The Federal Housing Finance Agency dramatically slashed executive salaries and bonuses at Fannie Mae and Freddie Mac, finally showing consumers that the agency is taking its role seriously and will no longer tolerate anybody cutting a fat hog.
The Federal Housing Finance Agency in its role as conservator of Fannie Mae and Freddie Mac significantly reduced the amount of pay chief executive officers at the firm will earn in the future.
“The 2012 pay program reduces top executive pay by nearly 75% since conservatorship, eliminates bonuses, and establishes a target for new CEO pay at $500,000,” the FHFA said in a statement.
The current, and outgoing, chief executives at the government sponsored enterprises, Michael Williams at Fannie and Charles ‘Ed’ Haldeman at Freddie, both drew criticism from Congress for earning millions of dollars in salaries.
Critics of compensation caps say relatively low levels of pay will not draw top talent to the positions. Williams and Haldeman are both leaving their jobs, likely this year.
“I believe the new compensation program strikes the balance between prudent executive pay including the elimination of bonuses, with the need to safeguard quality staffing in order to protect the taxpayers’ investment,” said FHFA acting director Edward DeMarco.
“A sudden and sharp change in pay from these levels would certainly risk a substantial exodus of talent, the best leaving first in many instances,” he added. “A significant increase in safety and soundness risks and in costly operational failures would, in my opinion, be highly likely.”