DOLE HELPS INTRODUCE LEGISLATION TO DENY GOLDEN PARACHUTES FOR FANNIE, FREDDIE EXECS
Today U.S. Sen. Elizabeth Dole co-sponsored legislation to deny ousted Fannie Mae and Freddie Mac executives lucrative "golden parachutes" in the wake of their respective companies' collapses, which triggered a government takeover over the weekend. According to several public estimates, Daniel Mudd, the outgoing CEO of Fannie Mae, could potentially receive more than $9 million in compensation and benefits, while former Freddie Mac CEO Richard Syron could receive as much as $14.1 million.
"It is an absolute outrage to think that these executives could receive lavish compensation packages after their gross mismanagement and poor performance drove their companies into the ground, forcing a government takeover and exposing the taxpayers to enormous risk," said Dole. "These companies have spent millions of dollars lobbying Congress to promote the very policies that led to their collapse, and now these executives could receive multi-million dollar golden parachutes? I won't stand for it."
The legislation, S. 3458, would amend the recently-enacted Housing and Economic Recovery Act of 2008, which gave the Treasury Department the authority to take control of Fannie Mae and Freddie Mac, to prohibit severance packages for these executives. Under existing law, the Federal Housing Finance Agency (FHFA), which oversees Fannie Mae and Freddie Mac, has the authority to prohibit or permit these payouts on a case-by-case basis. This legislation would require FHFA to use its powers to prohibit these former executives from receiving any such severance package.
In 2003, after it was revealed that Freddie Mac had misstated its earnings, Dole helped introduce legislation to strengthen oversight of the Government Sponsored Enterprises (GSEs). Fannie Mae and Freddie Mac responded in full force, dispatching an army of lobbyists to Capitol Hill to oppose the bill. In 2004, their lobbying tab totaled $26 million, and in 2005, it exceeded $24 million.
Dole helped reintroduce the GSE reform bill in the 109th Congress, and in July 2005 it was approved by the Senate Banking Committee but never considered by the full Senate. In the 110th Congress, Dole reintroduced the bill again with Sens. Chuck Hagel, Mel Martinez and John Sununu.
In response to the housing and mortgage crisis, Congress approved and the President signed into law in July 2008 a housing bill that created a stronger GSE regulator and provided the Treasury Department the authority to place Fannie and Freddie under conservatorship. Sunday, the Treasury Department used its new authority, and Fannie and Freddie are effectively under new leadership and have ceased lobbying activities, and their respective Foundations' assets are under review.