It never ceases to amaze me, even though we shouldn’t be shocked: the "free market" leaders fail–but, no worries, they still walk off with a pile of money, while average people get shafted. And the song remains the same at Freddie Mac and Fannie Mae.
Though this has been referred to in passing in most stories in the traditional media, The Los Angeles Times is the first traditional outlet that I have seen go with a specific story:
Shareholders in Fannie Mae and Freddie Mac saw the value of their stock nearly disappear Monday after the mortgage giants had been taken over by the federal government, but the companies’ chief executives will leave after banking millions and taking millions more on the way out the door.
Fannie Mae’s Daniel Mudd and Freddie Mac’s Richard Syron stepped down but are helping with the transition of their companies into federal conservatorship under the Federal Housing Finance Agency. The agency has not said how much they will earn in their new roles.
Mudd earned $11.6 million last year, and 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.
To his credit, Barack Obama thinks this is an outrage:
Presidential candidate Sen. Barack Obama (D-Ill.), in a letter to Treasury Secretary Henry M. Paulson Jr. and James Lockhart, the housing agency director, urged them to void the "inappropriate" payments.
"Under no circumstances should the executives of these institutions earn a windfall at a time when the U.S. Treasury has taken unprecedented steps to rescue these companies with taxpayer resources," Obama wrote.
The only other leader that I saw publicly criticizing the payments was AFL-CIO President John Sweeney who said: "…we are concerned about press reports of executive severance packages totaling over $21 million. All payments to departing executives should be frozen pending a full review of their conduct."
No word from the McCain camp on whether they think conservative values include paying people when they are spectacular failures.
So, get this: these two CEOs were at the helm of two companies that effectively are in bankruptcy and had to be rescued by the federal government–and, yet, they walk away with a small fortune. It isn’t simply that they mismanaged their companies. Their behavior–rushing after fool’s gold and exercising, at best, pathetic judgment in leaping on the top of that housing bubble–ended up, or will end up, costing millions of people their homes and many years of crushing debt.
