What Is the Deal?
Sep 8th, 2008 by David Anderson
The Fed has decided to avoid allowing the uncertainty in the market to devolve into a financial panic. It is has fired the executives of the federal mortgage companies Fannie Mae and Fannie Mac. Their failure would have pulled the entire world into recession and the U. S. into economic turmoil. The executives who lost their jobs didn’t fare too poorly. One had the board insert into his contract last July after it was known they would need a government bailout, a nice departure clause. The bottom line is while taxpayers are at risk, pensioners have lost, and banks are undermined directly as a result of his mismanagement, he gets an extra bonus. What a deal!
Here a quote the NYTimes aticle.
But even after the government seized the mortgage finance companies on Sunday and dismissed their chief executives, the companies’ outgoing leaders could see big paydays — a prospect that angers many investors, particularly because ordinary stockholders could be virtually wiped out.
Under the terms of his employment contract, Daniel H. Mudd, the departing head of Fannie Mae, stands to collect $9.3 million in severance pay, retirement benefits and deferred compensation, provided his dismissal is deemed to be “without cause,” according to an analysis by the consulting firm James F. Reda & Associates. Mr. Mudd has already taken home $12.4 million in cash compensation and stock option gains since becoming chief executive in 2004, according to an analysis by Equilar, an executive pay research firm.
Richard F. Syron, the departing chief executive of Freddie Mac, could receive an exit package of at least $14.1 million, largely because of a clause added to his employment contract in mid-July as his company’s troubles deepened. He has taken home $17.1 million in pay and stock option gains since becoming chief executive in 2003.
lightining is going to strike….
you linked to a NYTIMES article? I thought they were liberal commie rag? What gives David?
You know where to find us when you are ready to say you were wrong for voting for Bush. Defending him, and thinking that all his little friends were true conservatives.
Thanks for getting me and my country into this mess. Dopes like you are 51% of the reason my country is in the toilet.
I have always been pro-business, but this idea that CEO’s have the right to be paid millions, when all they have done is drive the company into the ground is ridiculous! I don’t mind that when a company is doing well that everyone wins, but I would love to see the gov’t step in and make it clear that if the company doesn’t have profits, then neither do the people in charge! I don’t see how they sleep at night knowing they just got a $13 million bonus and that hundreds of people may have just lost their life savings!
LOL, DV even a stopped clock is right twice a day. I have no problem reading or linking to the commie rag NY Times when they are right.
I am pro-business as well, but something is rotten when a guy goes to congress to say rescue my company. Then goes to his board and says, this company may tank and I may lose my job; give me a huge severance package if I do. Then the board says ok, we may be going belly up and under government receivership, but we’ll take care of you. Does that seem wrong? Whose interest are they working in? They are suppose to represent the shareholders. They are not. They should have fired him on the spot and hired Mitt Romney or someone who knows how to turn the company around.
It is outrageous.
donviti,
Lets remember that it is the Democratically run Congress that played a part in this mess. John McCain sent out a statement 2 years ago “If Congress does not act, American taxpayers will continue to be exposed to the enormous risk that Fannie Mae and Freddie Mac pose.” Congress should have acted when they had the chance… before it was too late!!