Executive compensation of FHLBank execs comes under scrutiny

A letter from Senate Republicans noting a payout to a former Federal Home Loan Bank CEO has led consumer advocates to heighten scrutiny of executive salaries throughout the FHLB system.  

In correspondence addressed to Federal Housing Finance Agency Director Bill Pulte in early April, the 13 Republican members of the Committee on Banking, Housing and Urban Affairs said the multimillion dollar payment made to former FHLBank of San Francisco CEO Alanna McCargo as part of a separation agreement raised "serious concerns" about how the system was using resources. 

In addition to regulating fellow government-sponsored enterprises Fannie Mae and Freddie Mac, the FHFA is also responsible for oversight of the FHLBank system.

In recent years, critics pointed to profits and compensation at the 11 regional institutions that make up the FHLBank system in calling for reforms, claiming that they had lost sight of the system's initial purpose of supporting mortgage lending and related community investments. 

The letter prompted a consumer advocacy group to release executive compensation figures this week, all compiled from publicly available filings.

"If FHFA and Congress seek to root out waste and inefficiencies in our housing finance system, they can start by setting reasonable limits on FHLB executive pay and looking into consolidation options for this system of 11 banks, 11 presidents and 11 executive teams," said Sharon Cornelissen, director of housing at Consumer Federation of America. Cornelissen also leads the Coalition for Federal Home Loan Bank Reform.  

"In 2024 alone, 31 executives across the FHLB system – a GSE chartered by Congress and backed by taxpayer dollars – made more than $1 million in compensation," she added.

Last year, the average annual salary for all 11 CEOs approached $2.4 million, with the cumulative total equaling $30.4 million, according to calculations made by the consumer nonprofit.

Between 2019 and 2024, the average annual executive salary throughout the system approached $1.5 million. The total compensation to senior leaders over the last five years came in at approximately $534.5 million, with 213 executives earning more than $1 million in annual salary, numbers deemed "excessive" by CFA.

The 11 institutions that make up the FHLBank system serve designated regions across the country. Created through the Federal Home Loan Bank Act, the network was originally formed to help support liquidity and affordability in local housing markets. 

The Council of Federal Home Loan Banks, a group that represents the full system, pushed back on the "excessive" claim, saying salaries were in line with compensation at comparably sized financial institutions across the U.S. 

While created under an act of Congress, the banks are privately capitalized and should not be seen as extensions of the government, the group's leadership said. Likening the system and salaries to government-run Federal Reserve banks was akin to comparing apples and oranges, according to the council. 

"Each FHLBank undergoes a detailed and transparent comparative analysis of salaries at financial institutions of similar size and complexity, including large regional banks. Compensation levels are specifically designed to attract individuals with the requisite talent and capabilities to ensure the safe and sound operations of each FHLBank," said Council of Federal Home Loan Banks President and CEO Ryan Donovan.

"The leaders of each of the 11 FHLBanks are highly skilled executives with years of banking experience and their compensation levels are determined by their boards of directors, in consultation with their executive compensation committees," he added.

The FBLBank system also continues to support housing affordability, with over $1.2 billion committed last year, with each member allocating 15% of profits toward that aim, the council said.

The payout given to McCargo on her departure is also in line with sums given to other CEOs after they exited, according to a Federal Home Loan Bank of San Francisco representative. Payout amounts for top executives are clearly stipulated in contracts at hiring and publicly disclosed at that time, they added. 

McCargo announced she was leaving FHLBank of San Francisco in January after accepting the role less than one year earlier. 

The Republican call for FHFA to "aggressively and prudently" address unnecessary spending comes amid widespread cuts in government funding during the second Trump administration. After the president took office in January, the Elon Musk-led Department of Government Efficiency immediately embarked on slashing federal programs and budgets it saw as "waste, fraud and abuse." 

While the enterprises FHFA regulates do not fall under DOGE's purview, Pulte has employed similar tactics since his confirmation as FHFA director. His focus has largely been trained on Fannie Mae and Freddie Mac rather than the FHLBanks.  

Pulte has already eliminated several programs administered by the GSEs and removed top leadership at Freddie Mac. Pulte this week also announced that Fannie Mae fired scores of employees engaged in fraud, but exact numbers and other further details have not been made public.