Sunday, September 21, 2008

$15, 000, 000 Severance Packages: A Little More Outrage...

This blog entry contains a section of Obama IS America!'s Editor Opinion,  commentary posted on a Yahoo thread, where people are talking about the government bailouts, and a N(ational)  P(ublic)  R(adio) article about the million dollar severance packages for fired CEO's, and why the Bush Administration chose act now and bail out these companies.  If there are any economists out there who would like to simplify the reasons listed in the article, please write to us and inform us further.  Thanks!

Wow.  $700, 000, 000, 000.  That is almost    one    trillion    dollars   being spent to bail out Fannie and Freddie

that is how much money WE THE TAXPAYERS are going to have to pay, even though WE are the ones losing our homes!  Where is the bailout for all the people who's homes foreclosed?

If there are any economists out there who can explain and simplify WHY exactly it makes sense to spent that much to bail out these mega-corporations that gambled our money and lost.

Now, the fired CEO's of these corporations--the head honchos responsible for making horrible decisions in the first place--are getting severence packages (money given to people who are fired) of **$9, 000, 000** and more.  To spend on themselves and their needs.  While we, the taxpayers, earning a minute fraction of that, are going to be the ones paying for their disastrous mess.

What happened to Roosevelt's antitrust laws? Weren't they supposed to protect against a small group of people earning CRAZY amounts of money?  Weren't they supposed to prevent monopolies in ALL markets?  Weren't they supposed to permanently prevent things like this from happening?  Have we learned NOTHING from history??!?!

Well....that is what you get when you have 'small' government as the Republican Party/politicians tend to fight for and praise, where you have less government regulation and intervention into the predatory practices of BIG CORPORATIONS (the true gangsters and bad guys of today), while creating laws and tax breaks that benefit those same unregulated companies.


less rules, more money for big corporations


they don't really care what the impact of reckless gambling of 'stakeholder' (yours and my) funds is on the economy as a whole.  They don't have to worry after either, because they get 

$9, 000, 000 severance packages.

Please find the reader commentary and the NPR article below.


Resolved Question

Show me another»

1 trillion dollar bail out for financials today, everyone we now hold all the bad debt, are you happy? ?

The markets are going to fly today, and all next week, since banks no longer have to worry about bad debt, mortage back securities, bad loans and short sellers.... I made 17,000 today but overall im sad because we the tax payers have 1 trillion in more debt
  • 2 days ago

Best Answer - Chosen by Asker

I guess its official....We can all say goodbye to SS.
  • 2 days ago
Asker's Rating:
5 out of 5
Asker's Comment:
i wont get it and you wont get it... hehe unless we pay 50 percent taxes

Is this what you are searching for?

Other Answers (13)

  • No! It is too bad that the government can bail out so many companies, but what about the people that need help and are out of work like me for over 18 months now. This happened due to people not being able to afford their mortgages and the mortgage companies issuing loans to people that could not afford them. I hope the next president puts more strict guidelines with people and mortgage companies so that we do not go through this anymore.
    • 2 days ago
  • Sorry but you simply don't understand economics. 

    Yes we did issue funds to cover the debt BUT also bought out the majority shareholder positions in these companies. That means that when these companies make money, WE THE PEOPLE make money and it goes back into our Treasury. It is also a loan that must be paid back which is separate from the profit that the government receives.

    Not only does it prevent other companies from failing that are linked to AIG, etc (saving those people's jobs etc) it also improves the world view of the American economy which essentially grows our financial base.
    • 2 days ago
  • Not really. But I'm glad you made money, I don't begrudge that.

    Back in the 90's, Clinton wanted the black vote so he put an African American into Fannie Mae and this person worked with HUD to get houses for minorities and Fannie Mae became a 16.2 million dollar lobbyist for campaigns & they spent a combined $170 million to cultivate allies during that period for the Democratic Congress. This political fiasco cost American Taxpayers and threatened the housing market. The Dems will deny this, but it's a fact.

    When the government starts owning business, we move from capitalism to socialism. The Unions are already geared to move into government and then a unionized government is patterning communism.

    The UNIONS are protecting Comrade Obama from the scrutiny he needs and he is definitely socialist with communist tendencies. Labor Unions in Russia are communist and we are starting to adopt communist ideas here in the U.S. where labor unions want to run our government instead of free enterprise.

