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114th Congress    }                                 {    Rept. 114-339
                        HOUSE OF REPRESENTATIVES
 1st Session      }                                 {           Part 1

======================================================================



 
             EQUITY IN GOVERNMENT COMPENSATION ACT OF 2015

                                _______
                                

 November 16, 2015.--Committed to the Committee of the Whole House on 
            the State of the Union and ordered to be printed

                                _______
                                

Mr. Hensarling, from the Committee on Financial Services, submitted the 
                               following

                              R E P O R T

                        [To accompany H.R. 2243]

      [Including cost estimate of the Congressional Budget Office]

    The Committee on Financial Services, to whom was referred 
the bill (H.R. 2243) to suspend the current compensation 
packages for the senior executives of Fannie Mae and Freddie 
Mac and establish compensation for such positions in accordance 
with rates of pay for senior employees in the Executive Branch 
of the Federal Government, and for other purposes, having 
considered the same, report favorably thereon with an amendment 
and recommend that the bill as amended do pass.
    The amendment is as follows:

  Strike all after the enacting clause and insert the 
following:

SECTION 1. SHORT TITLE.

  This Act may be cited as the ``Equity in Government Compensation Act 
of 2015''.

SEC. 2. DEFINITIONS.

  In this Act:
          (1) Director.--The term ``Director'' means the Director of 
        the Federal Housing Finance Agency.
          (2) Enterprise.--The term ``enterprise'' means--
                  (A) the Federal National Mortgage Association and any 
                affiliate thereof; and
                  (B) the Federal Home Loan Mortgage Corporation and 
                any affiliate thereof.
          (3) Executive officer.--The term ``executive officer'' has 
        the same meaning as is given such term in section 1303(12) of 
        the Federal Housing Enterprises Financial Safety and Soundness 
        Act of 1992 (12 U.S.C. 4502(12)).

SEC. 3. REASONABLE PAY FOR CHIEF EXECUTIVE OFFICERS.

  (a) Suspension of Current Compensation Package and Limitation.--The 
Director shall suspend the compensation packages approved for 2015 for 
the chief executive officers of each enterprise and, in lieu of such 
packages, subject to the limitation under subsection (b), establish the 
compensation and benefits for each such chief executive officer at the 
same level in effect for such officer as of January 1, 2015, and such 
compensation and benefits may not thereafter be increased.
  (b) Limitation on Bonuses.--Subsection (a) may not be construed to 
affect the applicability of section 16 of the STOCK Act (12 U.S.C. 
4518a) to the chief executive officer of each enterprise.

SEC. 4. FANNIE AND FREDDIE EXECUTIVE OFFICERS NOT FEDERAL EMPLOYEES.

  Any executive officer affected by any provision under section 3 shall 
not be considered a Federal employee.

                          PURPOSE AND SUMMARY

    Introduced by Representative Royce, H.R. 2243, the ``Equity 
in Government Compensation Act of 2015,'' as reported by the 
Financial Services Committee with an amendment, eliminates 
recent increases in compensation and benefits for the chief 
executive officers of the government sponsored enterprises 
(GSEs) Fannie Mae and Freddie Mac and provides that such 
officers shall be compensated at levels that were in place on 
January 1, 2015.

                  BACKGROUND AND NEED FOR LEGISLATION

    Since entering federal conservatorship in September 2008, 
Fannie Mae and Freddie Mac have received nearly $187.5 billion 
in government funds, making their conservatorship by far the 
costliest of all taxpayer bailouts arising from the financial 
crisis. Despite their unprecedented government assistance, the 
Treasury Department announced on Christmas Eve of 2009 that it 
would grant top executives at Fannie Mae and Freddie Mac multi-
million dollar bonuses. Accordingly, the Federal Housing 
Finance Agency (FHFA) ratified $42 million worth of pay 
packages for the GSEs' 12 top executives. In 2010, the FHFA 
approved pay packages similar to the ones it approved in 2009. 
Thus, Fannie Mae paid its top six executives $15.4 million in 
salaries and bonuses, and its CEO, Michael Williams, received 
$5.6 million. Freddie Mac paid its top five executives nearly 
$18.5 million, and its CEO, Charles E. Haldeman, Jr., received 
$5.4 million. On November 1, 2011, the FHFA approved $12.79 
million in bonus pay for 10 GSE executives.
    In 2012, then-FHFA Director Ed DeMarco capped the 
compensation for the GSEs' chief executives at $600,000. In 
early 2015, however, FHFA Director Mel Watt allowed the GSEs to 
raise their CEO pay to as much as the twenty-fifth percentile 
of comparable companies. This ultimately allowed both GSEs to 
increase their CEO pay from the previous cap of $600,000 to $4 
million annually.
    Director Watt's decision provoked bipartisan disapproval, 
both in Congress and the Administration. Notably, both the 
Treasury Department and the White House opposed the FHFA's 
decision to raise the GSEs' CEO pay. The Treasury Department 
recommended that ``existing limits on compensation continue 
given the taxpayers' ongoing backstop of both enterprises.'' 
Additionally, White House press secretary Josh Earnest stated 
that ``the reason that these entities are different than some 
of the financial entities that you see in the private sector is 
they benefit significantly from a backstop that's provided by 
the taxpayers. And because of that taxpayer assistance, I think 
it is entirely legitimate for the executives of those 
institutions to be subject to compensation limits.''
    Despite claims that the GSEs should be able to pay salaries 
commensurate with the private sector, these arguments fail to 
consider that the GSEs continue to function in ways unlike 
private industry. As noted by Treasury Secretary Jack Lew in 
testimony before the Financial Services Committee on June 17, 
2015, ``[their] risk is being borne by taxpayers on an ongoing 
basis and the conservatorship is not over.''

