Report criticizes Fannie, Freddie pay
WASHINGTON - A government report finds median pay for nearly 2,000 senior managers at government-controlled Fannie Mae and Freddie Mac exceeded $200,000 last year.
The Federal Housing Finance Agency, which oversees the two mortgage giants, also did an inadequate job monitoring pay, according to the report released Monday from the inspector general for the FHFA.
The median figure means that half the managers received salaries above $200,000 and half received less.
Those managers represent nearly 17 percent of the roughly 11,900 total employees at the two bailed-out companies. Compensation for senior managers at the companies cost about $455 million in 2011, according to the report.
The report also says the top 333 of those managers are vice presidents who had median pay of $388,000. That's close to salaries paid by private financial firms and exceeds pay for similar jobs at federal agencies.
Because the FHFA doesn't closely evaluate the compensation of senior managers, it is unable "to ensure that the costs associated with senior professional compensation are warranted," the report says.
The FHFA said Monday it agreed with the inspector general's conclusion that it should improve its oversight of senior managers' pay. The FHFA said it plans to make a full review.
Taxpayers so far have paid roughly $170 billion to rescue Fannie and Freddie, which suffered huge losses from risky mortgages during the 2008 financial crisis.
Fannie and Freddie together own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans.
Under pressure from Congress, the FHFA earlier this year capped pay for Fannie and Freddie's CEOs at $500,000 a year. The agency also cut pay for about 50 other executives, who were earning more than the companies' senior managers looked at in the latest report.
In December 2010, the agency imposed a freeze on merit pay increases and cost of living adjustments for all Fannie and Freddie employees in 2011. It later was extended to cover 2012.
The agency and the two companies have said that the relatively high levels of compensation are needed to attract and keep qualified employees.
"There's a lot at stake for our country and it is absolutely critical that Fannie Mae compensation is competitive in the market for financial services talent," Fannie spokeswoman Kelli Parsons said in a statement Monday.
Compensation for Fannie employees has declined "substantially" from the levels of pay before the government takeover, Parsons said.
Brad German, a spokesman for Freddie, said "We compete every day with Wall Street for finance experts, mathematicians, engineers and other professionals."
Freddie uses "a rigorous compensation process" to offer pay that is reasonable yet competitive, German said in a statement.
REPORT FINDINGS
Report on pay: A government report finds median pay for nearly 2,000 senior managers at government-controlled Fannie Mae and Freddie Mac exceeded $200,000 last year. Taxpayers have paid about $170 billion to rescue Fannie and Freddie, which almost collapsed from losses on risky mortgages during the financial crisis.
Poor monitoring: The Federal Housing Finance Agency did an inadequate job monitoring pay, according to the report from the inspector general for the FHFA.
Compensation costs: Compensation for senior managers at the companies, who represent nearly 17 percent of the workforce, cost about $455 million in 2011.
