IB 

Union Calendar No. 247 

112TH CONGRESS 

2D SESSION H. R. 1221 

[Report No. 112–366, Part I] 

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 

MARCH 29, 2011 

Mr. BACHUS (for himself, Mr. GARRETT, Mr. HENSARLING, Mr. PEARCE, and 

Mrs. BIGGERT) introduced the following bill; which was referred to the 

Committee on Financial Services, and in addition to the Committee on 

Oversight and Government Reform, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions 

as fall within the jurisdiction of the committee concerned 

JANUARY 17, 2012 

Additional sponsors: Mr. MCCOTTER, Mr. CANSECO, Mr. ROYCE, Mr. GERLACH, Mr. WOMACK, Mr. REHBERG, Mr. ISSA, Mr. FORBES, Mr. VISCLOSKY, Mr. LOBIONDO, Mr. COFFMAN of Colorado, Mr. KISSELL, Mr. 

NUNNELEE, Mr. DEFAZIO, and Mrs. NOEM

JANUARY 17, 2012 

Reported from the Committee on Financial Services with an amendment 

[Strike out all after the enacting clause and insert the part printed in italic] 

JANUARY 17, 2012 

The Committee on Oversight and Government Reform discharged; committed 

to the Committee of the Whole House on the State of the Union and ordered to be printed 

[For text of introduced bill, see copy of bill as introduced on March 29, 2011] 


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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. 


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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 2011’’. 

6 SEC. 2. CONGRESSIONAL FINDINGS. 

7 The Congress finds that— 

8 (1) the Federal National Mortgage Association 

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

10 Mortgage Corporation (known as Freddie Mac), which 

11 are both privately owned but publicly chartered Gov12 ernment-sponsored enterprises (GSEs), were at the 

13 center of the mortgage market meltdown that caused 

14 the financial crisis that commenced in 2008; 

15 (2) the failures of Fannie Mae and Freddie Mac 

16 helped precipitate the deepest economic decline since 

17 World War II; 

18 (3) in September 2008, the Bush Administration, 

19 Federal Reserve Board, and Federal Housing Finance 

20 Agency (FHFA) exercised authority granted by the 

21 Congress to place the two GSEs in conservatorship, a 

22 form of nationalization that puts the regulators firm23 ly in control of the GSEs’ daily operations; 

24 (4) in September 2008, the Bush Administration 

25 established a $200 billion facility to purchase senior 


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1 preferred stock in the enterprises to backstop their 

2 losses; 

3 (5) in February 2009, the Obama Administra4 tion raised the senior preferred stock purchase com5 mitment to $400 billion; 

6 (6) on Christmas Eve 2009, the Obama Adminis7 tration removed any limits on the use of Federal 

8 funds to cover losses at the enterprises, significantly 

9 expanding a commitment that has resulted in the ex10 penditure of so far nearly $175 billion in taxpayer 

11 funds to purchase senior preferred stock in the two en12 terprises; 

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

14 taxpayers of the United States now own nearly 80 

15 percent of the two GSEs; 

16 (8) the Congressional Budget Office has con17 cluded that Fannie Mae and Freddie Mac have effec18 tively become Government entities whose operations 

19 should be included in the Federal budget; 

20 (9) the GSEs are expected to be a long-term 

21 drain on the taxpayers as a result of market condi22 tions and the political and public policy mandates 

23 imposed on them by the Administration and the Con24 gress; 


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1 (10) in spite of these liabilities, the Treasury De2 partment and FHFA approved compensation pack3 ages for the chief executive officers of Fannie Mae and 

4 Freddie Mac in 2009, 2010, and 2011 that were near5 ly 15 times greater than the annual compensation of 

6 the President of the United States and 30 times great7 er than the annual compensation of a Cabinet Sec8 retary; 

9 (11) the Treasury Department and the FHFA 

10 also approved multi-million dollar compensation 

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

12 payable in cash rather than in the type of stock op13 tions that have characterized compensation arrange14 ments at other large financial institutions that have 

15 received extraordinary government assistance; 

16 (12) on September 17, 2008, FHFA determined 

17 that no executive officer of Fannie Mae or Freddie 

18 Mac would be entitled to receive a cash bonus or long19 term incentive awards for 2008; 

20 (13) FHFA’s five-year Strategic Plan for Fannie 

21 Mae and Freddie Mac includes a commitment that 

22 the GSEs will operate in a safe and sound manner; 

23 and 

24 (14) section 1318(c) of the Federal Housing En25 terprises Financial Safety and Soundness Act of 1992 


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1 (12 U.S.C. 4518(c), as added by section 1113(a)(4) of 

2 the Housing and Economic Recovery Act of 2008 

3 (Public Law 110–289; 122 Stat. 2678)), permits the 

4 Director of FHFA to withhold any payment, transfer, 

5 or disbursement of compensation to an executive offi6 cer, or to place such compensation in an escrow ac7 count, during the review of the reasonableness and 

8 comparability of compensation. 

