WASHINGTON – The regulator for Fannie Mae and Freddie Mac announced Friday it is capping CEO pay at the two deeply troubled housing giants at just $500,000 and will eliminate bonuses for dozens of top executives.
The move came as Freddie Mac was announcing another big loss for its fourth quarter of 2011, $1 billion, and a new request for $146 million in government aid. Both figures were greeted as good news because they were significantly down from losses last year.
Under the new policy by the Federal Housing Finance Agency, which has run the housing giants under conservatorship since Sept. 2008, neither firm – which both are searching for new CEOs – may pay their chief executives more than $500,000. Last year Fannie paid its CEO Michael Williams $5.3 million and four other executives more than $2 million. Freddie paid its CEO Charles Haldeman $3.8 million and three others more than $2 million.
The two companies, which have emerged as the only place for credit unions and banks to sell mortgages since the collapse of the mortgage market, have received more than $170 billion in government bailout funds since their 2008 takeover. The government estimates it could cost up to $259 billion more to support the companies through 2014.
Freddie and Fannie own or guarantee about half of all U.S. mortgages, or nearly 31 million home loans, which are worth more than $5 trillion. Along with other federal agencies, they backed nearly 90% of new mortgages over the past year.
