Senator Webb and nine bipartisan colleagues today reiterated their call for fiscal responsibility and their concern about executive compensation at Fannie Mae and Freddie Mac in a letter to the Chairman of the Federal Housing Finance Agency (FHFA), Ed DeMarco. The senators voiced concern over news the new Chief Executive of Freddie Mac, Donald Layton, will be paid a salary of $600,000. The senators also reminded DeMarco that Fannie and Freddie remain in conservatorship at the expense of the American taxpayer. The announcement this week of the Layton salary came following Fannie Mae and Freddie Mac saying they would target their executive compensation at $500,000.
" We are troubled after news reports shed light on the $600,000 salary that former JP Morgan Vice Chairman Donald Layton will now receive as Freddie Mac's new Chief Executive so quickly after your announcement. It is important to maintain your commitment to the target salary, as you work to rebuild the confidence of the American public," the senators wrote.
The senators voiced additional concern about the message being sent to Americans by placing a former Vice Chairman from JP Morgan in a leadership position at taxpayer-supported institution while he maintains stock options and deferred compensation with JP Morgan Chase, a company FHFA does business with. The letter urges the agency to clearly define the circumstances with which he will continue to work with JP Morgan and insist that they closely monitor the relationship to avoid "any conflict of interest."
The letter follows a series of events that began last November, when reports surfaced that the FHFA approved nearly $13 million in bonus pay for ten executives at Fannie Mae and Freddie Mac. In response, Senator Webb joined a bipartisan letter to Edward DeMarco and Treasury Secretary Timothy Geithner expressing outrage over this excessive pay. As a result of Congressional pressure, FHFA recently announced a new compensation framework that would target executive compensation at $500,000. In addition, the Stop Trading on Congressional Knowledge Act of 2012 (STOCK Act) was passed into law, which prohibits insider trading by members of Congress and their staff. The law contains also contains a provision to prohibit bonuses for executives at Fannie Mae and Freddie Mac.