9 SEC. 3. DEFINITIONS. 

10 In this Act: 

11 (1) DIRECTOR.—The term ‘‘Director’’ means the 

12 Director of the Federal Housing Finance Agency. 

13 (2) EMPLOYEE.—The term ‘‘employee’’ means an 

14 employee of an enterprise, except that such term does 

15 not include any employee who would be defined as a 

16 prevailing rate employee (as defined in section 

17 5342(2) of title 5, United States Code) if such em18 ployee were employed by an agency (as defined in 

19 paragraph (1) of such section). 

20 (3) ENTERPRISE.—The term ‘‘enterprise’’ 

21 means— 

22 (A) the Federal National Mortgage Associa23 tion and any affiliate thereof; and 

24 (B) the Federal Home Loan Mortgage Cor25 poration and any affiliate thereof. 


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1 (4) EXECUTIVE OFFICER.—The term ‘‘executive 

2 officer’’ has the same meaning as is given such term 

3 in section 1303(12) of the Federal Housing Enter4 prises Financial Safety and Soundness Act of 1992 

5 (12 U.S.C. 4502(12)). 

6 SEC. 4. REASONABLE PAY FOR EXECUTIVE OFFICERS. 

7 (a) SUSPENSION OF CURRENT COMPENSATION PACK8 AGES.—The Director shall suspend the compensation pack9 ages approved for 2011 for the executive officers of an enter10 prise and, in lieu of such packages, subject to the limitation 

11 under subsection (d), establish a compensation system for 

12 the executive officers of such enterprise in accordance with 

13 the schedules of compensation and benefits established and 

14 adjusted pursuant to section 1206 of the Financial Institu15 tions Reform, Recovery, and Enforcement Act of 1989 (12 

16 U.S.C. 1833b). 

17 (b) CLAWBACK OF 2010 AND 2011 COMPENSATION.— 

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

19 the Congress that each executive officer performing 

20 services for an enterprise on the date of the enactment 

21 of this Act whose compensation package is suspended 

22 under subsection (a) should return to the Secretary of 

23 the Treasury any compensation earned in 2010 and 

24 2011 that was in excess of the maximum annual rate 


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1 of basic pay authorized for a position in level I of the 

2 Executive Schedule. 

3 (2) USE TO REDUCE NATIONAL DEBT.—The Sec4 retary of the Treasury shall transfer any amounts re5 ferred to in paragraph (1) that are returned to the 

6 Secretary to the special account established by section 

7 3113(d) of title 31, United States Code (relating to re8 ducing the public debt). 

9 (c) ADDITIONAL REQUIREMENT.—An executive officer 

10 of an enterprise shall be subject to section 111 of the Emer11 gency Economic Stabilization Act of 2008 (12 U.S.C. 5221), 

12 which relates to executive compensation and corporate gov13 ernance. 

14 (d) LIMITATION ON COMPENSATION.—An executive of15 ficer of an enterprise whose compensation package is sus16 pended under subsection (a) shall not be compensated more 

17 than the highest compensated employee of the Federal Hous18 ing Finance Agency. 

19 SEC. 5. COMPENSATION RATE OF EMPLOYEES OF FANNIE 

20 MAE AND FREDDIE MAC. 

21 (a) IN GENERAL.—During any period that an enter22 prise is federally chartered under the Federal National 

23 Mortgage Association Charter Act (12 U.S.C. 1716 et seq.) 

24 or the Federal Home Loan Mortgage Corporation Act (12 


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1 U.S.C. 1451 et seq.), the compensation of the positions held 

2 by employees shall be in accordance with this section. 

