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‘Golden Parachutes’ for Fannie/Freddie CEOs?

September 15, 2008 RSS Feed Print

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Looks as if the ex-CEOs of Fannie Mae and Freddie Mac—the mortgage finance giants that were recently taken over by the federal government—might not be strapping on those golden parachutes after all...

From Bloomberg:

The Federal Housing Finance Agency notified former Fannie CEO Daniel Mudd and former Freddie CEO Richard Syron that they will not receive the exit pay called for in their employment contracts now that the companies are under federal control, the regulator said in a statement yesterday on its Web site.

FHFA Director James Lockhart on Sept. 12 proposed limiting payments for departing executives, board members, contractors, outside lobbyists and business partners. U.S. senators including Charles Schumer of New York, Jack Reed of Rhode Island and Richard Durbin of Illinois, had urged FHFA to trim or eliminate bonuses for Mudd and Syron, citing their "failed leadership..."

Syron, 64, could have received $12 million to $14 million in exit pay, while Mudd, 50, could have gotten $7 million to $9 million, David Schmidt, a senior consultant for New York-based compensation firm James F. Reda & Associates, said last week after reviewing employment agreements in company filings.

Tags:: executive pay,; executives,; Freddie Mac,; Fannie Mae

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ANYONE with a brain and 20/20 vision beyond the next fiscal year could foresee the 'crisis' we seem to think is happening today. It was about as unpredictable as the next solar eclipse. I was asking seven years ago how long the increase in home prices could last and it went on a lot longer than I expected. Had someone like me been on the boards of these banks, they would have started tightening credit at least four years ago and making sure the loans approved were to people who could afford them. I expect they would have stayed out of investing in any bank or group which had a finger in the sub-prime market as well.
As it is, these yahoos didn't look beyond the next bonus or stock split and took down institutions that are responsible for a gigantic number of home loans. They certainly don't DESERVE a bonus for screwing up. I'm gratified to see SOME sense in how they're being let go. Normally, when someone is fired for incompetence, they're just shown the door with an admonishment to not let it hit their rear on the way out.
I can only hope some federal regulator says the same thing to these guys.

Fatesrider of CA 7:28PM September 15, 2008