Senate approves amendment to end Fannie, Freddie bonuses

The Senate approved an amendment on Thursday night to prohibit insider trading that would end bonuses for executives at mortgage giants Fannie Mae and Freddie Mac. 

The amendment offered by Sens. Jay Rockefeller (D-W.Va.) and John McCain (R-Ariz.) won't allow Fannie and Freddie's top officials from receiving future multi-million dollar bonuses as long as the government-backed mortgage companies remain in federal conservatorship. 

At the end of last year, the Federal Housing Finance Agency, the regulator of the firms, approved $12.8 million in bonuses to 10 Fannie and Freddie executives.  

"The American people deserve better, particularly as too many families are struggling just to get by," Rockefeller said. "Fannie Mae and Freddie Mac must be more responsible with taxpayers’ money, and this legislation should help make that happen.”

McCain said the mortgage firms, which hold about half of all home loans, argued that any bonuses should be stopped while they accept taxpayer help — $170 billion so far, and a recent request for $13.8 billion more. 

"The American taxpayer has been the victim of outright corruption and blatant abuse at the hands of Fannie Mae and Freddie Mac for decades — it must stop," he said. 

"It is time to enact fundamental GSE reform, and take Fannie and Freddie off the permanent taxpayer bailout list, returning them to the competitive marketplace before they go from ‘too big to fail’ to ‘too late to fix,’ " he said. 

Co-sponsors of the amendment are Sens/ Mike Johanns (R-Neb.), Claire McCaskill (D-Mo.), John Barrasso (R-Wyo.), Lindsey Graham (R-S.C.), Mike Enzi (R-Wyo.), Tom Coburn (R-Okla.), John Thune (R-S.D.), Roy Blunt (R-Mo.), Lindsey Graham (R-S.C.), Dean Heller (R-Nev.), Joe Manchin (D-W.Va.), John Hoeven (R-N.D.), and Sheldon Whitehouse (D-R.I.).

The chief executives of both firms will leave their posts when replacements are found. 

Edward DeMarco, acting director of the FHFA, has argued before Congress that the bonuses were needed to attract and retain talented enough employees to manage $5 trillion in mortgage assets. 

The Senate passed the insider trading bill 96-3 on Thursday night, sending it to the House, which is expected to beef it up and pass its version by the end of the month.