Fannie, Freddie executives defend pay packages

Wed Nov 16, 2011 10:25am EST
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By Margaret Chadbourn

WASHINGTON (Reuters) - The top executives for Fannie Mae and Freddie Mac on Wednesday defended their companies' pay practices, which have drawn scrutiny after it was disclosed the government-controlled firms were paying out nearly $13 million in executive bonuses.

Michael Williams, chief executive of Fannie Mae, and Charles Haldeman, Freddie Mac's chief executive, both argued the compensation structures at the mortgage finance firms were warranted to retain and attract qualified staff.

In remarks prepared for delivery to a House of Representatives committee, the executives said cutting compensation for workers at Fannie Mae and Freddie Mac would be disruptive and limit their ability to attract skilled management.

"We need to compensate our executives and employees to ensure that we have and keep the leadership we need to continue our progress," Williams said in the testimony to the House Oversight Committee.

Republicans and Democrats in both the House and Senate have expressed chagrin that the two companies, which have been propped up by about $169 billion in federal aid, were paying out $12.79 million in bonuses for 10 executives.

The government took control of the firms, the two largest sources of funding for U.S. mortgages, as mounting losses threatened their solvency in 2008. The government has managed them since then.

A bill to block the pay packages was approved by the House Financial Services Committee on Tuesday on a lop-sided 52-4 vote. The full House must vote on the measure. A similar bill has been introduced in the Senate.

Williams said that without legislative direction from Congress on the future of the two government-sponsored enterprises, it was "difficult to attract and retain employees with highly specialized skills, expertise and experience."   Continued...