Democrats demand DeMarco testify on Fannie, Freddie bonuses

House and Senate Democrats want federal housing overseer Edward DeMarco on Capitol Hill to discuss executive compensation at Fannie Mae and Freddie Mac.

House Oversight and Government Reform Committee ranking member Elijah Cummings (D-Md.) sent a letter on Tuesday to committee Chairman Darrell Issa (R-Calif.) requesting that he invite DeMarco, the acting director of the Federal Housing Finance Agency (FHFA) that oversees the government-controlled mortgage lenders, to testify at the panel’s Nov. 16 hearing on the issue. 

“In order to properly examine these compensation packages,” Cummings wrote. “The committee should hear from the official who approved them, Mr. DeMarco.”

Senate Banking, Housing and Urban Affairs Committee Chairman Tim Johnson (D-S.D.) said last week that he will hold a hearing on the bonuses and wants DeMarco to testify. 

“Given the current economic times and continued challenges in the housing market, I want to assure my colleagues that I plan to call DeMarco before the committee as soon as possible,” he said. “The details are still being worked out, but my staff will be in touch with your staff.”

Johnson emphasized that the FHFA under DeMarco’s leadership “is responsible for approving compensation and maintaining adequate internal controls to oversee the day-to-day operations at Fannie Mae and Freddie Mac.”

“This committee, the Congress and taxpayers need to be confident that those controls are in place and the conservator is upholding its responsibilities.”

Last year, the FHFA reportedly approved $12.79 million in bonus pay for 10 Fannie Mae and Freddie Mac executives. 

But earlier this year the FHFA’s inspector general issued a report concluding that the housing agency “lacks the controls to monitor and evaluate Fannie and Freddie’s executive compensation decisions and fails to make them transparent to the public,” Cummings wrote. 

Cummings also requested that Issa ask the FHFA to produce all copies of all compensation packages for the top executives at Fannie Mae and Freddie Mac by Nov. 14. 

“Without testimony from the head of the agency responsible for approving executive compensation at Fannie Mae and Freddie Mac, and without copies of the compensation packages we are supposed to review at the hearing, the Committee’s oversight efforts will be inadequate and incomplete,” Cummings wrote. 

So far, Issa has invited Charles Haldeman Jr. and Michael Williams, chief executives of Freddie Mac and Fannie Mae, respectively, to the hearing, Cummings said.  

Fannie and Freddie were taken over by the government in 2008. 

In a news release issued on Dec. 24, 2009, DeMarco said “it will be essential that that the Enterprises continue to perform their current role” and explained that executive compensation would consist of three elements: base salary, a performance-based incentive opportunity and deferred salary.

Although compensation levels were “down 40 percent from pre-conservatorship levels,” DeMarco justified the compensation packages by stating that Fannie and Freddie “must attract and retain the talent needed to accomplish these objectives,” Cummings said.