The inspector general of the Federal Housing Finance Agency (FHFA) released a report on Wednesday criticizing federal regulators’ oversight of top executives’ pay at the beleaguered Fannie Mae and Freddie Mac.
The IG report found that the FHFA approved more than $35 million in annual base salaries and deferred performance pay for FNMA and the Federal Home Loan Mortgage Corp.'s top six officers–their CEOs, COOS and CFOs–in 2009 and 2010. Fannie and Freddie were taken over by the government in September 2008, and FHFA became the conservator for the two GSEs.
The report recommended that FHFA should establish written criteria and procedures for reviewing performance data of the executives, and conduct "independent verification and testing of the basis for executive compensations levels." Once those actions are taken, the report suggest that those factors "may warrant lower compensation" for Fannie and Freddie executives.
Finally, the IG report said FHFA does not provide "sufficient transparency to the public" of the two GSEs' executive compensation packages.
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The IG report recommended, instead, that the FHFA look at other federal agencies involved in the housing market to help determine executive compensation levels.