CEO salaries in private enterprise often raise hackles of progressives, but they seem strangely mute when the fat cats are executives in charge of agencies that have had woeful performance records or made blunders that are devastating to our nation’s economy or security.

That’s why we’re raising our collective eyebrows because two executives at the quaisi-governmental agencies Fannie Mae and Freddie Mack are getting big raises that will mean that together they'll be taking home more than $4 million.

The government is relaxing the caps placed on CEO pay at these two organizations, even though they suffered losses, after engaging in practices that led to the housing bubble, which in turn led to government bailouts. Never mind.   CEO pay had been capped at $600,000 per year, but now Fannie Mae CEO Timothy Mayopoulous and Freddie Mac CEO Donald Layton will get annual base salaries of $750,000 each, $2.1 million in fixed deferred compensation, and $1.2 million in at-risk deferred salary. On top of that are bonuses.

The Federal Housing Finance Agency (FHFA) which oversees Freddie and Fannie, claim this move is to keep these CEOs from leaving for other more lucrative opportunities. We're all in favor of competitive compensation, but are these executives really worth it, given the records of their agencies? If they headed similarly-performing companies in the private sector, would they be given raises or pink slips?

Fox News/Associated Press report:

The compensation limits were imposed in 2012, shortly before the two men became CEOs of their respective companies. At that time, Fannie and Freddie had been in government conservatorship for more than three years, as they had suffered losses on risky mortgages in the housing market bust. Even after the $170 billion taxpayer bailout, their top management stayed well-compensated, leading to criticism of both the companies and the FHFA.

Officially known as Federal National Mortgage Association and Federal Home Loan Mortgage Corp., Fannie and Freddie own or guarantee about half of all U.S. mortgages, worth about $5 trillion. Along with other federal agencies, they back roughly 90 percent of new home loans. The companies don't directly make loans to borrowers. Instead they buy mortgages from lenders, package them as bonds, guarantee them against default and sell them to investors. That helps make loans available.

The FHFA allowed the companies to propose new compensation plans in May with the goal of helping them keep their CEOS, set up succession plans, and maintain continuity in management. The proposals had to include pay-for-performance aspects, couldn't include bonuses, and couldn't be higher than the 25th percentile for CEOs of comparable companies.

This matters because we may be incentivizing these CEOs to engage in the same practices that led to the housing bubble, subsequent housing market collapse, and economic recession. Last fall we reported that these lenders have decided to start relaxing requirements for borrowers.

We're again seeing some of the practices that led to trouble in the past, including relaxing standards such as lowering the minimum down payments below 10 percent to as low as 3 percent (even 0 percent down for some loans), reducing credit-score requirements, and giving greater leeway to consumers whose credit history suffered because of one-time events like a job loss or big medical bill, has expanded the pool of borrowers. It also appears to be contributing to a housing boom as American bought almost 20 percent more homes than last May.

Let’s just be careful though that the same well-intentioned polices don’t trigger the kind of harmful unintended consequences that we experienced leading to the recession. It is good when people have access to credit, but only if they are credit-worthy and don't put the entire economy at risk. As taxpayers we are on the hook for the loans that Freddie Mack and Fanny Mae are making, so we have an incentive of our own – to ensure that responsible decisions are being made.

If Freddie Mack and Fannie Mae’s CEOs are incentivized to take risky behavior as part of their compensation, their focus will be on their short-term bank accounts and not long-term health of the industry.

Furthermore, why aren’t we rewarding CEOs for growing more government independence rather than dependence? That they still back about 90 percent of new home mortgages is nothing to celebrate. The economy is truly healthy when the private sector is making and supporting those loans not the government. Let’s boost their pay when we see that rate drop by 20 or 30 percent.