Both top executives ousted from Fannie Mae and Freddie Mac, in the major federal bailout ever of the troubled mortgage lenders, will receive a combined payoff exceeding $23 million.
This move will surely enrage shareholders of the abyssal loss-making companies.
Daniel Mudd, disembarked from Fannie Mae, is expected to be given $9.3 million in pay and retirement benefits.
Richard Syron, the departing CEO of Freddie Mac, could leave the ship with a towering $14.1 million, under the terms of his contract.
Richard Syron’s greater payoff is due to a clause added to his contract last summer following the initial signs of the credit meltdown.
But following last night’s bailout by the government, it is too early to affirm that either executive will effectively receive the money.
Considering the 90% dropdown of both companies’ shares this year, US analysts consider that both Mudd and Syron were too slow to react to the sub-prime mortgage breakdown.
In response, two high-profile bankers tied to the Republican party will bear the Herculean mission to bail Fannie and Freddie out.
Herbert Allison, a 65 year-old veteran who served as finance chairman on John McCain’s unsuccessful 2000 presidential campaign, was named CEO of Washington-based Fannie Mae on Sunday. He formerly was president of Merrill Lynch and lately CEO of pension fund TIAA-CREF.
David Moffett, a 56 year-old former executive at Carlyle Group, the private equity firm, will lead Virginia-based Freddie Mac. He was most recently an executive with U.S. Bancorp.
But in answer to the treasure chest that both Mudd and Syron are taking back home, officials at the federal Housing Finance Agency, the primary regulator of Fannie Mae and Freddie Mac, declared that the pay of Mr Allson and Mr Moffet would be significantly lower than their predecessors.