Duncan Calls for Stop to Million Dollar Severance for Sacked Freddie, Fannie CEO’s; Blasts $1.5 Trillion Foreign Bailout
September 11, 2008
Washington, DC -- Congressman John J. Duncan, Jr. (R-Tenn) today sent a letter to the Director of the Federal Housing Finance Agency James B. Lockhart asking that the recently fired CEO’s of Fannie Mae and Freddie Mac receive zero severance pay for overseeing the collapse of the companies.
The Federal Housing Finance Agency seized control of the two companies over the weekend after they teetered toward collapse. Reports say fired Fannie Mae and Freddie Mac CEOs Daniel H. Mudd and Richard F. Syron could receive severance packages upwards of $15 million.
“While the American people make sacrifices to pay their mortgages and try to afford $4 a gallon gas, these CEO’s enjoyed incomprehensible salaries. It seems ridiculous to me to further reward them for steering their companies into the ground and then ask taxpayers to cover the bill.”
Congressman Duncan has expressed concerns about the exorbitant salaries of Fannie Mae and Freddie Mac executives for years. In 2004, he sent a letter to the Director of the Office of Federal Housing Enterprise Oversight – which had oversight of Freddie Mac and Fannie Mae at the time – Armando Falcon Jr., to express his dismay at the performance of then Fannie Mae CEO Franklin Raines.
Mr. Raines was dismissed for overstating profits by $9 billion. He participated in a culture of deceit and greed that both preceded and succeeded his tenure. Mr. Duncan wrote in 2005:
“…Mr. Raines received $20 million in compensation last year and was guaranteed a lifetime pension of over $100,000 per month, deferred compensation of $8.7 million, and free healthcare coverage for life for him and his family. All this for men who left under a cloud of either scandal or shoddy management. This is ultimately a taxpayer-backed corporation. I have also asked the Chairman of the subcommittee that oversees Fannie Mae to take action on this.”
The government’s new control over Fannie Mae and Freddie Mac was authorized by the Federal Housing and Economic Recovery Act, which Duncan voted against. President Bush signed the bill into law on July 30, 2008.
“This housing rescue bill is pure socialism and will cost the taxpayers untold billions of dollars. I do not believe the government should be in the mortgage business,” Duncan said. “It goes against the free market principals of our Nation. Congress continues to spend like there’s no tomorrow, and if they keep it up, there won’t be.”
Duncan also expressed outrage over reports that $1.5 trillion of investments in Fannie Mae and Freddie Mac by foreign nations– including a large portion from China – will now be covered fully by U.S. taxpayers.
“While governments in China and the Middle East celebrate this takeover deal and the safety of their investments, many U.S. banks are recovering only pennies on the dollar,” Duncan said. “Washington D.C. has effectively given up on capitalism.”
This injustice was brought to light on Wednesday in a front page article in the Washington Times.
