Washington, DC – United States Senators Elizabeth Warren (D-Mass.) and Thom Tillis (R-N.C.), both members of the Senate Banking Committee with jurisdiction over Fannie Mae and Freddie Mac, yesterday introduced the Respect the Caps Act.  

The bill comes after the Federal Housing Finance Agency (FHFA) Inspector General reported the FHFA has allowed compensation for executives at Fannie Mae and Freddie Mac to expand well beyond Congressionally-mandated limits for chief executive compensation at both institutions by separating the chief executive and president role at those agencies, transferring duties of the chief executive officer to the president, and raising the president’s salary by millions.

The Respect the Caps Act closes this loophole by amending the Federal Home Loan Mortgage Corporation Act and the Federal National Mortgage Association Charter Act to explicitly state that neither Fannie nor Freddie may transfer or delegate any duty or responsibility of the chief executive officer to any other position.

Respect the Caps Act also says the director of the FHFA may be removed should he or she approve compensation greater than the cap of $600,000 a year. 

"Following the financial crisis, Congress passed my bipartisan bill to cap pay raises for executives at Fannie Mae and Freddie Mac. Instead of enforcing the law, the FHFA has allowed executive compensation at Fannie to increase by $3.6 million and at Freddie, by $3.25 million," said Senator Warren. "My new bill with Senator Tillis is designed to close the loophole used to more than triple CEO salaries and keep Fannie and Freddie in check.”

In 2015, the Senate passed Senator Warren's bipartisan legislation with former Louisiana Senator David Vitter to cap compensation for executives at Fannie Mae and Freddie Mac and limit total compensation for each executive to $600,000 a year.