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Taxpayers are now on the hook for tens of billions of dollars of capital necessary to save Fannie Mae and Freddie Mac. The CEOs of both companies–the ones who ran them into the ground–have thankfully been shown the door. But they’re taking a nice pot of money with them.
Specifically, Dan Mudd, the CEO of Fannie Mae, is getting $9.3 million of severance for destroying his company. Richard Syron, the CEO of Freddie Mac, is getting $14.1 million–in part because of a clause he added to his employment contract two months ago, when it was clear the company was headed for disaster…
The severance money comes right out of the pockets of taxpayers, who didn’t agree to the severance deals and aren’t ponying up to save the companies because they want to. Taxpayers are saving Fannie and Freddie because they have to–because Mudd and Syron were incompetent.
“Incompetent”? Is that too harsh? Absolutely not. Both men gambled big and lost bigger. The fact that they may not have appreciated how big a risk they were taking is no defense: If they didn’t, they should have.Both Mudd and Syron chose to run their companies at an astronomical level of leverage, borrowing more than $50 for every $1 they put to work. Why? Because, in the good years, the companies made more money than they would have had they been levered, say, 20-to-1. Just because a housing crash of the current magnitude hasn’t happened since the 1930s doesn’t mean Mudd and Syron shouldn’t have guarded against it. Instead, they chose not to, and the companies–and shareholders and taxpayers–have paid the price.
They should be forced to take what shareholders in the companies are getting: nada, nothing, nuttin’ honey…
Thanks, Justin
“Taxpayers are saving Fannie and Freddie because they have to–because Mudd and Syron were incompetent. ”
Actually Eideard, taxpayers are on the hook because some corrupt politicians decided to set it up that way. Why don’t you research the real story with a full list of names of those who set these entities up?
Ron Paul predicted this mess… And again, the taxpayers suffer.
It saved the world from a very, very deep, dark recession spanning decades. Regardless of the means, the end was justified and the unexpected bonus will be that the US economy is now in an advantageous position.
What is the best way to rob a bank? Manage it.
F*cking dickwads. They should give those bums the bums’ rush.
If I performed like them at MY job, I’d be living under the interstate drinking Mad Dog.
At the very least, these guys should have been shown the door, with a nice little kick in the ass. Sterner action would include severe monetary pentalties, and perhaps jail time.
But hey. That’s Dumbya for ya. Fail at running a business….that’s just what Dumbya does best.
#5
Huh?
Fannie Mae and Freddie Mac were private corporations, originally started by Roosevelt, a democrat. In spite of his vast powers to control everything in the world, GWB did not run this company.
please rise for our corporate anthem
# 7 Montanaguy
Freddie Mac was not started by Roosevelt. It was created under Nixon.
# 1 Paddy-O
Your insinuation is stupid. One was created 70 years ago and was just fine until recently. it was turned into a private GSE in 1968. The other was created 38 years ago as a private GSE and was fine until recently.
How does who created it matter? If it was such a bad idea how come no Republican President or congress said so before. Why didn’t they shut it down?
It was a capitalist company paying it’s shareholders. I thought you Republicans liked that? It is a fucking shame when capitalism doesn’t work well isn’t it.
Don’t bother with the GSE argument either because that is a bullshit argument. The same shit has been going on with banks and major corporations too. It is capitalism run amuk.
You want to speak with the guy who Bush put in charge for implementing corporate responsibility? I’m sorry… he’s busy right now.
#10 – tee-hee.
#10 – Meister
“President Bush today called for enhanced criminal penalties, including longer jail terms and financial restitution for business executives found responsible for corporate scandals like those at Enron and telecommunications giant WorldCom.
Yeah, but that was six years ago. Now, true to form, Dumbya has flip-flopped yet again, and decided to reward business executives that are responsible for corporate scandals with multi-million dollar golden parachutes.
But hey. Nobody ever accused Dumbya of being true to his word, did they?
#7
Dont mind the Mustard, he is kind of a ‘tard and everything is GWB’s fault. If he couldn’t take a crap he would think George Bush is up in there clogging him up.
This is a direct result of fractional reserve banking. Everything these guys did was legal and above board. Blaming them and saying they ran the companies into the ground is all un-informed ignorant ranting.
The real reason Ginnie and Freddie need a bailout is because the people with loans through them simply do not have the cash to pay their payments. Would you like to know where the cash went? I thought you would. It went into their gas tanks, across the ocean to Saudi Arabia et. all.
