Senator Bob Corker released the following statement regarding reports that Federal Housing Finance Agency (FHFA) director Mel Watt will reconsider the executive compensation cap for the CEOs of government-sponsored enterprises (GSEs) Fannie Mae and Freddie Mac.
He said, “Just last week, FHFA’s own stress test showed that Fannie Mae and Freddie Mac could require a $157 billion taxpayer bailout to stay afloat during a future crisis.
While Director Watt’s decision to reassess the existing compensation cap may seem minor, it is emblematic of a much larger problem: FHFA appears ready and willing to unilaterally drive the GSEs back to the failed model of private gains and public losses. If Congress doesn’t act to reform our housing finance system, it will be blessing FHFA’s push to recreate the failed pre-conservatorship model.”
Legislation first introduced by Senator Corker and Senator Mark Warner (D-Va.) in June 2013, the Housing Finance Reform and Taxpayer Protection Act (S.1217), passed the Senate Banking Committee in May 2014 by a vote of 13 to 9.
Senator Corker said, "During the 2008 financial crisis, Fannie Mae and Freddie Mac were taken into government conservatorship and given a $188 billion capital injection from taxpayers to stay afloat. As a result, the private market almost completely disappeared, and nearly every loan made in America today comes with a full government guarantee. Despite this unsustainable situation, there still has been no real reform to our housing finance system."