At Freddie Mac, Chief Discarded Warning Signs

[RamboLiberal]

Source: NY Times

The chief executive of the mortgage giant Freddie Mac rejected internal warnings that could have protected the company from some of the financial crises now engulfing it, according to more than two dozen current and former high-ranking executives and others.

That chief executive, Richard F. Syron, in 2004 received a memo from Freddie Mac’s chief risk officer warning him that the firm was financing questionable loans that threatened its financial health.

Today, Freddie Mac and the nation’s other major mortgage finance company, Fannie Mae, are in such perilous condition that the federal government has readied a taxpayer-financed bailout that could cost billions. Though the current housing crisis would have undoubtedly caused problems at both companies, Freddie Mac insiders say Mr. Syron heightened those perils by ignoring repeated recommendations.

In an interview, Freddie Mac’s former chief risk officer, David A. Andrukonis, recalled telling Mr. Syron in mid-2004 that the company was buying bad loans that “would likely pose an enormous financial and reputational risk to the company and the country.”

Mr. Syron received a memo stating that the firm’s underwriting standards were becoming shoddier and that the company was becoming exposed to losses, according to Mr. Andrukonis and two others familiar with the document.

Read more: http://www.nytimes.com/2008/08/05/business/05freddie.html?hp

[DJ13]

1. This is why neither Fanny or Freddie should be public corporations

When executive compensation is based on stock valuations the executives will do anything to increase the stock price.

[MannyGoldstein]

3. Exactly - If They're Too Big To Fail

Then they're too big to be private.

[UpInArms]

2. $7.767 mil a year for 2 years worth of looting

Total Compensation
$7.765 mil (#188)

5-Year Compensation Total
NA

Richard F Syron has been CEO of Freddie Mac (FRE) for 2 years. Mr. Syron has been with the company for 2 years .The 62 year old executive ranks 22 within Diversified Financials

Education
College: Boston College BS '66
Graduate School: Tufts University PhD '71

© AP Photo/Chitose Suzuki


Richard F Syron's Compensation Vs. Diversified Financials Medians
Salary $1.10 mil $0.70 mil
Bonus $2.50 mil $1.42 mil
Other $4.16 mil $0.53 mil
Stock Gains -- $0.75 mil

Total Compensation $7.765 mil $7.77 mil
Data Contributor
Freddie Mac
(FRE: quote, news, executives)

8200 Jones Branch Drive
McLean, VA 22102
Virginia
703-903-2000
703-918-8403

www.freddiemac.com Richard F Syron's Ownership Of Freddie Mac
Industry Medians
Stock Owned (% of Co) 0.01% 0.34%
Stock Owned $2.1 mil $0.05 mil

Freddie Mac's Stock Performance

Total Return During Tenure 5%
Relative to Market 97

http://www.forbes.com/lists/2006/12/H9BC.html

[kmac3]

4. Big money . . . the nation's ruination

I read somewhere that 2 of the top officers of the company just received mega bonuses . . . how can that be when they are going down?:shrug:

[AllHereTruth]

5. I am so fucking sick of "Freddy and Fannie"

The American Peoples wages continue to plummet. Out country is borrowing for an unnecessary occupation. Innocent Americans are being illegally spied on. Our constitution is being shredded before our very eyes.
And all the fucking media talks about if FUCKING FREDDY AND FANNIE.

God dammit.