3 (b) CONVERSION OF COMPENSATION RATE FOR CUR4 RENT EMPLOYEES.— 

5 (1) IN GENERAL.—Except for as provided in sec6 tion 4, effective for pay periods beginning after the 

7 date of the enactment of this Act, the Director shall 

8 fix the rate of basic compensation of positions held by 

9 employees performing services for an enterprise as of 

10 the date of the enactment of this Act in accordance 

11 with the General Schedule set forth in section 5332 of 

12 title 5, United States Code. In fixing such rate— 

13 (A) if the employee is receiving a rate of 

14 basic compensation that is less than the min15 imum rate of basic compensation of the appro16 priate grade of the General Schedule in which 

17 his or her position is placed, such employee’s 

18 rate of basic compensation shall be increased to 

19 such minimum rate; 

20 (B) if the employee is receiving a rate of 

21 basic compensation that is equal to a rate of 

22 basic compensation of the appropriate grade of 

23 the General Schedule in which his or her posi24 tion is placed, such employee’s rate of basic com25 pensation shall be equal to that rate of basic 


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1 compensation of the appropriate grade of the 

2 General Schedule; 

3 (C) if the employee is receiving a rate of 

4 basic compensation that is between 2 rates of 

5 basic compensation of the appropriate grade of 

6 the General Schedule in which his or her posi7 tion is placed, such employee’s rate of basic com8 pensation shall be at the higher of those 2 rates 

9 under the General Schedule; and 

10 (D) if the employee is receiving a rate of 

11 basic compensation that is in excess of the max12 imum rate of basic compensation of the appro13 priate grade of the General Schedule in which 

14 his or her position is placed, such employee’s 

15 rate of basic compensation shall be reduced to 

16 such maximum rate. 

17 (2) NOT CONSIDERED TRANSFERS OR PRO18 MOTIONS.—The conversion of positions and employees 

19 to the appropriate grades of the General Schedule and 

20 the initial adjustment of rates of basic compensation 

21 of those positions and employees provided for by this 

22 subsection, shall not be considered to be transfers or 

23 promotions within the meaning of section 5334(b) of 

24 title 5, United States Code, and the regulations issued 

25 thereunder. 


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1 (3) CREDIT FOR INCREASE IN COMPENSATION

2 BEFORE ADJUSTMENT.—Each employee performing 

3 services for an enterprise on the date of the enactment 

4 of this Act whose position is converted under this sub5 section to the General Schedule and who prior to the 

6 initial adjustment of his or her rate of basic com7 pensation under paragraph (1) has earned, but has 

8 not been credited with, an increase in that rate, shall 

9 be granted credit for such increase before his or her 

10 rate of basic compensation is initially adjusted under 

11 such paragraph. 

12 (4) SERVICE PERFORMED SINCE LAST COM13 PENSATION INCREASE.—Each employee performing 

14 services for an enterprise on the date of the enactment 

15 of this Act whose position is converted under this sub16 section to the General Schedule shall be granted cred17 it, for purposes of his or her first step increase under 

18 the General Schedule, for all satisfactory service per19 formed since his or her last increase in compensation 

20 prior to the initial adjustment of his or her rate of 

21 basic compensation under paragraph (1). 

22 (5) COMPENSATION INCREASE UNDER THIS SEC23 TION.—An increase in the rate of basic compensation 

24 by reason of the enactment of paragraph (1) shall not 

25 be considered to be an equivalent increase with respect 


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1 to step increases for employees whose positions are 

2 converted to the General Schedule under authority of 

3 this subsection. 

4 (c) NEW EMPLOYEES.—Except for as provided in sec5 tion 4, the grade and rate of basic pay of any individual 

6 beginning employment with an enterprise after the date of 

7 enactment of this Act shall be fixed in accordance with the 

8 General Schedule set forth in section 5332 of title 5, United 

9 States Code. 

10 SEC. 6. FANNIE AND FREDDIE EMPLOYEES NOT FEDERAL 

11 EMPLOYEES. 

12 Any executive officer or employee affected by any pro13 vision under sections 4 and 5, respectively, shall not be con14 sidered a Federal employee. 


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Union Calendar No. 247 

112TH CONGRESS 

2D SESSION H. R. 1221 

[Report No. 112–366, Part I] 

A BILL 

To suspend the current compensation packages for 

eral Government, and for other purposes. employees in the Executive Branch of the Fedtions in accordance with rates of pay for senior Mac and establish compensation for such posithe senior executives of Fannie Mae and Freddie 

JANUARY 17, 2012 

Reported from the Committee on Financial Services with 

an amendment 

JANUARY 17, 2012 

The Committee on Oversight and Government Reform 

printed House on the State of the Union and ordered to be discharged; committed to the Committee of the Whole 


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