According to regulatory filings, Fannie Mae (NYSE: FNM) Chief Executive Michael Williams and Freddie Mac CEO Charles Halderman Jr. are each eligible to receive compensation for 2009 that could reach $6 million.
The two mortgage giants, which were taken into conservatorship in 2008 by the U.S. government, have seen plenty of debate over the past year about executive compensation. However, the Federal Housing Administration, which acts as the main watchdog for the two mortgage firms, stated that compensation must remain competitively high in order to attract and retain the industry’s top talent.
Additionally, 10 other executives at the two firms are eligible for a total of $30.1 million in 2009 compensation. However, even with those potential payouts, compensation for the two firms is down roughly 40 percent from when they were taken over.
Along with the Federal Housing Administration, the U.S. Treasury Department approved the 2009 pay packages.
Fannie and Freddie, combined, have received more than $111 billion in financial aid from the U.S. government thus far, but as seen with today’s filing, have not received the same pressure in regard to pay restrictions that some other big banks did while under TARP guidelines.
The two mortgage firms back roughly 31 million home loans worth around $5.5 trillion, thus providing key liquidity to the mortgage industry. A failure of either Fannie or Freddie would likely take the mortgage industry to a standstill.
That concern is likely why the U.S. Treasury Department announced it is removing the $400 billion financial aid limit for the two firms, of which $288 billion is still available. Rather, the agency said it will put in place a formula to ensure the mortgage firms can honor the billions in mortgage-backed securities it offers.
The Treasury’s move could mean that Fannie and Freddie may be in-line for a larger role in mortgage modifications, which are widely viewed by regulators as a key in slowing foreclosures.
