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Freddie Pays Big for New CFO
Mr. Ross Kari has been appointed as CFO of Freddie Mac. He is getting a big paycheck.
Freddie
Mac does not need a CFO. What is Mr. Kari going to do with his time?
Freddie is in conservatorship. It is a ward of the state. He is not
going to be doing any special transactions that justify this big nut
for the taxpayers. Freddie borrows short term from Treasury to fund
their portfolio; they sell their MBS and unsecured bonds to the Fed.
What’s so complicated about that?
The whisper from D.C. is that
something will be on the table for all of the Agencies by next March.
Mr. Kari is likely to be out of a job by then. For his sake I hope he
has a big parachute. On the flip side, if he does, there will be hell
to pay.
Freddie is no longer a public company that has a big
stock float or a presence on Wall Street. It has no earnings, only
losses. It should be de-listed. This is not a Citi where there is a
remote hope of a soft landing. Freddie is toast. There will be no
stockholders meetings where Mr. Kari will be called on to report the
success and progress at Freddie. It is unlikely that Freddie can even
pay the dividend it owes to Treasury. They are losing $2+ billion a
month. That number would be higher, but they are burying their losses
by providing ReFi loans at 125% LTV. Half of these new loans go into
default in less than one-year.
Freddie hired Mr. Kari to bring
someone solid on board. That cost them. Freddie has plenty of talented
people who can operate this ship for the next six months. This thing is
on autopilot. The only reason Freddie did this (with the blessing of
FHFA) is that they wanted to try to demonstrate that they had the right
“team” to be the survivor Agency. This hire was about optics, not
substance.
Mr. Kari is ex CFO of Fifth Third Bank. That makes
him a player, but let's not forget that Fifth Third took $3.4 billion
in TARP money. This is what he had to say about repaying that loan back
in July:
Fifth
Third Bancorp's Chief Financial Officer Ross Kari said the Cincinnati
bank would wait until the economy improves until it would repay cash
from the government.
Freddie
needs to be absorbed by HUD. I think they will be. There is not much
room for this pay grade at HUD. The President makes $400k, Senators
$174k, Bernanke and Geither get $191k.
Who is making these choices? Who is approving them? Is anyone watching the store?
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Keeping two sets of books is very complicated stuff. I'm sure this guy will earn his keep while trying to keep the SEC in the dark (are they ever in the light?)
does that include a life insurance policy, self-inflicted coverage included?
Outrage!!! We will also end up picking up the legal fee's when he continues to cook the books.
Freddie Mac and Fannie Mae have long been a haven for (mostly) Democratic party hacks. Jamie Gorelick created the now infamous "Gorelick Wall" which prevented the FBI from searching Zacharia Moussaoui's laptop or forwarding information about Moussaoui to the CIA. For her service to the country for being the single American most responsible for the success of the 9-11 attacks, Gorelick was rewarded with a Vice Chairman position at Fannie, where she pulled down a cool $26 million in compensation while running Fannie into the ground. Life is good when you are part of the criminal enterprise.
You forgot to mention her being named a member of the 911 Commission. Sickening.
675,000 I presume no stock options haha
Only the depth and breadth of the criminal enterprise is in question when it comes to the GSEs.
The CFO is simply a CAPO who looks honest in a suit and won't dribble his soup.
This big payday is essential to reenforcing the " NO SNITCHIN' " mandate.
Keeping a small dribble of private capitalization in the game helps legitimize the Big Taxpayer Con called FRE. And maintaining the semi-private illusion of FRE requires silence and big payoffs. No one will be allowed to drift off the reservation, especially the head beancounter.
Taken in context, it's a perfectly understandable move.
They are losing $2+ billion a month. That number would be higher, but they are burying their losses by providing ReFi loans at 125% LTV. Half of these new loans go into default in less than one-year.
I wish I could run my businesses that way. When the mafia does it it's called busting out a business. When the USG does it it's called conservatorship.
Keep the good material coming Bruce. For any MSM members reading this, this is what's called journalism.
I wrote this last night after I saw the headline of the $675k salary. Later more details on the pay package came out. It was sweeter than I reported.
A $2mm signing bonus and a contract with a guarantee of $3.75mm. So the parachute is open on this one.
I hope that someone looks into this. This is a crime.
bk
I agree, this is criminal. I sent a note to my congresscritter, not that is will help, but at least they will know someone is watching their ass.
Maybe they need this guy to count up all the losses. Did you see the monthly summary released today?
http://www.freddiemac.com/investors/volsum/pdf/0809mvs.pdf
Not pretty at all. Look at those DQs continue to spike.
Ghost, sent it to mine as well. From the old pace picante commercial
GET A ROPE.
Considering what happened to the last CFO they probably couldn't get somebody to take the job without massive hazard mitigation pay. Remember how fast they cleaned up that "crime scene"?
The new CFO will have tremendous operational responsibilities. The company needs to adapt to new accounting pronouncements (FAS 166) that will eliminate the QSPE model for the GSEs (both Freddie and Fannie). Their balance sheets will balloon to over two trillion dollars each. It should prove to be another operational nightmare. If he can pull it off and still report in a timely manner with the SEC, that type of salary may even be justified.
I'll bet he's got a few hundred folks in accounting to help with that. Unless he's the first CFO in history to do it all on his own.
Just one more proof that Freddie is not a government agency, because real government agency employees do not get paid $675,000 a year.
That is an interesting point. Bernanke claims he has the authority to buy agency debt because they are effectively arms of the government, but anyone who has dealt with the "agencies" in the past knows they HATED being called agencies, the preferred the moniker "GSE", since they were NOT arms of the government.
Now they are in "convervatorship", which STILL does not make them arms of the government.
Yet Bernanke still claims he has the legal authority to buy their debt?
Slippery.
Hey fellas, this is a buy signal right? I'm in!
Only $675,000?
That's just walkin around money for members of the criminal syndicate.
Now if you want to talk about top tier criminalisous amounts of dirty money compenstion such as that pocketed by my good friend and colleague Lloyd Blankfein, then I'm all yours.
But, I guess if all you have to do is rotate on your thumb until the store gets shanked by the Fed in the next couple of months than the $675K will be more than worth it.
Super sweet job if you can get it!
Criminal Syndicate Member Since 1913.
As a side note, even the mafia runs front companies to appear legit, so I doubt the upfront salaries of the President, Senators, Geithner and Bernanke even comes close to the smokey backroom deals being cooked up by these criminals.
Ooooh, life is sweet in the Criminal Syndicate.
Criminal Syndicate Member Since 1913.
Good point. But then, who do you think they modeled their operations after?
This is simply gross....in the real world, he would be lucky to make $50,000.
Now Sqworl, he is in the right clubs you know. At least $125k I would think.
Ya and in the real world toxic assets would simply mean nobody wants them. But they don't live in the real world.
Excellent post, Bruce!
Maybe he can cross manage and assist the FHA as it implodes. As FITB is likely to as well.
Another great post, Bruce. Freddie should be absorbed into HUD and folded into the FHA. I am 100% against government involvment in housing and housing finance, but given that they are going to do it anyway, they might as well eliminate the triplication of effort between Fannie, Freddie, and the FHA (not to mention the USDA, VA, etc - can't one entity manage all these programs? All you need are guidelines).
I fail to see why the taxpayer is paying a guy 675K a year, plus his counterpart at Fannie is probably getting the same, so we are paying almost 2M a year including benefits and bonuses, for two individuals we don't need.
The more I see BS like this, the more convinced I become that the United States is going to collapse from a currency crisis. Glad I got my gold.
barney rubble...er frank..said it was a-okay...