Fannie Mae, Freddie Mac CEOs in line for $6 million each in 2009 and ‘10

The chief executives of Fannie Mae and Freddie Mac, the troubled mortgage companies seized by federal officials during the financial crisis, could receive as much as $6 million each this year and next year under pay packages announced Thursday by the agency overseeing the government’s conservatorship of the firms.

The announcement comes as taxpayers are on the hook for $111.8 billion in debt that the Federal Reserve has purchased from the two companies, making the firms among the largest bailout recipients.

Separately on Thursday, the Obama administration said it is removing the $400 billion financial cap it will provide to Fannie and Freddie to keep the mortgage giants from failing.

Treasury Department officials said the cap will be replaced with a flexible formula to ensure the companies can stand behind the billions of dollars in mortgage-backed securities they sell to investors. In August, the administration projected the cost for rescuing Fannie and Freddie would total $170 billion.

While most analysts believe the companies are unlikely to use the full $400 billion, the administration decided to remove the cap to eliminate any doubts.

“The amendments to these agreements … should leave no uncertainty about the Treasury’s commitment to support these firms as they continue to play a vital role in the housing market during the current crisis,” the department said in a statement.

The compensation packages for the chief executives are likely to provoke outrage in Congress, particularly among Republicans who have charged that Fannie Mae and Freddie Mac caused the housing boom and financial crisis with lax mortgage standards. Republicans have pushed for major changes at the two agencies, which were created as government-sponsored enterprises to provide liquidity to the mortgage industry by purchasing loans.

The pay packages were designed in consultation with the Treasury Department and follow the compensation guidelines set out by Kenneth Feinberg, the special master for Troubled Asset Relief Program executive compensation, said the Federal Housing Finance Agency, which has overseen the companies since federal officials seized them in September 2008. Those guidelines limit base salary and move more compensation into deferred stock and other incentives tied to a company’s longer-term performance.

Freddie Mac Chief Executive Charles Haldeman Jr., who took over in July, will receive a base salary of $900,000 in 2009 and 2010, with deferred payments of $3.1 million each year “only if the enterprise meets performance metrics” set by its board and subject to government review, according to filings today with the Securities and Exchange Commission. An additional $2 million is possible annually, identified as a “target incentive opportunity.” Fannie Mae Chief Executive Michael Williams, who became CEO in April, will receive the same compensation package.

Four additional Fannie Mae executives will receive base salaries above $500,000 and have compensation packages for 2009 and 2010 that could pay each of them at least $2.7 million annually. One other Freddie Mac executive has a base salary over $500,000 and could make up to $1.15 million a year.

The FHFA said that total compensation for executives at the two firms was down 40 percent in 2009 from the levels before the companies were seized. While seven executives have base salaries over $500,000 in 2009 and 2010, there were 16 executives with such salaries in 2008, the FHFA said.