The massive bailouts of Fannie Mae and Freddie Mac show unfortunate trends once again in the U.S. corporate world: failed executives get rewarded while trusting shareholders get bupkis.
Freddie Mac’s CEO Richard Syron could get nearly $15 million, according to news accounts. Over at Fannie Mae, CEO Daniel Mudd could receive an exit package worth $9.2 million, including stocks he already holds.
Big rewards, indeed, for executives who helped cause one of the biggest federal bailouts in history. Sloppy accounting and overstating the firms’ capital on hand precipitated the Sept. 7 bailout plan. In it, the hybrid groups will be under federal conservatorship with the power of the U.S. taxpayer to back them up.
The plan, led by Treasury Secretary Henry Paulson, has generally been hailed as a needed measure to buck up confidence in the U.S. financial system and prevent further deterioration in the mortgage securities business. Fannie and Freddie were deemed too big to fail. The bailout is also intended to reassure all-important foreign borrowers that their loans will somehow be secured.
What about shareholders? So sorry, out of luck. The takeover pretty much erased the value of their holdings
About Me
- dharma
- I believe in "Baptism by fire" that will transform me from an average joe to a true blue bee's knees in corporate finance and investment banking
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