No Severance Money for Freddie Mac CEOs
Last week, RealtyStore brought you the news that Fannie Mae and Freddie Mac CEO’s were being removed from their posts by the U.S. Government. To the disgust of many, both Daniel Mudd (former CEO) and Richard Syron had expected to receive multimillion dollar severance packages. The FHFA, assigned to handle the removal process, recently announced it’s determination not to issue the “golden parachute” (extra money the men could use to “get by” on until new employment could be found) as part of the mens’ severance packages, which also include pensions. Given the circumstances of their removals, granting the men severances has been deemed inappropriate.
“The announcement follows an “interim final regulation” issued on Friday for publication in the Federal Register which invites comments on the FHFA’s ruling. It states that no regulated entity can make or agree to make any golden parachute or indemnification payments without the agreement of the director who will take into consideration whether there is reason to believe that the recipient has committed any fraudulent act or omission, breach of trust or fiduciary duty or insider abuse that has impacted the regulated entity or if there is reason to believe that the recipient is substantially responsible for the insolvency of the entity, the establishment of the conservatorship and whether the proposed payment reasonable reflects the compensation earned over the period of employment or represents a reasonable payment for services rendered.
“The compensation package that was expected by the two executives included pension money as well as severance pay and it is unclear whether the conservator can interfere with the pensions.
“In an article in The Wall Street Journal James R. Hagerty speculated that the two had already lost much of their wealth through the collapse in Freddie and Fannie’s stock prices. The value of Mudd’s Fannie Mae stock is now worth $683,000 (and may realistically be without any value) compared to $23.7 million before the mortgage crisis.”
Source: “GSE Executives Left to Bail Out Without Parachutes.” Copyright 2008 Mortgage News Daily.
Tags: fannie mae, foreclosure homes, foreclosure investing, foreclosure news, freddie mac, Real Estate, real estate bubble, subprime loan
