Golden parachutes at Fannie and Freddie

You knew this was coming, didn't you? Golden parachutes for the guys who steered Fannie and Freddie into the ditch. From this morning's L.A. Times:

... the companies' chief executives will leave after banking millions and taking millions more on the way out the door.

Fannie Mae's Daniel Mudd earned $11.6 million last year, and Freddie Mac's Richard Syron made $18.3 million. In both cases, a large portion of their pay packages included stock that was valued much higher at the end of 2007 than it was as of Monday, when it was trading at less than $1 a share.

By conservative estimates, Mudd, 49, and Syron, 64, will leave with an additional $7.3 million and $6.3 million, respectively, as part of a severance package, according to an analysis by Paul Hodgson at the Corporate Library.

I'm trying to figure out who had a worse summer: these two guys or Dodgers bench-warmer Andruw ($18 million/year) Jones? That's $6 million per home run for Andruw, if you're scoring at home.

-- Peter Viles

Your thoughts? Comments? E-mail story tips to Peter Viles.

Comments

[GL]

From the same LA Times article:

With Fannie and Freddie, the nation's biggest mortgage buyers, out of business, foreclosures probably would have continued to climb at an even faster rate, analysts said, and home prices would have fallen further.

"This is what we needed to put a floor under the housing market," said Michael Nozzarella, managing director at the Tarbox Group, a Newport Beach investment advisor.

"Home prices would have fallen further" - and how's that a bad thing? WOW!! Who are these people? realtors? mortgage brokers? Why are they so out of touch as to say that we need a floor on the housing market? Who is really running this country?

[356man]

These two clowns should get "Enroned" for what they did.

[Tombstone Realty]

I'd say Not-Andruw.

After all, he just feels bad he can't hit - he at least hasn't screwed over the entire global economy.

[dclogang]

How is this even possible or legal?

Why are these guys not being investigated?

How can these guys earn this much?

How can they walk out the door with this much money?

Why are citizens allowing this at a time when there are runs on the banks and when the 2nd great depression is approaching?

Why aren't people more upset?

Why doesn't somebody do something?

Why don't all the grass root organizations that have popped up due to housing crisis combine and march on Washington and kick out all the politicians that voted for and those who DIDN'T vote at all for all the bailouts?

It's OUR money people.. our money they are using.

Something HAS to be done!

Come on people lets do something already!

I'm so mad I can't even believe it.

[Nelcisco]

Peter, interesting comparison between these two crooks and Andruw Jones, however Andrew's slump at the plate or on defense if there is a slump i'snt going make tax payers foot the bill. I guess lessons were'nt learned from Enron, Worldcom or Bearsterns.

[russ]

A Brief History of Reaganomics, the Mortgage Banking Crisis, and Fannie and Freddie

The root of this evil was the change in rules/policies decades ago that provided mortgage guarantees to lenders to cover mortgages to home buyers who could not afford them. The standard used to be 29/36, meaning a borrower would qualify based on the lesser of the mortgage payment being 29% of their gross income or total debt to income including mortgage payment being a maximum of 36% of their gross income. We saw this creeping-up to 41%, 45%, and Fannie/Freddie even gave loan approvals over 50% if there were strong compensating factors. And Fannie and Freddie remember have been the conservative mortgage backers, there are far worse miscreants of greed at that trough. Taking these regulatory controls off the percentage of income a mortgage payment could be converted American family homes into speculative leveraged commodities.

This underwriting brought on the scandalous parasitism of the grifters Freddie, Fannie, and a sick supply of banking gangsters to follow. It now becomes clear that Bonnie and Clyde were nothing compared to these bandits. They have destroyed, more than anything else, the American dream, changing it into the American scheme. Can you spell Reaganomics, may he burn in hell. This is the frightful legacy of the Reagonomics and its party.

How did we get here? The recently added centerpiece in this story is the United States government allowed, nay intentionally inflated an $8 trillion unchecked housing bubble. Between 1996 and 2006, house prices rose by more than 70 percent, after adjusting for inflation. In the previous century, from 1896 to 1996, house prices had just kept even with the overall rate of inflation.

While partying loyalists may grimace at their hero’s fall it is neither intellectually nor historically dishonest to blame Godfather Reganomics and family and deregulation for throwing the chum, or rather chumps, in the water to attract the sharks. The feeding frenzy Reaganomics created surely expanded far beyond Fannie and Freddie and FHA as was the intent of the so called “leadership.”

As history teaches us it frequently takes a long time for such cleverly designed crimes against society to run a course and come to light. And as this case illustrates it helps to have the crooks take over control of the executive to allow the completion of the last 8 years of the topping on the cake.

This America and our society ought not to be conformed into a sporting event! Team (or party) spirit complete with cheerleaders and beauty queens in place of intelligent good and honest intentions is what the grifters bank on. The trillion squandered on the Iraq fiasco was our collective nest egg for the long predicted hard times and rainy days we are just now beginning suffer. Unemployment is at a 50 year high and foreclosures are at the highest level since Bonzo days.

The fact is the broad ranging economic collapse we all now face is clearly one of the effects of converting the American dream into the American scheme. Common dreams for the common good are what this great country was and is built upon and it is high time to take back those dreams from those who perverted them to their dastardly greed. We might consider our love of country and our duty to put some real historical perspective in front of its readers.

[Buck McHugh]

Congress and treasury created the mess we have with fannie and freddie. They were going to put every american in a home. New loan programs with no downpayments and no doc requirements came from the top with oversight from congress. They financed these ludicrous programs with our money and when they don’t work they walk away and leave us with the losses. Paulson has done nothing but lie about the condition of these two institutions since July. This is now a slush fund for government cronies. These programs didn’t work and will cost taxpayers billions with public oversight. Just think what it will cost now with the crooks in the kitchen!These mortgage programs are in direct competition with private banks and finance companies. Why should they have to compete against their own government. If things were OK in July why are we now eliminating 36 billion dollars in preferred shares? This is the fiasco of the century. comment by Buck McHugh

[E]

Golden Parachute?

Don't you mean "Diamond Encrusted Platinum Parachute"?

All I want to know is...

Where are they putting their money?

In a bank?

Treasuries?

The Stock Market?

A nice yacht and a pad in Monaco?

[ET]

That's a lot of money for guv-ment work.

[Syscom3]

Somebody in the treasury dept approved of these bonus's.

I wonder if shareholders can sue them for being over compensated while the business was collapsing?

[Steven Ciavarella]

What a bunch of incompetent short sighted clowns we have running our government and corporations!

These guy's should be giving back $$$.

This is going to cost the tax payers big $$.