The bailout simply continues the farce that fractional banking is, maintaining the ‘confidence’ people have with banks to prevent a run on them.
Just so ya all know, most every penny you have in your savings account is highly leveraged and out on loan. If everyone try’s to withdraw their savings in whole at once, well you won’t be getting your money. If you have more than 100k you wont be seeing that over 100k ever.
Sorry but them’s the facts.
It’s far worse than tax payers having to bail out these two companies, The money to bail these companies out are coming from hot off the printing presses.
Holders of Class A stock in these companies are going to get nothing for their shares. Holders of Preferred stock are going to get next to nothing for their shares. However, the bailout is going to make sure that every FOREIGN investors gets their investment back.
This stuff ain’t over either….the AUTO makers are getting ready to belly up to the federal cash trough as well,
#12 – Mister Mustard
I know… it’s Politician Responsibility… nice words, but doesn’t mean much nowadays.
#13 – The Pirate – The real reason Ginnie and Freddie need a bailout is because the people with loans through them simply do not have the cash to pay their payments.
And why is that?
Would you like to know where the cash went?
There was no cash to start with. Lending money to people who could never afford paying it back is IRRESPONSIBLE.
It went into their gas tanks, across the ocean to Saudi Arabia et. all.
Exporting the jobs to China and India had a lot to do with it. Americans wants things cheap, so Wal-Mart will continue keeping low prices, which will result in more foreign goods.
#9 “it was turned into a private GSE in 1968. The other was created 38 years ago as a private GSE and was fine until recently.”
Okay, Mr. Brilliant. Who voted to bail them out?
What a moron.
Incompetent? Not at all. They accomplished exactly what they intended. They transferred millions of dollars from borrowers and investors to their pockets and the pockets of politicians.
The only problems is the inefficiency of it all. Too bad the government is racking up hundreds of billions of dollars in debt to bail out their Ponzi scheme. It would have been much cheaper just to pay them and the politicians a few million each.
#15
Call it what you like, explain it how you want. Of course there are details but the fact remains that the high gas prices in the US siphoned the remaining funds from the people who owe debt, hence the problem. If the loan applications were processed today under todays economic conditions, they wouldnt be getting loans. But ‘if’ means squat for where the economy is now.
The tail wags the dog.
… this old shoe, this old shoe … if I ever get to heaven it will be because of this old shoe. …
Courage Mom!
..on the land and on the sea, we are the men of the fighting three oh three.
Let’s not forget the sainted Dem. operative, Jamie Gorelick, who was on the board when the books were being cooked. She bailed out with her own multi-million dollar para-up-our-chute.
#18 – The Pirate
Just face it… These people lived beyond their means. Instead of taking the bus to work, they “needed” a van. Instead of buying a 26″ TV, they “had to” buy a 60″ plasma. Instead of settling with a 1600 sq. ft., they “had to have” a 3000 sq. ft. home. Instead of buying an old home, they “had to” buy a new home. Don’t be so fucking apologetic… Two of my coworkers lived beyond their means and now they’re blaming everything and everyone – except themselves – for the mess they’re in.
# 16 Paddy-O
“Okay, Mr. Brilliant. Who voted to bail them out?”
I know two people that completely support the bailout.
George W. Bush & John McCain. You know the twins!!!
The best part is that Bush threatened to veto it if the Democrats didn’t remove the $4 billion to help local government buy and redevelop foreclosed homes. Isn’t that nice lets help the rich fuckers and screw the poor saps who couldn’t pay the juice loan. Wanna guess which one of your buddies supported that decision too. 🙂 MORON!
You resort to name calling after you realize how ridiculous your premise is. How sad. Next time, instead of trying to lay the problem at the feet of the Democrats you should look at your neck deep in it Republicans are.
#3 “It saved the world from a very, very deep, dark recession spanning decades. Regardless of the means, the end was justified and the unexpected bonus will be that the US economy is now in an advantageous position.”
Umm, nope. Just postponed it a little bit.
# 22 ArianeB
“Umm, nope. Just postponed it a little bit.”
70 YEARS??? 70 years is not a postponement. That is a lifetime.
I’ve seen credible analysis that this bailout is more like 2 Trillion Dollars–the difference between the guaranteed debt and the value of the underlying assets.
With the bailout in place, no reason for banks to “be reasonable” and renegotiate the loans with homeowners.
See any pattern here? Government regulations are bad, get rid of the rules. Business is good, lets remove the taxes and/or give tax breaks so that businesses can make as much money as possible. When it all goes into the shitter, have the tax payers step in with bailouts leading to a weaker dollar and reduced security for all American’s except for the rich bastards that set it all up.
