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Statement from Senator Obama commending federal regulators on blocking golden parachutes for Fannie Mae and Freddie Mac CEOs

September 15, 2008

Chicago, IL - Below is a statement from Senator Obama commending federal regulators on blocking golden parachutes for Fannie Mae and Freddie Mac CEOs:

"I want to commend federal regulators for blocking golden parachutes for the outgoing CEOs of Fannie Mae and Freddie Mac. Last week, while John McCain praised the plan to rescue Fannie and Freddie without raising any concerns about a golden parachute for their CEOs, I urged Secretary Paulson and Director Lockhart to reject these multimillion dollar bonuses. Rewarding CEOs during a historic economic crisis may make sense to someone who's so disturbingly out of touch he believes 'the fundamentals of our economy are strong,' but it undermines our economy and betrays our sense of fairness. And I am glad these bonuses will not come to pass," said Senator Barack Obama.

Below is a letter Senator Obama sent to Secretary Paulson and Director Lockhart on September 9, 2008 urging him to block these golden parachutes:



September 9, 2008

The Honorable Henry Paulson

Secretary

U.S. Department of the Treasury

1500 Pennsylvania Avenue, NW

Washington, D.C. 20220

The Honorable James B. Lockhart

Director

Federal Housing Finance Agency

1700 G Street NW, 4th Floor

Washington, D.C. 20552

Dear Secretary Paulson and Director Lockhart,

News reports indicate that the chief executives of Fannie Mae and Freddie Mac will stand to reap millions of dollars in severance payments when they are removed from their posts. Under no circumstances should the executives of these institutions earn a windfall at a time when the U.S. Treasury has taken unprecedented steps to rescue these companies with taxpayer resources. I urge you immediately to clarify that the agreement with Fannie Mae and Freddie Mac voids any such inappropriate windfall payments to outgoing CEOs and senior management.

When Congress granted the Department of the Treasury the authority to step in and rescue Fannie and Freddie, we explicitly included a provision that gave the new regulator the authority to block "any" payments made to CEOs that were "contingent on the termination" of their affiliation with the organization. It would be a gross violation of the public trust to fail to use this authority now, while American taxpayers and American homeowners, already struggling in a weak economy, are being asked to accept an historic intervention to rescue these institutions.

I recognize that intervention is necessary to maintain liquidity for the housing market so that homeowners can continue to get affordable mortgages and homes can be bought and sold in neighborhoods across the country. Yet one of the central requirements that I have consistently set in evaluating any intervention under this new legislation is that such action protect taxpayers and not bail out senior management from Fannie Mae and Freddie Mac. Multi-million dollar severance payments for the executives who helped steer these institutions into the current crisis situation would violate the spirit of the authority granted by Congress to the Treasury Department and would violate the public's trust.

I understand that details of the agreement are still being worked out. Please let me know right away what steps are being taken to ensure that the agreement is responsible and that Fannie and Freddie can continue to fulfill their important missions without wasting taxpayer dollars or rewarding poor leadership. The American people are watching and have put their trust in us to look out for their interests.

Sincerely,

Barack Obama

United States Senator

Barack Obama, Statement from Senator Obama commending federal regulators on blocking golden parachutes for Fannie Mae and Freddie Mac CEOs Online by Gerhard Peters and John T. Woolley, The American Presidency Project https://www.presidency.ucsb.edu/node/291326

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