No exit bonuses for Fannie Mae and Freddie Mac executives, but it's not the whole story

It's one of the big news stories today: Hooray! Corporate governance and federal regulations gone right! Now that the Federal Housing Finance Agency has taken over Fannie Mae and Freddie Mac, Daniel Mudd (Mae) and Richard Syron (Mac) will be denied the golden parachutes that their employment contracts gave them (MSNBC)!

Two issues come to mind. First, I don't have a copy of the contracts in front of me. However, MSNBC reports that financial disclosures from Mae and Mac apparently state that Mudd and Syron had contracted to walk away from their top positions with a combined $25 million. This agreement was broken unilaterally by the FHFA, an executive branch actor created by Congress. Can an agency break an employment contract that a privately-owned company made with its employee before the company was federally taken over? I didn't get the best grade in Administrative Law, and I got an even worse one in Constitutional Law, but my guess is that a federal agency is not given Chevron deference to cheat someone out of their paycheck.

Oh, wait, did I just make a Lochner argument there? I'd appreciate an explanation on that point. As I said, I didn't get the best grades in Con Law. But I do wonder if Mudd and Syron don't have a legitimate claim for a taxpayer bailout of Mae's and Mac's contractual obligations on that point. Here's a line from the MSNBC article linked to above:

A law passed by Congress this summer granted the director of FHFA . . . the power to limit severance payments made to departing executives. But the law is untested and it is unclear whether Mudd and Syron will contest the decision.

If I had some $10 million or $12 million at stake, I'd pay an attorney a few thousand dollars to test that law for me, wouldn't you?

Second, Mudd's and Syron's replacements. Herbert Allison is in like Flynn at Mae. He's a director at Time Warner, spent the 1970s to 1990s at Merrill Lynch, and was the finance director of John McCain's 2000 campaign. David Moffett (misidentified in the MSNBC article as "Daniel" Moffett -- c'mon, guys, I found that with two minutes of googling; either you mis-typed because the article is about Daniel Mudd, or you were thinking about Daniel Radcliffe's naked Equus opening on Broadway, which was big news on CNN.com this morning) will be at Mac. Moffett "is virtually unknown outside banking circles" but was nice enough to send some gracious introductory e-mail to Freddie Mac employees when he was named the new CEO there. According to Forbes, he spent much of the 1990s at the banks that became US Bancorp and is now a director at eBay. Intense mid-day googling is revealing little else about him.

Now, contrary to the impression I may have given in my previous post, I'm not an adherent of any theory of a vast, right-wing conspiracy. I just calls 'em as I sees 'em. Here, I wouldn't expect a Republican administration to appoint anyone but one of their own good old boys in the GOP to Mae and Mac. People with more MBA-fu and google-fu than I have will be sure to dig up stuff on these guys. Though I imagine the two new CEOs were better vetted than Sarah Palin was, it's clear that someone at FHFA thinks (or at least hopes) that McCain will win the election -- they put someone known and favorable to him at Mae, I daresay in hopes of paving the way for Mae to do the Executive's bidding without fuss after November.

Does it matter that Mac got a relative unknown? Does Mac have a significantly different function than Mae? Aren't there any women executives who could have been put in one or both positions?

I'm not asking to suggest a conspiracy or shadowy dealings (though I'm happy to suggest sexism). I'm honestly curious.