CEOs receive massive taxpayer-funded raises
Ignoring objections from the White House and the U.S. Treasury Department, the Federal Housing Finance Agency (FHFA) went ahead with its proposal to raise salaries for the chief executives of government-backed Fannie Mae and Freddie Mac.
Despite the $600,000 salary cap implemented by the FHFA after public-criticism of the CEO’s seven-figure salaries, Freddie Mac CEO Donald Layton and Fannie Mae CEO Timothy J. Mayopolous are set to each receive $4 million a year. The six-fold salary increase came after Matt Melvin, the director of the FHFA, raised concerns over a competitive salary being necessary to maintain employees.
Bailed out by the government during the financial-market collapse in 2008 that the two mortgage companies helped to cause, Fannie Mae and Freddie Mac received a combined $187.5 billion taxpayer-funded bailout, the largest bailout given during the crisis. Since the government takeover, there has been little progress made in reforming the U.S. financial housing market.
Mayopolous’ and Layton’s new salaries rival their previous private-sector salaries, but they are not private-sector employees. They are public servants and their salaries should not be comparable to that of private-market CEOs. While the companies have sent the Treasury $230 billion since their bailout, both firms have failed to make considerable progress in reforming or rehabilitating the U.S. housing finance market.
The pay-revamp comes after increasing uncertainty over whether or not Congress will make a decision about the companies any time soon. In 2014, the Senate Banking Committee passed a measure that would dissolve Fannie Mae and Freddie Mac and replace them with a private-market solution. Backed by a bipartisan coalition, the measure was opposed by progressive Democrats and failed to make it to the Senate for a vote. Neither chamber is expected to take up the issue this year.