Yep, we all lost the class war when Bush got in. McCain will continue it. Good job sheeple.
#23 You are missing the big picture. The US is on track to a huge crash, like collapse of the soviet union crash.
All this does is put a band aid on ONE aspect of this collapse, and it adds to the devaluation of the dollar, the rise of inflation, etc.
There seems to be a pattern here. Bush senior bailed out the Savings & Loan institutions, that went bust, to a tune of $50 Billion (even though they weren’t under FICA protection). The excuse was to save the banking industry from harm. Yet the ABA continues to party hardy in Hawaii, annually.
Now Bush Jr. is bailing out these two home mortgage institutions (again not FICA protected), to the tune of $200 Billion. And I’m sure their CEOs will be sunning themselves in Hawaii any day now. This is the sort of sanctioned corporate welfare that makes the poor peoples’ kind look pitiful in comparison. The Gov. worries so much about you or I getting away with a few extra, they don’t think we deserve. And then rolls out the red carpet to every incompetent CEO, that wants to be paid a king’s ransom just for sitting in some leather chair. “Hey, I sat on my ass for three years, where’s my golden parachute?”
Let’s face the government (Congress & Prez) protects these creeps because they turn around and fund their party’s election campaigns. In laymen terms, this is money laundering. Because the politicians have been receiving a percentage, for the billions in taxes they’ve been handing out to their corporate patrons. Some kind of RICO statue should apply. But no doubt state and federal officials are all exempt from their own rules. They obstruct the legal process, that would provide some checks and balances to stop this.
Their strategy is to just stir us up enough, with black vs white, man vs woman, red vs blue, vacuous choices. To get us to sign up and vote for these stooges. Approving of the system as it is, be re-enforcing it every four years. If only 5% of the public voted for them, the whole thing would be declared invalid, and they’d REALLY would have to reform to get the public back. Don’t count on reform as long as they can snow us with these media circus campaigns, about who is more qualified to lie to us for four years.
In China they would have taken these guys out and shot them in front of everyone else as an example.
Bend over dude, your getting a bailout.
# 13 The Pirate has a problem with “fractional banking” (whatever that is):
“Just so ya all know, most every penny you have in your savings account is highly leveraged and out on loan. If everyone try’s to withdraw their savings in whole at once, well you won’t be getting your money. If you have more than 100k you wont be seeing that over 100k ever.
Sorry but them’s the facts.”
Is that supposed to be a scandal, or even news? Didn’t we all learn this in middle school civics class?
Later, he said:
“If the loan applications were processed today under todays economic conditions, they wouldnt be getting loans.”
In fact, if the loans were processed almost any time other than the last five years or so, they wouldn’t be getting the loans _because under sane rules, they don’t qualify for them_! I’m talking about the so-called “subprime” loans, here. The strategy of loaning money to high-risk borrowers worked out so well for the credit card companies six or eight years ago (NOT!) that the mortgage companies decided to try it for themselves. (“Hey! I want to learn how to shoot myself in the foot too!”)
The way these scandals, huge business/bank failures and stock market crashes keep popping up, regular as clockwork, it looks a lot like the business world is run by a huge assortment of barely constrained crooks. Some populist will get stronger regulations passed for a while, but then people who otherwise claim to be fiscal conservatives start arguing for loosening things up, then the crooks swoop in and scoop up all the money in sight and the whole thing crashes again. It’s almost enough to turn a reasonable person into a Bolshevik.
# 25 ArianeB
“The US is on track to a huge crash, like collapse of the soviet union crash.”
I don’t disagree with you on that. I think it is an inevitable part of social structure and has taken place with every civilization in history, America is not alone. The difference is, we seem to want to do it in a shorter amount of time when we allow shit like this to happen.
As expected, the Republicans and conservatives are looking to shift the blame that lands squarely on their shoulders.
My favorite argument from some genius above is that the lenders did nothing wrong; their borrowers are at fault. It’s hard to believe that anyone above the age of 12 needs to be reminded of the fact loan repyments were never part of their plan. As Wall Street Republicans fought tooth and nail against rules that would have prevented it, the plan of the lenders was *always* to leverage the loans into more concrete investments for themselves and their buddies.
They knew from the start they wouldn’t be held accountable for the stupid loans they created and bought up — because they gave lots and lots of money to lawmakers, mostly Republican, to ensure they would have no legal accountability.