Still living with parents

24 July 2015 By Daniel Indiviglio

Congress wants to fund highway repairs by raising mortgage insurance fees and cap pay for bosses of the two rescued GSEs. Both proposals are well intentioned but encourage the idea that Fannie and Freddie are permanent wards. It’d be better to find ways to help them leave home.

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The U.S. House Financial Services Committee announced on July 23 that it would take on legislation sponsored by Republican Representative Ed Royce to cap salaries at government-owned mortgage guarantors Fannie Mae and Freddie Mac. The bill aims to revise the terms of executives’ current pay packages so that they are governed by government employee pay schedules.

The companies disclosed on July 1 that their CEOs would each earn $4 million per year, up from $600,000. The Treasury and White House opposed these increases, but the Federal Housing Finance Agency approved the higher compensation rates, arguing that the changes would allow Fannie and Freddie to be better placed to find and appoint successors for their CEOs.

Separately, the federal highway fund authorization expires on July 31. A bipartisan Senate bill to extend funding for six years relies in part on $2 billion in new revenue from increasing Fannie and Freddie guarantee fees until 2025.

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