    Thats why liberal UNION media, Hollywood - UNIONS, and pop musicians UNIONS and writers of textbooks, newspapers and magazines - ALL UNION are giving Obama and the Democratic Congress a free ride and unlimited "Pass".
    • 2 days ago


    Raines' appointment would make him one of three African American cabinet members in the administration.
    Under Raines' leadership, Fannie Mae began partnerships with HUD and local lenders in Baltimore and other cities across the country. Raines led an effort enabling more minority families to become homeowners.

    Both Fannie (FNM) and Freddie (FRE) made the list of Washington's TOP 20 lobbying spenders. 
    They spent a combined $170 million to cultivate allies during that period. At the same time, their executives have consistently led the mortgage-banking sector in campaign giving to members of Congress, contributing a combined $16.2 million since 1997.

    The US Communist Party Endorses Obama | Sweetness & Light
    Aug 7, 2008 ... This scares me more - exactly what does, is the purpose or agenda of labor unions to be involved in racism or eradication of such? ...

    Bay Area Communists infiltrate youth

    (Mold young minds and they are yours)

    Boycott Hollywood Anti-Americans List Updated
  • No.

    Some of the working poor make $17,000 a year or less, yet you made that in one day.

    And still, the working poor and the lower to middle income individuals will still have to foot the $1 trillion bill.

    It's really time for this country to be moved in a different direction. And that's why I'll be voting the Obama/Biden ticket.
    • 2 days ago
  • If your upset; do NOT vote for Obama!!!!

    "Senator Obama was as the head of the line when the little piggies lined up at the trough."

    Explosive Video, Fannie Mae CEO calling Obama and the Dems the "Family" and "Conscience" of Fannie Mae

    Barack Obama advisor Jim Johnson quits under fire

    The Obama-Fannie-Freddie Connection

    Bush Fought to Regulate Freddie Mac and Fannie Mae 5 Years Ago Until Democrats Stopped Him
    • 2 days ago
  • No, I'm not happy. I'm convinced now more than ever that McCain is exactly the person we need as president.

    I feel as though I'm being punished for being a good, responsible tax payer... why didn't I think of buying a house I couldn't afford and then stop paying, then wait for a bailout and now I can keep it for way less. Yeah, that's real fair.
    • 2 days ago
  • No, I'm not happy. 

    I don't see why those of us who made good decisions with our lives should be required to bail out those who didn't. It's the same argument conservatives have used against welfare, and now they're suddenly OK with it.
    • 2 days ago
  • If you Google Ron Paul he can show you how if we simply follow or Constitution, we would have NO federal income taxes. If we did not have a Federal Reserve we would not have this crisis. 

    Get to know Ron Paul - the champion of the Constitution
    • 2 days ago
  • You Americans caused the worldwide credit crisis, you deserve everything you get. Innocent people from other countries have suffered greatly because of your country's financial incompetence. It won't be forgotten quickly.
    • 2 days ago
  • sure I'm thrilled - NOT.
    Everyone is so worried we need to learn Spanish, we better start learning Chinese, as that's who's going to end up owning us.
    • 2 days ago
  • no 

    we just bought a bunch of vacay homes, 2nd homes, mcmansions, and houses for people who can't afford what they bought
    • 2 days ago

Big Severance Packages Await Fannie, Freddie CEOs

Morning Edition, September 9, 2008 · The government takeover of mortgage finance companies Fannie Mae and Freddie Mac has cost CEOs Daniel Mudd and Richard Syron their jobs. But Fannie Mae's Mudd could collect more than $9 million for leaving, while Syron could receive exit pay of more than $14 million.

Other Wall Street CEOs have received even larger packages when leaving firms battered by the housing slump. Still, the Fannie and Freddie packages are likely to draw fire from politicians and critics of high corporate pay.

Understanding The Fannie, Freddie Rescue

Treasury Secretary Henry Paulson announces a rescue plan for Fannie Mae and Freddie Mac.
Susan Walsh

Treasury Secretary Henry Paulson announces a rescue plan for mortgage finance giants Fannie Mae and Freddie Mac at a news conference in Washington, D.C., on Sunday. AP, September 8, 2008 ·The U.S. government has stepped in with an ambitious plan to help rescue mortgage finance giants Fannie Mae and Freddie Mac.

The Bush administration placed the two companies into a conservatorship, replaced their CEOs and boards of directors, and announced a plan to infuse billions of dollars to prop them up as a means for reinvigorating the U.S. housing market.

