No Golden Parachutes For Ex-CEOs at Fannie, Freddie
For now ex-CEOs Richard Syron and Daniel Mudd, their departure from Freddie Mac (FRE) and Fannie Mae (FNM) won't line their pockets, after investor and taxpayer uproar over both executives' severance packages. In total, both men would have made roughly $25 million under the terms of their employment contracts, a total that the financial press regularly crowed about as being excessive in the wake of the government placing both companies into conservatorship last week. In a brief press statement issued Sunday evening, the Federal Housing Finance Agency said it had "notified former Fannie Mae Chief Executive Officer Daniel Mudd and former Freddie Mac Chief Executive Officer Richard Syron that “golden parachute” payments contemplated under their contracts would not be paid." "The agency, serving as conservator, determined that under applicable statute and regulation, the Enterprises should not make such payments to these individuals and directed the Enterprises accordingly." Freddie Mac and Fannie Mae combined own or guarantee $5.4 trillion in outstanding mortgage debt. Spokesmen for both former CEOs have not commented to the press on the matter, although some HW sources said they expect a lawsuit in the near future. "There is no way Syron and Mudd don't sue over this," said one source, a senior bank executive that asked not to be named. "It was in their employment contract, plain as day." Nonetheless, some praised the decision by the FHFA. "This is exactly why Congress gave [FHFA director James] Lockhart this authority. It would have been unconscionable to award these inflated salaries," Sen. Charles E. Schumer (D-NY) said Sunday in a statement. Both CEOs previously agreed to stay on at their respective companies to ease a transition to new leadership; it's unclear if the FHFA's decision may change that agreement. Disclosure: The author held no relevant positions when this story was published; indirect holdings may exist via mutual fund investments. HW reporters and writers follow a strict disclosure policy, the first in the mortgage trade.