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Judge Says Agency Can't Block Pay of Freddie Mac's Ex-Chief

September 01, 2004|From Reuters

The U.S. government agency that regulates mortgage finance company Freddie Mac cannot freeze more than $50 million in compensation owed to the company's former chief executive who stepped down last year amid an accounting scandal, a judge ruled late Monday.

The Office of Federal Housing Enterprise Oversight made the company withhold payment to Leland Brendsel and other executives last year after accounting problems at the company came to light.

But U.S. District Judge Richard Leon in Washington told the oversight office that Congress had not given it authority to force Freddie Mac to freeze Brendsel's pay and benefits while it sought civil penalties and restitution.

The agency's "arguments that it has the power to freeze assets pending the outcome of the administrative proceeding in this case is simply overreaching," Leon wrote.

Brendsel resigned in June 2003 at the request of Freddie Mac's board. His resignation was considered to be for "good reason," entitling him to the entire termination package detailed in his employment contract.

But the oversight office tried to retroactively classify Brendsel's termination as "for cause." That would have reduced his compensation.

The oversight office said it was reviewing the judge's decision and would continue to pursue administrative proceedings.

Lawyers for Brendsel did not return phone calls seeking comment.

Shares of McLean, Va.-based Freddie Mac rose 94 cents Tuesday to $67.12 on the New York Stock Exchange.

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