Here, a look at some of the reasons the government decided to act and the implications for taxpayers.

Why did the government act now?

Treasury Secretary Henry Paulson told NPR that the primary reason for the rescue was the discovery of a "capital deficiency that needed to be addressed." In other words, they didn't have an adequate cushion against further losses in the deteriorating housing market.

Paulson said that investors have become "increasingly jittery here and around the world" and unwilling to provide added capital for Fannie and Freddie. He said the action was taken to ensure the continued availability of mortgages and to protect taxpayers. Currently, Fannie and Freddie are providing financing for more than two-thirds of all mortgages originated in the U.S.

What does this bailout plan involve?

The government is putting Fannie and Freddie into conservatorships under the control of their regulator, the Federal Housing Finance Agency. (Earlier this summer, Congress gave the administration the green light to take over the two companies if necessary.)

The four-step rescue plan, which also involves the Federal Reserve and the U.S. Treasury, calls for increasing Fannie and Freddie's portfolio of mortgage-backed securities through the end of 2009, then reducing them by 10 percent each year, starting in 2010. It would also establish a special class of shares owned by Treasury that would give preference to the government's investment over those owned by other shareholders. It would create a credit facility to lend up to $100 billion to each of the companies — as a means for encouraging continued investment in the companies. And it would begin a temporary program whereby the U.S. Treasury will invest in new mortgage-backed securities — $5 billion in the next month alone.

What's the goal of the government's takeover?

Paulson said the federal takeover was initiated to avert a "serious risk" to the financial system and keep money available for mortgages.

In the short term, the rescue is meant to help calm the markets and to offer some measure of stability to help the U.S. economy weather the housing correction. In the longer term, the goal is to keep the two companies afloat so that they can continue to support the U.S. housing market.

Fannie and the smaller Freddie own or guarantee more than $5 trillion in mortgages — almost half of all the mortgages issued in the United States. On Sunday, James Lockhart, the director of the Federal Housing Finance Agency, said the two companies' market share of new mortgages "reached over 80 percent" earlier this year, but is now falling.

Will Fannie and Freddie debt and mortgage-backed securities continue to be backed by a government guarantee?

Paulson said this is a key question that will need to be addressed in the next couple of years. Fannie and Freddie were chartered by Congress, and so historically, investors — especially foreign ones — have bought their debt because they believed it was backed by the full faith and credit of the United States, akin to Treasury bonds.

The takeover makes that guarantee explicit for the time being. Paulson said the issue of whether there should be a government guarantee would have to be resolved: "We're going to have to decide whether we want to have government support for private profit."

In recent weeks, Fannie and Freddie suffered a crisis of confidence as their stock price plummeted.

Are taxpayers at risk?

Paulson said the rescue effort was "structured very carefully to protect the taxpayers." If taxpayer dollars are used for the purchase of preferred stock, then "first losses will be borne by the existing shareholders," he said. But if the housing market continues to deteriorate, taxpayers could be on the hook. The Congressional Budget Office has estimated that a bailout of Fannie and Freddie could cost from $0 to $100 billion, with the most likely amount being $25 billion.

How might this affect homebuyers and mortgages?

The takeover buoyed investors, and mortgage rates began to drop in the financial markets after the takeover was announced. Economist Mark Zandi with Moody's says that 30-year mortgage rates could descend to nearly 5.5 percent; the national average is now 6.35 percent.

How will consumers know whether the takeover action is working?

Paulson said the yardstick for consumers would be if there continues to be "an abundant supply of mortgage financing that is reasonably priced." In other words, if homebuyers are still able to obtain mortgages at good rates.

Will shareholders in Fannie and Freddie be wiped out or bailed out?

Paulson said in a prepared statement that because Fannie and Freddie are now in conservatorship, they will "no longer be managed with a strategy to maximize" shareholder returns — a strategy that he said "historically encouraged risk-taking." But he said if everything goes well, they might get some money back. But shareholders are last in line for any claims. So if things worsen, shareholders would likely get very little.

How could the takeover of Fannie and Freddie help stabilize the world financial system?

Many foreign central banks held Fannie and Freddie bonds in their portfolios. Some have reduced those holdings in recent months as questions about Fannie and Freddie's future have intensified. If Fannie and Freddie were not able to make good on their debt, there would be chaos in world financial markets.

With reporting by John Ydstie, Jim Zarroli, Adam Hochberg and Joshua Brockman and The Associated Press

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