GOP panel to probe exec pay of Fannie Mae and Freddie Mac

A congressional panel plans to question Fannie Mae and Freddie Mac executives over their multimillion-dollar compensation packages paid for by U.S. taxpayers. Texas Representative Randy Neugebauer, said he plans to bring Mae chief executive Michael Williams and Freddie Mac chief executive Ed Haldeman before the House Financial Services Subcommittee on Oversight and Investigations.

“I think we will be on a first name basis … because I think we will have them” testify, Neugebauer, a Republican, told reporters after a feisty hearing on the use of millions of taxpayer dollars to pay legal bills for former Fannie Mae executives accused of accounting fraud.

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In late 2008, both Fannie Mae and Freddie Mac were seized by the Bush administration because of mounting losses from mortgages gone sour and are controlled by a government conservator, the Federal Housing Finance Agency (FHFA). Edward DeMarco, the acting director of FHFA, in 2009 approved compensation packages allowing the top executives at each firm to receive as much as $6 million each in annual compensation.

“What is going on over at Freddie and Fannie and what is the conservator doing to make sure the taxpayers are represented?” Neugebauer asked.

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This all comes just days after Obama outlined plans to wind-down Fannie and Freddie gradually and to take steps to make the $10.6 trillion U.S. mortgage market less dependent on the government. Neugebauer says it’s no longer business as usual for the so-called government sponsored enterprises because “their business got taxpayers on the hook for a lot of money.”

Between the two institutions, they received more than $130 billion in direct taxpayer aid since being taken over by then Treasury Secretary Henry Paulson. ut the Administration said the amount could be much higher, to $169 billion next year before slowing shrinking as losses are paid back to Treasury coffers. Williams was asked why his salary should be more than that of the president, and he replied that the government decides his salary.

“My compensation is determined by the board of directors of FHFA and they determine what the appropriate compensation is for the executives of the company,” Williams said.

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Lawmakers debated with Williams and DeMarco over whether it was “reasonable” for taxpayers to foot more than $24 million in legal bills for former chief executive Franklin Raines and two other former Fannie executives accused of accounting misdeeds. DeMarco has consistently said his agency aims to protect taxpayers by making sure the firms have executives with the technical expertise to oversee more than $5 trillion in assets traded in global financial markets.