I 

112TH CONGRESS 

1ST SESSION H. R. 1221 

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 

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 2011’’. 


tjames on DSKG8SOYB1PROD with BILLS
2 

•HR 1221 IH

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; 

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; 


tjames on DSKG8SOYB1PROD with BILLS
3 

•HR 1221 IH

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 resulted in the ex8 penditure of so far nearly $150 billion in taxpayer 

9 funds to purchase senior preferred stock in the two 

10 enterprises; 

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

12 taxpayers of the United States now own nearly 80 

13 percent of the two GSEs; 

14 (8) the Congressional Budget Office has con15 cluded that Fannie Mae and Freddie Mac have ef16 fectively become Government entities whose oper17 ations should be included in the Federal budget; 

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

19 drain on the taxpayers as a result of market condi20 tions and the political and public policy mandates 

21 imposed on them by the Administration and the 

22 Congress; 

23 (10) in spite of these liabilities, the Treasury 

24 Department and FHFA approved compensation 

25 packages for the chief executive officers of Fannie 


tjames on DSKG8SOYB1PROD with BILLS
4 

•HR 1221 IH

1 Mae and Freddie Mac in 2009 and 2010 that were 

2 nearly 15 times greater than the annual compensa3 tion of the President of the United States and 30 

4 times greater than the annual compensation of a 

5 Cabinet Secretary; 

6 (11) the Treasury Department and the FHFA 

7 also approved multi-million dollar compensation 

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

9 payable in cash rather than in the type of stock op10 tions that have characterized compensation arrange11 ments at other large financial institutions that have 

12 received extraordinary government assistance; 

13 (12) on September 17, 2008, FHFA deter14 mined that no executive officer of Fannie Mae or 

15 Freddie Mac would be entitled to receive a cash 

16 bonus or long-term incentive awards for 2008; 

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

18 Fannie Mae and Freddie Mac includes a commit19 ment that the GSEs will operate in a safe and sound 

20 manner; and 

21 (14) section 1318(c) of the Federal Housing 

22 Enterprises Financial Safety and Soundness Act of 

23 1992 (12 U.S.C. 4518(c), as added by section 

24 1113(a)(4) of the Housing and Economic Recovery 

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


tjames on DSKG8SOYB1PROD with BILLS
5 

•HR 1221 IH

1 2678)), permits the Director of FHFA to ‘‘withhold 

2 any payment, transfer, or disbursement of com3 pensation to an executive officer, or to place such 

4 compensation in an escrow account, during the re5 view of the reasonableness and comparability of com6 pensation’’. 

7 SEC. 3. DEFINITIONS. 

8 In this Act: 

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

10 the Director of the Federal Housing Finance Agen11 cy. 

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

13 an employee of an enterprise, except that such term 

14 does not include any employee who would be defined 

15 as a prevailing rate employee (as defined in section 

16 5342(2) of title 5, United States Code) if such em17 ployee were employed by an agency (as defined in 

18 paragraph (1) of such section). 

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

20 means— 

21 (A) the Federal National Mortgage Asso22 ciation and any affiliate thereof; and 

23 (B) the Federal Home Loan Mortgage 

24 Corporation and any affiliate thereof. 


tjames on DSKG8SOYB1PROD with BILLS
6 

•HR 1221 IH

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

8 PACKAGES.—The Director shall suspend the compensa9 tion packages approved for 2011 for the executive officers 

10 of an enterprise and, in lieu of such packages, establish 

11 a compensation system for the executive officers of such 

12 enterprise in accordance with the rates of pay for positions 

13 in the Executive Schedule and the Senior Executive Serv14 ice of the Federal Government. 

15 (b) CLAWBACK OF 2010 COMPENSATION.— 

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

17 of the Congress that each executive officer per18 forming services for an enterprise on the date of the 

19 enactment of this Act whose compensation package 

20 is suspended under this subsection should return to 

21 the Secretary of the Treasury any compensation 

22 earned in 2010 that was in excess of the maximum 

23 annual rate of basic pay authorized for a position in 

24 level I of the Executive Schedule. 


tjames on DSKG8SOYB1PROD with BILLS
7 

•HR 1221 IH

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

2 Secretary of the Treasury shall transfer any 

3 amounts referred to in paragraph (1) that are re4 turned to the Secretary to the special account estab5 lished by section 3113(d) of title 31, United States 

6 Code (relating to reducing the public debt). 

7 SEC. 5. COMPENSATION RATE OF EMPLOYEES OF FANNIE 

8 MAE AND FREDDIE MAC. 

9 (a) IN GENERAL.—During any period that an enter10 prise is federally chartered under the Federal National 

11 Mortgage Association Charter Act (12 U.S.C. 1716 et 

12 seq.) or the Federal Home Loan Mortgage Corporation 

13 Act (12 U.S.C. 1451 et seq.), the compensation of the po14 sitions held by employees shall be in accordance with this 

15 section. 

