Embattled government mortgage giants Fannie Mae and Freddie Mac were under fire again Thursday as the House Committee on Financial Services grilled leaders on "lavish" spending and executive pay.
This after the government mortgage giants both posted huge losses last quarter and have appealed to the Treasury Department for more funds—almost $14 billion between them—to shore up their shaky balance sheets.
With a hefty dose of indignation, Texas Republican Rep. Randy Neugebauer railed on Fannie Mae chief Michael Williams about more than $5 million budgeted for "meals and social activities" for employees—wondering why a taxpayer-funded organization in major financial trouble was throwing cash away.
[Read: New-and-Improved HARP 2.0 Is Here.]
A conference in Chicago, first reported by the Wall Street Journal, set back the government-sponsored enterprises nearly $700,000, including $74,000 spent on dinners by Fannie and Freddie over the course of the two-day conference.
"Do you understand the outrage?" asked Pennsylvania Republican Rep. Michael Fitzpatrick.
Freddie Mac CEO Charles Haldeman, Jr. defended the spending, saying overall the company had reduced its expenses from the prior year, while acting FHFA director Edward DeMarco admitted certain individual expenditures "could have been done away with."
Massachusetts Democrat Rep. Michael Capuano hammered the mortgage leaders over their lavish bonuses and compensation, but was rebuffed by Haldeman who argued those earning the big bucks were worth every penny.
[Read: Road Map to a Housing Rebound.]
"I totally get the outrage about executive compensation, [but] let me tell you about the dilemma," Haldeman said. "If you're running a $7 billion portfolio," even a small error could result in millions of dollars in loss.
"I felt we needed to pay that kind of compensation to get people" to do the job right, he added.
Capuano conceded that was a "fair and reasonable" distinction but urged for more transparency going forward. "You live in a fishbowl now and you have to act like you're in a fishbowl," he said.