WASHINGTON U.S. regulators will not allow mortgage giants Fannie Mae and Freddie Mac to pay their departing chief executives multimillion-dollar severance packages outlined in their contracts, The Washington Post reported on Sunday.
The Federal Housing Finance Agency (FHFA) has notified former Fannie Mae Chief Executive Officer Daniel Mudd and former Freddie Mac Chief Executive Officer Richard Syron that the so-called "golden parachutes" will not be paid, the Post reported, citing an agency statement.
Mudd and Syron were entitled to combined pay and bonus packages worth about $24 million as part of the government's plan to restructure the troubled companies, which own or guarantee about half of the $11 trillion outstanding home mortgages in the United States.
The Post said a spokesman for Syron had no immediate comment and a lawyer representing Mudd did not return a phone call or e-mail.
The U.S. government took over the two mortgage giants last Sunday and replaced its management as part of a plan to recapitalize the two firms.
A law passed by Congress this summer gave FHFA Director James Lockhart the power to limit severance payments made to departing executives, the Post said.
The agency declined to specify what the former executives would lose or what parts of their contracts were in play, the newspaper said.
The golden parachute payments drew criticism from Democrats, including presidential contender Barack Obama, who said such a windfall was unacceptable and the government's failure to block the packages violated the public's trust.
Republican presidential nominee John McCain also opposed the severance packages, his chief economic adviser Douglas Holtz-Eakin said.
"They're inappropriate," he told Reuters.
The government's bailout of Fannie and Freddie is designed to support the U.S. housing market, which has seen prices fall about 15 percent on average nationwide in the past year.
Defaults and foreclosures on U.S. home mortgages in the past two years have risen, contributing to losses of more than $500 billion by banks worldwide, exacerbating the global credit crisis of the past year.
(Reporting by JoAnne Allen; Editing by John O'Callaghan)