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Pay to Fannie's CEO questioned

February 01, 2007|From Reuters

WASHINGTON — Several leading Republican members of the Senate Banking Committee said Wednesday that they would quiz the regulator of mortgage finance company Fannie Mae about approving more than $14 million in pay for the current chief executive.

The pay for CEO Daniel Mudd was "astounding" since the company has not yet emerged from an accounting scandal that has so far forced the company to restate $6.3 billion in earnings from 2001 to mid-2004, Sens. Chuck Hagel of Nebraska, John E. Sununu of New Hampshire and Mel Martinez of Florida said in a statement.

The lawmakers questioned the decision by Fannie's regulator, the Office of Federal Housing Enterprise Oversight, to approve the compensation and said they would seek clarification.

"We will be requesting from OFHEO an explanation as to why OFHEO signed off on this astounding development," the senators said.

Mudd was promoted to CEO from chief operating officer in 2004 when the company was rocked by an accounting scandal that prompted the ouster of several top executives and restatements of earnings. The company has yet to return to timely filings.

On Tuesday, Director James Lockhart defended his agency's decision to endorse the pay, saying it was "comparable" to pay for heads of similar-size banks and insurance companies.

Still, Lockhart said, excessive pay is a concern "because excessive compensation can lead to excessive risk-taking, and excessive risk-taking can lead to the kinds of problems they've had in the past."

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