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Letter To The Honorable Barney Frank, Chairman, House Financial Services Committee; The Honorable Spencer Bachus, Ranking Member, House Financial Services Committee

Letter

By:
Date:
Location: Washington, DC

Today, Congressman Peter Roskam (R-Ill.), Deputy Whip and member of the Ways & Means Committee, introduced The Protecting Taxpayers From Excessive Compensation Act, calling for new pay accountability rules for Fannie Mae and Freddie Mac. Roskam's proposed legislation would prohibit any employee of Fannie Mae or Freddie Mac, while the entities are under conservatorship or receivership, from being compensated more than any member of our Armed Forces.

"With historic federal spending and debt on one end, and unprecedented taxpayer exposure to Fannie and Freddie on the other, now is the time to take a step toward restoring accountability and the public trust in the use of taxpayer funds," Roskam wrote in a letter to Financial Services Chairman Frank and Ranking Member Bachus prior to the Committee's Employment Compensation Hearing being held this Friday. "There are few government personnel that perform a more solemn and vital duty to our country than the Chairman of the Joint Chiefs of Staff. So long as Fannie and Freddie are effectively owned by the government, there is no reason any of their employees should be compensated more than the Chairman of the Joint Chiefs."

Despite costing taxpayers $110 billion since 2008, compensation packages of $6 million for each of the chief executives at Fannie Mae and Freddie Mac were approved on Christmas Eve by the Treasury Department and Federal Housing Finance Agency. That same day, the Treasury Department lifted the $400 billion limit on the level of losses to which the Department could commit the taxpayer.

Chairman Frank himself wrote in a March 19, 2009 letter to then-FHFA Director James Lockhart that large bonuses "awarded by institutions receiving public funds at a time of serious economic downturn cannot continue."

The Chairman of the Joint Chiefs of Staff's yearly salary is $179,701.20.

Hon. Barney Frank Hon. Spencer Bachus
Chairman Ranking Member
House Financial Services Committee House Financial Services Committee
2129 Rayburn HOB B-371a Rayburn HOB
Washington, DC 20515 Washington, DC 20515

Dear Chairman Frank and Ranking Member Bachus,

I am writing regarding the compensation practices at Fannie Mae and Freddie Mac. It is my hope that these practices will garner the attention they warrant at your hearing on compensation practices this Friday, January 22.

There can be no doubt now that Fannie Mae and Freddie Mac have and will reap tremendous benefit from the taxpayer. Since September 2008 when the two were placed in conservatorship, they have cost taxpayers more than $110 billion. The taxpayer is now responsible for all of the losses of Fannie Mae and Freddie Mac as a result of the Treasury Department's Christmas Eve move to lift all limits on the amount of taxpayer funding that could be committed to these entities.

In a March 19, 2009, letter to then-FHFA Director James Lockhart regarding bonuses, Chairman Frank, you wrote that "[t]he public, having provided significant support for the purpose of restoring trust and confidence in our country's financial system, rightfully insists that large bonuses such as these awarded by institutions receiving public funds at a time of serious economic downturn cannot continue."

Indeed, we remain in just such a serious economic downturn and face increasing challenges managing public funds. In the last year, we've seen GDP contract, unemployment hit 10%, and an historic increase in the national debt to more than $12 trillion. Despite this reality, and the fact that the taxpayer is now expected to provide unlimited support to Fannie Mae and Freddie Mac, it was also announced on Christmas Eve that the Treasury Department and FHFA approved compensation packages of as much as $6 million for each of the chief executives of these entities.

With historic federal spending and debt on one end, and unprecedented taxpayer exposure to Fannie and Freddie on the other, now is the time to take a step toward restoring accountability and the public trust in the use of taxpayer funds. Accordingly, I've introduced legislation that would prohibit any employee of Fannie Mae or Freddie Mac, while the entities are in either conservatorship or receivership, from being compensated more than any member of our Armed Forces. There are few government personnel that perform a more solemn and vital duty to our country than the Chairman of the Joint Chiefs of Staff. So long as Fannie and Freddie are effectively owned by the government, there is no reason any of their employees should be compensated more than the Chairman of the Joint Chiefs.

I believe this is an issue we can engage in a swift and bipartisan fashion so that we might correct this instance where individuals that are effectively government employees are afforded on the backs of taxpayers an income that most will only ever hope to see deposited in their own bank account. For additional background and information on my legislation, please feel free to contact David Mork of my staff at 202-225-4561. I look forward to working together.

Very truly yours,

Peter J. Roskam
MEMBER OF CONGRESS


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