September 10, 2008

The multi-million dollar exit packages for ousted execs from Freddie Mae and Fannie Mac should be rescinded. - Inspired by Barack Obama

Three top Democrats, including presidential nominee Senator Barack Obama, called for federal housing regulators to rescind exit packages from the ousted leaders of Fannie Mae and Freddie Mac on Tuesday. The buy-out has become a hot issue in the presidential campaign.

“Under no circumstances should the executives of these institutions earn a windfall at a time when the U.S. Treasury has taken unprecedented steps to rescue these companies with taxpayer resources,” Senator Obama wrote in a letter to Treasury Secretary Henry M. Paulson Jr. and the director of the Federal Housing Finance Agency, the new regulator for Fannie and Freddie.

The New York Times reports: “Under the terms of his employment contract, [Daniel H. Mudd of Fannie Mae] could receive a package worth up to $9.3 million if his dismissal is deemed to be “without cause,” according to an analysis by the consulting firm James F. Reda & Associates. That is on top of $12.4 million in salary, bonuses and profits after cashing in stock options he has taken home since becoming chief executive in 2004, according to Equilar research...

[Richard F. Syron of Freddie Mac] could receive an exit package of at least $14.1 million on top of the $17.1 million he has taken home in cash, bonuses and stock option profits since becoming chief executive in 2003.”

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Comments | 10 Total

September 10, 2008 at 3:28pm

Sammy Sturkie

Part of me says the contracts should be honored, but I can't find it in myself to approve of it. So I say the exit packages should be rescinded. These CEO's have obviously done a terrible job and they do not deserve these exorbitant compensation packages. I would go one step further and suggest that the federal government get out of the mortgage business completely.

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September 10, 2008 at 4:43pm

James Belle

Definitely, why should the taxpayer bare the burden of their mistakes? They were hired to bring success instead they drove the bus into the ditch, why reward them for it?

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September 10, 2008 at 5:42pm

Jamin Bollen

I guess the joke is on me, I thought this quote was making fun of the fact that Barack Obama doesn't realize the names of these two companies "Fannie Mae and Freddie Mac" not "Freddie Mae and Fannie Mac", I would have to agree with him though, they shouldn't get a dime.

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September 10, 2008 at 8:34pm

Carel Two-Eagle

We DO NOT reward lousy performance and bad decisions in "real" life.. We certainly should not reward the now-former CEOs of Fannie Mae & Freddie Mac for their lousy performance and bad decisions! Of recent years, there has been far too much focus on "honoring contracts" with such CEOs by dismissing Boards, and far too little focus on "honoring contracts" by the non-performing, sometimes-thieving, often over-paid nest-feathering CEOs. Rescind the exit packages AND fine them for non-performance.

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September 10, 2008 at 10:13pm

Ron West

It would be different in my mind if these companies just closed their doors and as a part of the closing they delivered packages. That is the private sector - even if you don't agree - that is the way it works. I don't know the details about how this "bailout" is going to truly effect the taxpayers - but if we are using tax dollars (hard earned tax dollars) to help these people live happily - then I say - no way! That is not a good use of our money.

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September 11, 2008 at 11:28am

Dan Seidman

How about "piercing the corporate veil" and holding the boards accountable? They created contracts which didn't account for success or failure in rewarding the execs. Let's have the names of the board members and let them take some of the heat for their decision-making. All that being said, let's also not forget that economy has ruined too many companies and blame should fall completely on every one. The top execs, however, should have seen the signs earlier than anyone else and changed course. That's what they're hired to do, right? Offer their brainpower when things go south.

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September 11, 2008 at 12:45pm

Bailey King

The handing out of "party favors" is one for the books, and moreover, a public spectacle (the "Rescinded")for the gang on the hill to satisfy the craven appetites of the Obama tribe is one to watch for.

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September 11, 2008 at 3:51pm

Dale Thompson

Hmmm...let's see...I had to take a direct loss on Fannie Mae a few years ago when the stock went in the tank. The CEO then got a golden parachute. And I received pennies on the dollar in the class action suit settlement that followed. And now I will like take another hit since I am certain that mutual funds I have investments in include one or the other or both of these money pits. So, H%$# Yes make them and the BOD members walk the plank. If I get paid based on performance, then I don't see why they should not get paid in that same way. The way I see it, they all owe the investors and taxpayers a bunch of money.

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September 11, 2008 at 5:07pm

Dale Moyen

This is the problem with Corporate America today. The top executives' salaries are outrageous, there is NO accountability for results, and they still get bonuses and raises for failure!!! $12.4 Million per year? These guys aren't even worth $100k/year!!! But yet, Americans are just suppposed to accept all this, keep paying higher prices for lower quality, while getting laughable pay raises (Costs have to be contained ya know) if any while the value of our earnings keep getting erroded away by higher energy prices and inflation. This is why we need to get the Republicans OUT of the White House. They only continue to perpetuate these problems and focus on taking very good care of their own while the working people of America are getting the shorter & shorter end of the stick!

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September 12, 2008 at 3:05pm

Belinda Wagner

Excuse me, but how many responders who want to rescind the executives contractual severence payments are living within their means - i.e., not carrying a credit card balance, not carrying car loans, and not carrying a mortgage? Where is the accountability for every American who thinks it is OK to rack up debt they can never pay off and expect the government to bail them out? The problem with the economy is not executive contracts, the problem is the debt obsession that has reached epidemic proportions. Get yourself debt free, then see how little all of this means to you!

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