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."
Haldeman, who has already said he will leave Freddie Mac once his replacement is found, said the company has reduced compensation for the top 10 percent of the management team by about 40 percent since the firm was taken over by the government in September 2008.
"We have taken several measures to reduce overall compensation levels," he said. He added that it would be counterproductive to change the pay scales for the mortgage firm's employees without reform of the overall housing finance system.
"It would make it much harder for us to retain people we have and attract qualified people to replace them," he said.
Edward DeMarco, acting head of the Federal Housing Finance Agency, is also scheduled to testify before the committee. In an appearance before the Senate Banking Committee on Tuesday he defended the pay packages, saying it was important to retain top talent.
Reporting by Margaret Chadbourn; Editing by Kenneth Barry