mandates 


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1 imposed on them by the Administration and the 

2 Congress; 

3 (11) in spite of these liabilities, at the end of 

4 2009, the Treasury Department and the FHFA ap5 proved compensation packages for 2010 for the chief 

6 executive officers of Fannie Mae and Freddie Mac of 

7 $6,000,000 each, including incentive pay of 

8 $2,000,000 each, which is 15 times more than the 

9 annual compensation of the President and 30 times 

10 more than the annual compensation of a Cabinet 

11 Secretary; 

12 (12) the Treasury Department and the FHFA 

13 also approved multi-million dollar compensation 

14 packages for a number of the GSEs’ top executives, 

15 payable in cash rather than in the type of stock op16 tions that have characterized compensation arrange17 ments at other large financial institutions that have 

18 received extraordinary government assistance; 

19 (13) on September 17, 2008, FHFA deter20 mined that no executive officer of Fannie Mae or 

21 Freddie Mac would be entitled to receive a cash 

22 bonus or long-term incentive awards for 2008; 

23 (14) FHFA’s five-year Strategic Plan for 

24 Fannie Mae and Freddie Mac includes a commitVerDate Nov 24 2008 06:31 Jan 21, 2010 Jkt 089200 PO 00000 Frm 00004 Fmt 6652 Sfmt 6201 E:\BILLS\H4476.IH H4476

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1 ment that the GSEs will operate in a safe and sound 

2 manner; and 

3 (15) section 1318(c) of the Federal Housing 

4 Enterprises Financial Safety and Soundness Act of 

5 1992 (12 U.S.C. 4518(c), as added by section 

6 1113(a)(4) of the Housing and Economic Recovery 

7 Act of 2008 (Public Law 110–289; 122 Stat. 

8 2678)), permits the Director of FHFA to ‘‘withhold 

9 any payment, transfer, or disbursement of com10 pensation to an executive officer, or to place such 

11 compensation in an escrow account, during the re12 view of the reasonableness and comparability of com13 pensation’’. 

14 SEC. 3. REASONABLE COMPENSATION. 

15 (a) SUSPENSION OF CURRENT COMPENSATION

16 PACKAGES.—The Director of the Federal Housing Fi17 nance Agency shall immediately upon the enactment of 

18 this Act suspend the compensation packages approved for 

19 2010 for the executive officers (as such term is defined 

20 in section 1303 of the Federal Housing Enterprises Fi21 nancial Safety and Soundness Act of 1992 (12 U.S.C. 

22 4502)) of the Federal National Mortgage Association and 

23 the Federal Home Loan Mortgage Corporation and, in lieu 

24 of such packages, establish a compensation system for the 

25 executive officers of such enterprises in accordance with 


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1 the rates of pay for positions in the Executive Schedule 

2 and the Senior Executive Service of the Federal Govern3 ment. 

4 (b) CLAWBACK OF 2009 COMPENSATION.— 

5 (1) SENSE OF THE CONGRESS.—It is the sense 

6 of the Congress that each executive officer (as such 

7 term is defined in section 1303 of the Federal Hous8 ing Enterprises Financial Safety and Soundness Act 

9 of 1992 (12 U.S.C. 4502)) of the Federal National 

10 Mortgage Association and the Federal Home Loan 

11 Mortgage Corporation should return to the Sec12 retary of the Treasury any compensation earned in 

13 2009 that was in excess of the maximum annual 

14 rate of basic pay authorized for a position in level 

15 I of the Executive Schedule. 

16 (2) USE TO REDUCE NATIONAL DEBT.—The 

17 Secretary of the Treasury shall transfer any 

18 amounts referred to in paragraph (1) that are re19 turned to the Secretary to the special account estab20 lished by section 3113(d) of title 31, United States 

21 Code (relating to reducing the public debt). 

Æ 


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