Fannie/Freddie Regulator Blocks CEO Golden Parachute Payday

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Sept. 15 (Bloomberg) -- Fannie Mae and Freddie Mac's regulator is blocking as much as $24 million in ``golden parachute'' severance payments to the companies ousted chief executive officers.
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.''
``We find it way out of line that these two executives will be rewarded with millions of dollars in bonus compensation at a time when taxpayer dollars may have to be deployed to cover any financial losses caused by errors in management,'' Schumer and Reed, both Democrats, wrote in a Sept. 9 letter to Lockhart.
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.
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http://www.bloomberg.com/apps/news?pid=20601087&sid=auug.npwKdPE&refer=home

Sadly executives in other industries will continue to be paid through these outrageous "golden parachutes" regardless of their performance.
 
That's pretty awesome...

I don't see how it's legal to block it, but I don't understand much about how federal takeovers work. It's awesome if they can.
 
[quote name='Koggit']That's pretty awesome...

I don't see how it's legal to block it, but I don't understand much about how federal takeovers work. It's awesome if they can.[/QUOTE]

If it is legal to rape a pension fund I see no reason why a multi million retirement bonus can't be rendered null.
 
[quote name='Msut77']If it is legal to rape a pension fund I see no reason why a multi million retirement bonus can't be rendered null.[/quote]

Excellent, excellent point.

[quote name='SpazX']Let's have a moment of silence for these brave people and the struggles they've been through.[/quote]

:lol:
 
[quote name='SpazX']Let's have a moment of silence for these brave people and the struggles they've been through.[/QUOTE]

NEVAR FORGET!

Good for these guys.
 
Did you guys see the CEO of Lehman Brothers made $100 million in the last three years? There are too many fucked-up things on Wall Street.
 
[quote name='mykevermin']No way, man. Let the free market be free. I'm sure he earned that money.[/QUOTE]

I think the problem is less that the market is "free" and more that people who hold stock in these companies don't realize this stuff is going on, and the investment fund managers and the like aren't complaining about it either because then their compensation would be questioned. The problem is there is too much of a "good old boy" network around this stuff and it prevents transparency (and thus outrage).
 
You know, it is interesting.

On Black Tuesday back in 1929, many executives felt a sense of responsibility - some of them were so devastated that they committed suicide.

In modern times spend much of their time insulating their personal fortune from their job performance and still come with their hands out when their bad decisions cause a company to crash and burn. Now I'm not saying hari-kari is the answer, but it seems that the executives of a hundred years ago had a sense of responsibility and pride that is not just gone, but dead and buried.
 
[quote name='camoor']You know, it is interesting.

On Black Tuesday back in 1929, many executives felt a sense of responsibility - some of them were so devastated that they committed suicide.

In modern times spend much of their time insulating their personal fortune from their job performance and still come with their hands out when their bad decisions cause a company to crash and burn. Now I'm not saying hari-kari is the answer, but it seems that the executives of a hundred years ago had a sense of responsibility and pride that is not just gone, but dead and buried.[/QUOTE]

Iv talked about this before in why we should tax the rich debates. There was someone like Greenspan or T.Boone Pickens before who talked about how his dad started off as a small factory worker or something and scrimped and saved so that he ws upper middle class. The kid then took that money and made something of himself. He talked about how in his day and his fathers day whenever a business didnt do so well there was a damn fine reason for it and everyone struggled. But more importantly when a business did well they used the money to create more jobs for Americans. They reinvested that money in America. Now in the days of globalization companies are happy to let shitloads of Americans go then take the cash they save and either invest it over seas or give it to CEOs.

There really is a big wealth distribution problem in America and its been building for a good 10 years. People dont like to hear it, but we are going to have to make some major changes and it is going to require raising taxes. Untill just a few years ago I considered myself conservative when it came to finances. I felt we should have little regulation and taxes should be kept low. But I really feel we have come into new times with globalization and with the melting of the artic(which will open new faster shipping routes)and the rapid advance of technology we are going to have to have some system of wealth redistrubtion unless the rich step up and do the right thing investing in the common man(which they wont).
 
MSI, you are mostly right there. A lot of the problem is Globalization. Nafta type legislation sent us to this place we are at now, where it only makes business sense to send much of your company to other countries if you want to stay alive or be successful.

