S. 2036, Equity in Government Compensation Act of 2015

S. 2036

Equity in Government Compensation Act of 2015

Sen. David Vitter

November 16, 2015 (114th Congress, 1st Session)

Staff Contact
John Huston

Floor Situation

On Monday, November 16, 2015, the House will consider S. 2036, the Equity in Government Compensation Act of 2015, under suspension of the rules. S. 2036 was introduced on September 15, 2015 by Sen. David Vitter (R-LA) and passed the Senate by unanimous consent on September 15, 2015.

Bill Summary

S. 2036 suspends the compensation packages approved in July 2015 for the chief executive officers (CEOs) of the Government Sponsored Enterprises (GSE) Fannie Mae and Freddie Mac and caps compensation for such officers at the level that was in effect on January 1, 2015, if those entities are in conservatorship or receivership. The bill also clarifies that the CEOs are not federal employees.


The Federal Housing Finance Agency (FHFA) was established by the Housing and Economic Recovery Act of 2008 (HERA) and is responsible for the effective supervision, regulation and mission oversight of the Federal National Mortgage Association (Fannie Mae), the Federal Home Loan Mortgage Corporation (Freddie Mac), and the Federal Home Loan Bank System. [1]

On September 6, 2008, FHFA exercised this authority and placed Fannie Mae and Freddie Mac into conservatorships.  At the same time, the U.S. Department of the Treasury entered into Senior Preferred Stock Purchase Agreements (PSPAs) with Fannie Mae and Freddie Mac to provide liquidity and stability to the mortgage market by purchasing shares of each company. In part, as a result of these actions, the U.S. Government owns a combined $187.5 billion of PSPAs of the GSEs and the rights to purchase up to 80 percent of their common shares. According to recent reports, the Administration has no immediate plans to sell back any of its shares or remove the entities from conservatorship.[2]

As their regulator and conservator, the FHFA has sole authority over approving the executive compensation packages set at both Freddie Mac and Fannie Mae. In May of 2015, the FHFA boards approved compensation package increases of approximately $3.4 million for each of the entities CEOs, some of which will be provided in deferred compensation benefits. This brings the CEOs total annual compensation to approximately $4 million.

According to reports, the boards said higher compensation was needed to retain the CEOs and for succession-planning issues.[3] S. 2036 suspends these approved compensation packages and keeps in place the caps on CEO pay at current levels (approximately $600,000 per year), while the entities remain in conservatorship.

Additionally, Section 16 of the Stop Trading on Congressional Knowledge Act (STOP) of 2012, prohibits senior executives at Freddie Mac and Fannie Mae from receiving bonuses while those entities are in conservatorship.[4] S. 2036 ensures this provision of the STOP Act remains in effect.

The House Committee on Financial Services ordered a similar bill (H.R. 2243) reported by a vote of 57 to 1 on July 29, 2015.

[1] See Federal Housing Finance Agency 2014 Report to Congress, June 15, 2015, at 7.
[2] See Bloomberg Article, “Obama Officials Resist Calls to Release Fannie Mae, Freddie Mac”, October 19, 2015.
[3] See Wall Street Journal Article, “Fannie, Freddie CEOs to Get $3.4 Million Raises,” July 1, 2015.
[4] See 12 U.S.C. 4518(a)


The Congressional Budget Office (CBO) estimates that enacting the bill would not have a significant effect on the federal budget, because while the bill would limit amounts paid for certain compensation, it would not directly change the income of Fannie Mae and Freddie Mac nor would it restrict how those entities could spend amounts realized by reducing such compensation. Because the legislation would affect direct spending, pay-as-you-go-procedures apply. CBO estimates, however, that any decease in direct spending would be insignificant. Enacting the bill would not affect revenues.

Additional Information

For questions or further information please contact John Huston with the House Republican Policy Committee by email or at 6-5539.