Lead 'Chutes for Fannie, Freddie Execs

Last Updated Sep 18, 2008 7:39 PM EDT

American business has long had a bad habit of lavishly rewarding executive failure, and "the government" has often been accused of "meddling" in the affairs of business to the detriment of the national economy.

But Tuesday Uncle Sam stepped in opened up a can of righteous whup-ass in the Fannie Mae and Freddie Mac debacle (don't call it FannieGate), with the Federal Housing Finance Agency notifying former Fannie CEO, Daniel Mudd, and former Freddie CEO, Richard Syron, that they would not be receiving the approximately $24 million in "golden parachute" payments called for in their contracts. Syron would have gotten between $12 million and $14 million in exit pay; Mudd, $7 million to $9 million.

Whether the feds can manage Fannie and Freddie out of their current crises remains to be seen, although at this point it's hard to imagine it screwing the pooch worse than Syron and Mudd.

No matter. The question is, should private enterprise follow the government's lead and amend their executive contracts to include a "failure clause" that would nullify or reduce exit payouts if the exec fails meet a set of stated goals?[poll id=58]