                                HEARINGS

    The Committee on Financial Services did not hold any 
hearings on H.R. 2243 in the 114th Congress.

                        COMMITTEE CONSIDERATION

    The Committee on Financial Services met in open session on 
July 28, 2015 and July 29, 2015, and ordered H.R. 2243 to be 
reported favorably to the House as amended by a recorded vote 
of 57 yeas to 1 nay (Record vote no. FC-47), a quorum being 
present. An amendment offered by Mr. Royce was agreed to by 
voice vote.

                            COMMITTEE VOTES

    Clause 3(b) of rule XIII of the Rules of the House of 
Representatives requires the Committee to list the record votes 
on the motion to report legislation and amendments thereto. The 
sole vote in committee was a motion by Chairman Hensarling to 
report the bill favorably to the House as amended. The motion 
was agreed to by a recorded vote of 57 yeas to 1 nay (Record 
vote no. FC-47), a quorum being present.


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                      COMMITTEE OVERSIGHT FINDINGS

    Pursuant to clause 3(c)(1) of rule XIII of the Rules of the 
House of Representatives, the findings and recommendations of 
the committee based on oversight activities under clause 
2(b)(1) of rule X of the Rules of the House of Representatives, 
are incorporated in the descriptive portions of this report.

                    PERFORMANCE GOALS AND OBJECTIVES

    Pursuant to clause 3(c)(4) of rule XIII of the Rules of the 
House of Representatives, the Committee states that H.R. 2243 
as amended will provide for compensation levels for the chief 
executive officers of Fannie Mae and Freddie Mac that are 
appropriate in light of the fact that both entities remain in 
taxpayer-backstopped conservatorships.

   NEW BUDGET AUTHORITY, ENTITLEMENT AUTHORITY, AND TAX EXPENDITURES

    In compliance with clause 3(c)(2) of rule XIII of the Rules 
of the House of Representatives, the Committee adopts as its 
own the estimate of new budget authority, entitlement 
authority, or tax expenditures or revenues contained in the 
cost estimate prepared by the Director of the Congressional 
Budget Office pursuant to section 402 of the Congressional 
Budget Act of 1974.

                        COMMITTEE COST ESTIMATE

    The Committee adopts as its own the cost estimate prepared 
by the Director of the Congressional Budget Office pursuant to 
section 402 of the Congressional Budget Act of 1974.

                 CONGRESSIONAL BUDGET OFFICE ESTIMATES

    Pursuant to clause 3(c)(3) of rule XIII of the Rules of the 
House of Representatives, the following is the cost estimate 
provided by the Congressional Budget Office pursuant to section 
402 of the Congressional Budget Act of 1974:

                                     U.S. Congress,
                               Congressional Budget Office,
                                   Washington, DC, August 25, 2015.
Hon. Jeb Hensarling,
Chairman, Committee on Financial Services,
House of Representatives, Washington, DC.
    Dear Mr. Chairman: The Congressional Budget Office has 
prepared the enclosed cost estimate for H.R. 2243, the Equity 
in Government Compensation Act of 2015.
    If you wish further details on this estimate, we will be 
pleased to provide them. The CBO staff contact is Aurora 
Swanson.
            Sincerely,
                                                        Keith Hall.
    Enclosure.