16 (b) CONVERSION OF COMPENSATION RATE FOR CUR17 RENT EMPLOYEES.— 

18 (1) IN GENERAL.—Except for as provided in 

19 section 4, effective for pay periods beginning after 

20 the date of the enactment of this Act, the Director 

21 shall fix the rate of basic compensation of positions 

22 held by employees performing services for an enter23 prise as of the date of the enactment of this Act in 

24 accordance with the General Schedule set forth in 


tjames on DSKG8SOYB1PROD with BILLS
8 

•HR 1221 IH

1 section 5332 of title 5, United States Code. In fixing 

2 such rate— 

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

4 basic compensation that is less than the min5 imum rate of basic compensation of the appro6 priate grade of the General Schedule in which 

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

8 rate of basic compensation shall be increased to 

9 such minimum rate; 

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

11 basic compensation that is equal to a rate of 

12 basic compensation of the appropriate grade of 

13 the General Schedule in which his or her posi14 tion is placed, such employee’s rate of basic 

15 compensation shall be equal to that rate of 

16 basic compensation of the appropriate grade of 

17 the General Schedule; 

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

19 basic compensation that is between 2 rates of 

20 basic compensation of the appropriate grade of 

21 the General Schedule in which his or her posi22 tion is placed, such employee’s rate of basic 

23 compensation shall be at the higher of those 2 

24 rates under the General Schedule; and 


tjames on DSKG8SOYB1PROD with BILLS
9 

•HR 1221 IH

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

2 basic compensation that is in excess of the max3 imum rate of basic compensation of the appro4 priate grade of the General Schedule in which 

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

6 rate of basic compensation shall be reduced to 

7 such maximum rate. 

8 (2) NOT CONSIDERED TRANSFERS OR PRO9 MOTIONS.—The conversion of positions and employ10 ees to the appropriate grades of the General Sched11 ule and the initial adjustment of rates of basic com12 pensation of those positions and employees provided 

13 for by this subsection, shall not be considered to be 

14 transfers or promotions within the meaning of sec15 tion 5334(b) of title 5, United States Code, and the 

16 regulations issued thereunder. 

17 (3) CREDIT FOR INCREASE IN COMPENSATION

18 BEFORE ADJUSTMENT.—Each employee performing 

19 services for an enterprise on the date of the enact20 ment of this Act whose position is converted under 

21 this subsection to the General Schedule and who 

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

23 basic compensation under paragraph (1) has earned, 

24 but has not been credited with, an increase in that 

25 rate, shall be granted credit for such increase before 


tjames on DSKG8SOYB1PROD with BILLS
10 

•HR 1221 IH

1 his or her rate of basic compensation is initially ad2 justed under such paragraph. 

3 (4) SERVICE PERFORMED SINCE LAST COM4 PENSATION INCREASE.—Each employee performing 

5 services for an enterprise on the date of the enact6 ment of this Act whose position is converted under 

7 this subsection to the General Schedule shall be 

8 granted credit, for purposes of his or her first step 

9 increase under the General Schedule, for all satisfac10 tory service performed since his or her last increase 

11 in compensation prior to the initial adjustment of 

12 his or her rate of basic compensation under para13 graph (1). 

14 (5) COMPENSATION INCREASE UNDER THIS

15 SECTION.—An increase in the rate of basic com16 pensation by reason of the enactment of paragraph 

17 (1) shall not be considered to be an equivalent in18 crease with respect to step increases for employees 

19 whose positions are converted to the General Sched20 ule under authority of this subsection. 

21 (c) NEW EMPLOYEES.—Except for as provided in 

22 section 4, the grade and rate of basic pay of any individual 

23 beginning employment with an enterprise after the date 

24 of enactment of this Act shall be fixed in accordance with 


tjames on DSKG8SOYB1PROD with BILLS
11 

•HR 1221 IH

1 the General Schedule set forth in section 5332 of title 5, 

2 United States Code. 

Æ 


tjames on DSKG8SOYB1PROD with BILLS