Letter to Henry Paulson, Secretary of the Treasury, James Lockhart, Director of the Federal Housing Finance Authority, Herbert Allison, CEO of Fannie Mae, and David Moffett, CEO Freddie Mac, Re: Block Executive Compensation for Ousted Fannie Mae and Fredd
Letter
Letter to Henry Paulson, Secretary of the Treasury, James Lockhart, Director of the Federal Housing Finance Authority, Herbert Allison, CEO of Fannie Mae, and David Moffett, CEO Freddie Mac, Re: Block Executive Compensation for Ousted Fannie Mae and Freddie Mac's CEOs
Durbin Asks Paulson to Block Executive Compensation for Ousted Fannie Mae and Freddie Mac's CEOs
United States Senator Dick Durbin (D-IL) wrote a letter today to Secretary of the Treasury, Hank Paulson, asking him to deny windfall compensation packages to the outgoing CEOs of Fannie Mae and Freddie Mac - packages which could indirectly cost taxpayers an estimated $24 million.
"I agree that the decision to place Fannie Mae and Freddie Mac under federal control may have been the best of a number of bad options," Durbin wrote. "Our focus ought to be on stabilizing the housing market and helping families stay in their home, not on compensating failed leadership."
The letter, also sent to Federal Housing Finance Authority Director, James Lockhart, and incoming Fannie Mae and Freddie Mac CEO's Herbert Allison and David Moffett, asks that steps to be taken to responsibly keep as many families in their homes as possible by allowing their mortgages to be modified. Previous attempts to aid trouble homeowners have not yielded meaningful results. Programs like the Hope Now Alliance remain voluntary and are not reaching nearly enough of the estimated 2 million homeowners facing foreclosure. Durbin's letter asks that Treasury Department, the Federal Housing Finance Authority, Fannie Mae, and Freddie Mac evaluate ways to help modify the mortgages that some homeowners are struggling to pay.
"Last quarter, national foreclosure rates reached record highs and the number of families in jeopardy is expected to increase. Now that the federal government has taken explicit responsibility for Fannie Mae's and Freddie Mac's mortgage portfolios, I ask that you quickly determine whether steps can be taken to responsibly keep as many families in their homes as possible."
Last year, Durbin introduced the Helping Families Save Their Home in Bankruptcy Act, which would allow over 600,000 at-risk homeowners keep their homes by allowing them to alter the terms of their mortgages in bankruptcy.
In July, Congress passed, and the President signed into law, the Housing and Economic Recovery Act, a major housing package that helps families avoid foreclosure and aids communities as they recover from the collapse of the subprime mortgage market.
A copy of today's letter can be found below:
September 9, 2008
The Honorable Henry Paulson, Secretary of the Treasury
The Honorable James Lockhart, Director, Federal Housing Finance Authority
Herbert Allison, Chief Executive Officer, Fannie Mae
David Moffett, Chief Executive Officer, Freddie Mac
Dear Sirs:
I agree that the decision to place Fannie Mae and Freddie Mac under federal control may have been the best of a number of bad options, but I urge you to collectively take two immediate steps to minimize taxpayer costs and support struggling families who are trying to save their homes.
First, I ask you to deny the outgoing Chief Executives of these two companies the windfall paydays that they may technically be entitled to receive. According to published reports, former CEOs Daniel Mudd of Fannie Mae and Richard Syron of Freddie Mac could receive in excess of a combined $24 million as parting gifts for their services. Now that taxpayers in Illinois and across America face the prospect of paying for an enormous bailout of the two companies they led, executive compensation at these levels is unconscionable.
Second, I ask that you evaluate what steps can be taken by the Treasury Department, the Federal Housing Finance Authority, Fannie Mae, and Freddie Mac to help modify the mortgages that some homeowners are struggling to pay. Last quarter, national foreclosure rates reached record highs and the number of families in jeopardy is expected to increase.
When the Federal Deposit Insurance Corporation took over IndyMac Federal Bank it implemented a new program to systematically modify troubled mortgages in a much more organized way than IndyMac had attempted; now that the federal government has taken explicit responsibility for Fannie Mae's and Freddie Mac's mortgage portfolios, I ask that you quickly determine whether similar steps can be taken to responsibly keep as many families in their homes as possible.
While Congress must address many difficult questions regarding the future of mortgage finance in this country, we can and should protect taxpayers in the short term by taking the two steps described above. Our focus ought to be on stabilizing the housing market and helping families stay in their homes, not on compensating failed leadership. I look forward to your timely replies.
Sincerely,
Richard J. Durbin
United States Senator
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