Severance For Mortgage Execs?

Recently, Newsweek reported that the exiting CEOs of Freddie Mac and Fannie Mae may receive up to $24 million in severance packages from their respective organizations.  This raises the question, WHY?  It simply doesn’t make sense that these two characters should be receiving millions of dollars for their failures in management.

The government is in the process of bailing out both Freddie Mac and Fannie Mae, in an attempt to help salvage the already struggling home finance and mortgage markets.  This move is estimated to cost the government (aka the tax payers) $300 billion, assuming a 5% loss of their loans.  Some consider this a conservative estimate while others think it is on par.

The mismanagement of the two CEOs, Richard Syron of Freddie Mac, and Daniel Mudd of Fannie Mae, has led the government to take these two companies and place them under government control.  Both companies were originally government sponsored agencies, meaning they were private corporations with government support.  The severance packages expected to be dolled out are at least $7 million for Mudd and $12 million for Syron!  I’d love to make that kind of money for not doing my job and getting fired.

Thankfully, someone in the government has realized that this is ridiculous and is stepping in.  Sen. Shumer (D-NY) and Sen. Reed (D-RI) are urgeing James Lockhart, the man in charge of the Federal Housing Finance Agency, to review these proposed packages and severely trim / eliminate them.  Several other government officials are also stepping in, showing that the American people should not have to pay for the ignorance of big business.

At least not all the time.

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One comment to Severance For Mortgage Execs?

  • Kate  says:

    Indeedy indeedy. I’m going to start effing up at my job in order to get millions in severance.

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