PDF(PDF provides a complete and accurate display of this text.)Tip?
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.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
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.
[GRAPHIC(S) NOT AVAILABLE IN TIFF FORMAT]
