The regulator of Fannie Mae and Freddie Mac warned Thursday that congressional proposals to clamp down on the two government-sponsored enterprises could put taxpayers at greater risk.
Edward DeMarco, acting director of the Federal Housing Finance Agency, said the legislation would make it harder for the GSEs to retain employees, have the ironic effect of causing more complaints about their size and, ultimately, bring higher costs to the government.
"I am concerned that legislation to overhaul the compensation levels and programs in place today with the application of a federal pay system to nonfederal employees carries great risk for the conservatorships and hence the taxpayer," DeMarco said at a hearing before the House Financial Services' capital markets subcommittee.
His comments came the same day the agency's Inspector General issued a report evaluating the executive compensation packages at both companies. In its report, the agency said FHFA, which authorizes such compensation packages, should perform ongoing reviews, establish criteria for reviewing performance data, and consider the level of federal support for the GSEs.
"These factors may warrant lower compensation for enterprise executives," the IG's report said. It also urged the agency to publicly disclose information about executive compensation and links to the GSEs' securities filings.
The agency agreed to most of the recommendations made by the IG.