But what I don't understand is why do you tend to think the only answer is to keep things the way they are and FORCE people and company's to do certain things with their income? Why not reverse globalization through law changes and give more INCENTIVE to keep money invested here?
 
[quote name='MSI Magus']People dont like to hear it, but we are going to have to make some major changes and it is going to require raising taxes.[/quote]


I agree with everything you said except that.
 
[quote name='thrustbucket']MSI, you are mostly right there. A lot of the problem is Globalization. Nafta type legislation sent us to this place we are at now, where it only makes business sense to send much of your company to other countries if you want to stay alive or be successful.

But what I don't understand is why do you tend to think the only answer is to keep things the way they are and FORCE people and company's to do certain things with their income? Why not reverse globalization through law changes and give more INCENTIVE to keep money invested here?[/QUOTE]

I think thats one way of going about the problem and it could potentially work, its the stance I took for a long time too. However after reading alot on the subject including a few great essays in foreign affairs journal iv come to this new stance. The reason I say to tax more and keep the same policies is because our GDP has grown at an insane rate and I think fighting global trade is impossible. Thats not to mention the fact that globalization is pulling people around the world out of poverty which is not only a great thing from a humanitarian stand point, but also from a defense and trade stand point. So again that means we really dont want to stop or hinder globalization in any way. However as stated globalization is creating just making the rich richer and hurting the poor and middle class of America, and the rich nowadays have no sense of justice or a humanitarian bone in their body. So I say again let them make as much money as possible, but tax them at a higher rate. Take those taxes and don't do as many Dems want and just give more hand outs. Instead do a mixture of investing in green energy, education and technology that will ensure America a strong if not the top position in the world market in coming years.

I also think these investments should coincide with an overhaul of our welfare system which works to offer jobs first and foremost to those on the systems teet. I live off of SSI because of disabilities I have. Iv argued with people like myke in the past who say im just lazy and want to be on the system. The truth is that iv been through 2 or 3 job placement services run by the government and they are just bull shit that do nothing. They are supposed to work within your disabilities to find you jobs, instead all they do is open up cases then pass you on to other organizations or give you the "tools" to succeed on your own which is nothing. With the money I say we should be investing in areas like green tech the first jobs should go to those on the system that can fill the jobs. I know there are jobs out there I could do.....I would just need time to learn the damn job in a non pressure environment.

Sorry if this is a bit of a rant but it seems like a no brainier kind of thing. Let the rich bring as much money as they possibly can into society, tax them at a higher rate then take that money and put it into programs which ensure that America stays number 1 in the market AND that every member of society is taken care of without being a drain on the system.
 
[quote name='GuilewasNK']I agree with everything you said except that.[/QUOTE]

Like I said no one will like it but its true. Our debt is through the roof and we are at a point in time that if America wants to stay competitive we need major investment and reform. That costs money.
 
[quote name='thrustbucket']MSI, you are mostly right there. A lot of the problem is Globalization. Nafta type legislation sent us to this place we are at now, where it only makes business sense to send much of your company to other countries if you want to stay alive or be successful.

But what I don't understand is why do you tend to think the only answer is to keep things the way they are and FORCE people and company's to do certain things with their income? Why not reverse globalization through law changes and give more INCENTIVE to keep money invested here?[/quote]

I guess I'm trying to say there's been an ideology shift. Somehow the rich people of today have managed to become more morally berefit and out-of-touch then those of the early 1900s. They don't give a damn about the common man and they don't feel any shame. When it comes to profit sharing with the workers they have the etiquette of pigs at a trough.

I mean really, any reasonable person who fails a class knows enough not to ask the professor for an A. If you're fixing someone's roof and through a stupid error you cause the house to collapse, you should know enough to not bother attempting to draw a paycheck for your work. How do these failed CEOs have the gall to ask for more money after they have ruined their company, and why do the shareholders allow these ridiculous contracts?
 
[quote name='MSI Magus']Like I said no one will like it but its true. Our debt is through the roof and we are at a point in time that if America wants to stay competitive we need major investment and reform. That costs money.[/quote]


It's not that I don't like it. I just don't think it will help at all.
 
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