H.R. 2243--Equity in Government Compensation Act of 2015

    H.R. 2243 would direct the Federal Housing Finance Agency 
(FHFA) to roll back increases in compensation and benefits for 
Fannie Mae's and Freddie Mac's chief executive officers (CEO) 
to the levels that were in place on January 1, 2015. CBO 
estimates that enacting the legislation would not have a 
significant effect on the federal budget because while the bill 
would limit amounts paid for certain compensation, it would not 
directly change the income of Fannie Mae and Freddie Mac nor 
would it restrict how those entities could spend amounts 
realized by reducing such compensation. Because the legislation 
would affect direct spending pay-as-you-go-procedures apply. 
CBO estimates, however, that any decrease in direct spending 
would be insignificant. Enacting the bill would not affect 
revenues.
    Based on information from FHFA and Fannie Mae's and Freddie 
Mac's quarterly financial reports, the compensation for the two 
CEOs was capped at $600,000 annually beginning in 2013. On July 
1, 2015, FHFA increased each of the CEO's total compensation to 
$4 million to move the compensation levels closer to those in 
the financial industry and to align CEO compensation with the 
compensation levels of Fannie Mae's and Freddie Mac's eight 
Executive Vice Presidents, whose annual salaries range between 
$2 million and $3.5 million. Under the bill, the total 
compensation for each CEO would be reduced to $600,000 
annually. The bill also would indefinitely prohibit any 
increases in compensation and benefits for those CEOs.
    H.R. 2243 contains no intergovernmental or private-sector 
mandates as defined in the Unfunded Mandates Reform Act and 
would not affect the budgets of state, local, or tribal 
governments.
    The CBO staff contact for this estimate is Aurora Swanson. 
The estimate was approved by H. Samuel Papenfuss, Deputy 
Assistant Director for Budget Analysis.

                       FEDERAL MANDATES STATEMENT

    The Committee adopts as its own the estimate of Federal 
mandates prepared by the Director of the Congressional Budget 
Office pursuant to section 423 of the Unfunded Mandates Reform 
Act.

                      ADVISORY COMMITTEE STATEMENT

    No advisory committees within the meaning of section 5(b) 
of the Federal Advisory Committee Act were created by this 
legislation.

                  APPLICABILITY TO LEGISLATIVE BRANCH

    H.R. 2243 establishes compensation levels for the chief 
executive officers of Fannie Mae and Freddie Mac. The bill is 
narrow in scope to ensure that such individuals' compensation 
is appropriate given that the GSEs remain in conservatorship 
and therefore the bill does not apply to the legislative 
branch. The Committee finds that H.R. 2243 does not otherwise 
relate to the terms and conditions of employment or access to 
public services or accommodations within the meaning of the 
section 102(b)(3) of the Congressional Accountability Act.

                         EARMARK IDENTIFICATION

    H.R. 2243 does not contain any congressional earmarks, 
limited tax benefits, or limited tariff benefits as defined in 
clause 9 of rule XXI.

                    DUPLICATION OF FEDERAL PROGRAMS

    Pursuant to section 3(g) of H. Res. 5, 114th Cong. (2015), 
the Committee states that no provision of H.R. 2243 establishes 
or reauthorizes a program of the Federal Government known to be 
duplicative of another Federal program, a program that was 
included in any report from the Government Accountability 
Office to Congress pursuant to section 21 of Public Law 111-
139, or a program related to a program identified in the most 
recent Catalog of Federal Domestic Assistance.

                   DISCLOSURE OF DIRECTED RULEMAKING

    Pursuant to section 3(k) of H. Res. 5, 114th Cong. (2015), 
the Committee states that H.R. 2243 contains no directed 
rulemaking.

             SECTION-BY-SECTION ANALYSIS OF THE LEGISLATION

Section 1. Short title

    This section: cites H.R. 2243 as the ``Equity in Government 
Compensation Act of 2015.''

Section 2. Definitions

    This section: defines the terms ``director,'' 
``enterprise,'' and ``executive officer.''

Section 3. Reasonable pay for executive officers

    This section requires the FHFA Director to suspend the 
compensation packages approved for 2015 for the chief executive 
officers of Fannie Mae and Freddie Mac and, in lieu of such 
packages, to establish compensation and benefits at the same 
level as was in effect as of January 1, 2015. This section 
prohibits compensation and benefits from being increased 
thereafter and further provides that nothing in the section may 
be construed to affect the applicability of Section 16 of the 
STOCK Act (12 U.S.C. 4518a) to the chief executive officer of 
each GSE.

Section 4. Fannie and Freddie executive officers not Federal employees

    This section provides that an executive officer affected by 
Section 3 shall not be considered a Federal employee.

         CHANGES IN EXISTING LAW MADE BY THE BILL, AS REPORTED

    H.R. 2243 does not amend any section of a statute. 
Therefore, the Office of Legislative Counsel did not prepare 
the report contemplated by clause 3(e)(1)(B) of rule XIII of 
the House of Representatives.

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