Published: 09-23-08
Calls to End “Golden Parachute” Payments Halt Massive Govt. Bailouts
WASHINGTON D.C. – While millions of financially strapped American taxpayers are having to bear billions in government bailouts Daniel Mudd and Richard Syron the respective former CEOs of Fannie Mae and Freddie Mac may pocket severance packages of up to $15 million. However Congressman Louie Gohmert (TX-01) is putting his foot down.
Legislation passed in July included provisions allowing the Federal Housing Finance Agency (FHFA) regulator to prohibit or limit these “golden parachute” payments.
However rather than leave any doubt in the mind of the FHFA regulator about whether Mudd or Syron deserve to be paid millions in severance pay for running Fannie and Freddie into the ground Gohmert has cosponsored H.R. 6864 which will REQUIRE the regulator to prohibit golden parachute payments from being made to the companies’ former executives and board members.
Gohmert stated “It is incredible to think that as taxpayers begin the process of assuming the financial responsibility for the reckless decision-making of these institutions’ leaders those same leaders could walk away from the devastation they’ve wrought with a reward of millions of dollars. This is inexcusable. They must be held accountable for their irresponsible actions and that is what this bill aims to do. We must restore decency and consumer confidence in our market system by reinstating accountability. Accountability is what keeps our markets free and makes our economy strong.”
Gohmert and his colleagues also sent a letter to Secretary of the Treasury Henry Paulson and Federal Reserve Chairman Ben Bernanke expressing their deep concerns over the increasing government bailouts of private sector companies and in the best interest of taxpayers our economy and free market system urged that no more be orchestrated.
The letter says “federal investment in such large amounts of private company stock has the appearance of a socialist and not a free market approach to managing our economy” citing the federal government losing $9 billion from the collapse of IndyMac risking $114 billion from the bailouts of Bear Stearns and AIG and between $200 billion and potentially trillions of dollars of risk from the Fannie Mae/Freddie Mac bailouts.
It further states that instead of taking actions to insulate our economy “regulators ought to pursue a path that acknowledges the realities of our current financial problems without delay and implements reforms based on free market principles to restore certainty to our markets…including encouraging more—not less—competition among market participants rewarding innovation creating incentives for responsible risk management and re-establishing the market discipline that comes from the potential of failure.” Gohmert and his colleagues close with the request that Paulson and Bernanke “refrain from conducting any additional government-financed bailouts for large financial firms” since “the risk to taxpayers and to the long-term future health of our economy remain just too great to justify.”
For the full text of the letter contact Laura Mszar at laura.mszar@mail.house.gov or 202.225.3035.
