NEW YORK (CNNMoney) -- Top executives at Fannie Mae and Freddie Mac were paid handsomely over the past two years, while the government agency in charge of regulating the bailed-out mortgage backers was ill-equipped to do anything about it, according to a federal review.
The inspector general for the Federal Housing Finance Agency (FHFA) said the top six executives at Fannie and Freddie received a combined $35.4 million in 2009 and 2010, while the companies were in federal receivership.
Of that total, the chief executives at both companies were paid $17 million, according to the report. If they had met their performance targets, which they didn't, the CEOs would have received a combined $24 million over two years.
The chief executive of Freddie Mac is Charles "Ed" Haldeman, while Michael Williams is in charge at Fannie Mae. Both were appointed in 2009.
Representatives for both Fannie and Freddie declined to comment on the report.
Fannie and Freddie are government-sponsored enterprises, or GSEs, that buy home loans that conform to certain standards and convert them into assets that can be sold to investors. They stand behind the vast majority of mortgages in the United States.
The two institutions, which were publicly traded at one time, were rescued by the government in 2008 as the downturn in the housing market led to staggering losses on bad loans. The two companies have received over $150 billion in taxpayer aid since then.
Congress is currently debating ways to wind down Fannie and Freddie, which represent a major liability for U.S. taxpayers, and reduce the government's role in the mortgage market without raising costs for low-income borrowers.
Steve Linick, the inspector general, said the Federal Housing Finance Agency has a responsibility to "efficiently, consistently, and reliably ensure that the compensation paid to Fannie Mae's and Freddie Mac's senior executives is reasonable."
"This is especially true when you realize that the U.S. Treasury has invested close to $154 billion to stabilize Fannie Mae and Freddie Mac, and the GSEs are spending tens of millions of dollars for executive compensation," Linick said.
The inspector general found that FHFA did not review the issues necessary to determine whether compensation practices at Fannie and Freddie were "reasonable" and sufficient to "recruit and retain key professionals."
He also said the agency lacks "key controls" needed to monitor the ongoing compensation decisions under the companies' current approved packages. In addition, the report faults FHFA for a lack of transparency in its disclosures of compensation policies at Fannie and Freddie.
A spokeswoman for FHFA did not immediately respond to a request for comment. But in testimony before Congress on Thursday, the agency's acting director, Edward DeMarco, said overall compensation at Fannie and Freddie has been reduced by 40% since the companies were taken over by the government.
"Retaining human capital in the face of a very uncertain future is a difficult task and setting a compensation strategy in such an environment requires a delicate balancing act," he told members of the House Financial Services subcommittee on capital markets, insurance and government-sponsored enterprises.
DeMarco testified that the FHFA has directed Fannie and Freddie to keep 2011 compensation at last year's level, which he said was the lowest in 12 years.
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