The CEOs of Freddie Mac and Fannie Mae now stand to earn more than six times as much compensation as they did last year.
The pay hikes became public on Wednesday, when both companies filed required forms with the U.S. Securities and Exchange Commission (SEC). The hikes also took effect on Wednesday.
The SEC filings show that Donald Layton, Freddie Mac chief executive, and Timothy Mayopoulos, Fannie Mae chief executive, each are set to earn a total compensation of $4 million, most of which is deferred compensation.
The two CEOs each previously had been limited to pay of $600,000.
The raises were approved Tuesday by the Federal Housing Finance Agency (FHFA), an independent regulatory agency, the SEC filings state. The federal government established Fannie Mae and Freddie Mac as a means of creating mortgage-market liquidity, and of providing greater access to homeownership for more citizens.
The federal government took over the two mortgage giants during the 2008 financial crisis and placed them in conservatorship. The FHFA now has control over both Fannie and Freddie.
Fannie and Freddie received a combined $180 billion in federal bailout funds during the recession of 2007-2009, MarketWatch reports.
During a press conference in May, Josh Earnest, White House press secretary, cited that federal assistance as reason for Freddie Mac’s and Fannie Mae’s CEO compensation to be limited:
“The reason that these entities are different than some of the financial entities that you see in the private sector is they benefit significantly from a backstop that’s provided by the taxpayers. And because of that taxpayer assistance, I think it is entirely legitimate for the executives of those institutions to be subject to compensation limits.”
Adam Hodge, a spokesperson for the U.S. Department of the Treasury, stated an objection to the increases, telling Bloomberg:
“Treasury does not support FHFA’s new approach to CEO compensation at Fannie Mae and Freddie Mac and urged the agency to reject any increase. Treasury has consistently recommended that existing limits on compensation continue.”