Good ol’ Barney Frank. There he was today in all his sartorial splendor, honking away about the excessive pay packages for the CEOs of Fannie and Freddie. Turns out that the two gents in question, Daniel Mudd and Richard Syron, were paid roughly $12 million and $10 million respectively for their efforts in 2007.
Of course Rep. Frank is right–these are very expensive packages for guys who were in the process of running their companies off a cliff. But to focus on exec comp at the moment is to focus on the Rottweiler’s wee stub of a tail while the beast wantonly trashes the house the house. The real question is whether Fannie and Freddie should continue to exist at all, and how much we are willing to charge our children for ensuring their survival. More about this later.
Anyway, then came the good part on CNN. The camera cut away from Rep. Frank to Wolf Blitzer, who quoted a Freddie spokeswoman. Her rejoinder to Rep. Frank’s concerns was roughly as follows. “We believe that Mr. Syron’s compensation package is absolutely justified, as he grew Freddie Mac’s market share considerably during this period.”
I’m not making this up. I’m not nearly that funny.
One of the oldest jokes in the book is the CEO who tapes quarters to dollar bills and sells them for a dollar, then convinces his board to compensate him based on volume (or in this case, market share share). It’s precisely what was going on at Freddie: they were making and buying loans that were horribly underpriced for the risk they were taking. Ouila: big share gains.
Here’s my modest proposition: I’ll take the CEO gig, and will save the company real money in three ways. First, I’ll only use dimes instead of quarters. I really think I’m that good.
Second, I’ll do the whole job for only $7 million a year. Maybe 8 if I can keep making big share gains.
Third, the aformentioned spokeswoman needs to move on. I don’t need the trappings of power. I’m perfectly capable of making my own gaffes.