Regulator Sets Pay Conditions For Mortgage Giants' Leaders
Saturday, September 13, 2008
Lawmakers and both major-party presidential candidates have called on the regulator, the Federal Housing Finance Agency, to curb or eliminate so-called golden parachutes for the departing chief executives of the companies, Daniel H. Mudd of the District's Fannie Mae and Richard F. Syron of Freddie Mac, based in McLean.
Together, they could earn as much as $25 million in compensation as they leave the companies.
The law Congress passed over the summer that created FHFA gave the director, James B. Lockhart III, expanded powers over the companies. The law says the director "may prohibit or limit, by regulation or order, any golden parachute payment." The law listed examples of factors the director might take into consideration.
Yesterday's action set the conditions to be taken into account by the director. They include "whether there is reasonable basis to believe" that the executive "is substantially responsible for . . . the appointment of a conservator or receiver for the regulated entity."
On Sunday, FHFA became the conservator for Fannie Mae and Freddie Mac. It was not clear yesterday whether Lockhart would seek to curb Mudd's or Syron's compensation. The agency has said the issue is under review.
The FHFA rule applies to any director, officer employee, controlling stockholder or agent of the companies.