Thread: Freddie and Fannie fallout

WTF? You've got to be kidding me:

The two chief executives ousted from Freddie Mac and Fannie Mae, the troubled US mortgage lenders, stand to receive a combined payoff of more than $23 million (£12.9 million).

In moves that will infuriate shareholders in the loss-making companies, Daniel Mudd, the departing head of Fannie Mae, is expected to receive $9.3 million in pay and retirement benefits under the terms of his contract.
Richard Syron, the departing chief executive of Freddie Mac, could walk away with $14.1 million.

Mr Syron's larger payoff follows a clause added to his employment contract last summer when the first signs of the credit crunch began to emerge.

Look who's getting control of this:

Two veteran bankers with ties to the Republican party will be charged with the daunting task of bringing Fannie Mae and Freddie Mac back to life.

Herbert Allison, a 65 year-old who served as finance chairman on John McCain’s unsuccessful 2000 presidential campaign, was named chief executive of Washington-based Fannie Mae last night.

David Moffett, an executive at Carlyle Group, the private equity firm, will head Virginia-based Freddie Mac.

Officials at the Federal Housing Finance Agency, the primary regulator of Freddie and Fannie, said the pay of Mr Allison and Mr Moffett would be “significantly lower” than their predecessors.

Fannie and Freddie ousted chiefs to share $23m - Times Online

Yep- I bet their contracts were drilled by the best lawyers around...

Depressing, but you can't break a contract.

Irony is, if the companies had been allowed to fail, these guys would not have got a cent.
I guess, in a perverted kind of way, it is their reward for negotiating a way out for the company that did not involve bankruptcy...but its our money buying them off..

Yep, don't let the media/politician talking heads fool you. This was all about enriching their corporate elite friends at the expense of ordinary hardworking Americans. Everybody else is worse off, the economy is worse off, and the country is worse off.

I just wish Obombya didnt get his $105,000.00 and Hillary her $75,000.00 in donations from them before they went down.

Originally Posted by Defensor

Yep, don't let the media/politician talking heads fool you. This was all about enriching their corporate elite friends at the expense of ordinary hardworking Americans. Everybody else is worse off, the economy is worse off, and the country is worse off.

Paulson should have made it a condition of the bail-out that the execs would re-negotiate their contracts. But then, he was in a pretty weak negotiating position ...

Originally Posted by Latherty

Paulson should have made it a condition of the bail-out that the execs would re-negotiate their contracts. But then, he was in a pretty weak negotiating position ...

Paulson wasn't in a weak negotiating position. He's just helping out his friends at the expense of the taxpayers.

Originally Posted by Defensor

Paulson wasn't in a weak negotiating position. He's just helping out his friends at the expense of the taxpayers.

Were they friends? I didn't see this anywhere

Originally Posted by Latherty

Paulson should have made it a condition of the bail-out that the execs would re-negotiate their contracts. But then, he was in a pretty weak negotiating position ...

Yeah Right! Did you see their yearly salaries in the first place? These were some of the highest compensated people in the industry anyways. This is endemic of how large corporations work, telecommunications companies do the same thing, the company fires it's ceo cause they are failing but they give them 23 million as they walk away. You have to hold CEO's to responsibility if they fail, there is no incentive to win otherwise.
Not only that but the Federal government insured these companies against loss anyways and that's what has caused the collapse, risky investments without risk of loss. Accountability people. What the EFF!?

Originally Posted by Ron_Paul_AZ

Yeah Right! Did you see their yearly salaries in the first place? These were some of the highest compensated people in the industry anyways. This is endemic of how large corporations work, telecommunications companies do the same thing, the company fires it's ceo cause they are failing but they give them 23 million as they walk away. You have to hold CEO's to responsibility if they fail, there is no incentive to win otherwise.
Not only that but the Federal government insured these companies against loss anyways and that's what has caused the collapse, risky investments without risk of loss. Accountability people. What the EFF!?

Yeah, it sucks, but its the law. There was a contract. Its the shareholders fault.
Paulson had no real leverage to attack the contracts of those individuals.

This was the problem with the FM's all along, a government implied guarantee but no govt control over the decision making. It was a very poor state of affairs. At least now it has been rectified when the guarantees became explicit. But the contract pre-dated this.

I believe it's far from rectified.
You are right about the contract, no one can argue that. It's just not how I would run my Giant corporation.

We needed to privatize or nationalize these institutions along time ago, I would have voted for the former because I believe that private business are far more effective than the government.

Either way we can't give people millions to play with without the risk of losing it all, it's exactly what caused the "housing bubble" and it's subsequent bursting.
Seriously it's called accountability...shit.