Never mind that the U.S. government has staunched the bleeding at Fannie Mae and Freddie Mac with an historic takeover of those mortgage giants. There's a new crisis at hand: What will become of Lehman Brothers, the 157-year-old investment bank?
Lehman says it has the cash to survive its bad bets in the mortgage markets, but in nervous times like these, it takes more than money to make it -- Lehman also needs investors' confidence in its solvency to keep the storied firm alive.
While ordinary Americans continue to watch their home values and stock portfolios shrink in this massive mortgage market meltdown, the CEOs of Fannie and Freddie stand to make a fortune on their way out the door. You'll remember that they were shown the door by Treasury Secretary Hank Paulson over the weekend.
On Daniel Mudd's watch at Fannie, shares of the company's stock fell about 90 percent. On Richard Syron's watch at Freddie, shares of the company's stock fell about 90 percent. So how is it that Syron could receive an exit package of $14.1 million on top of the $17.1 million he's already earned at Freddie? And how is it that Mudd could collect more than $9 million on his way out the door?
Syron and Mudd could become the latest poster boys for Pay Without Performance, joining Robert Nardelli of Home Depot, Hank McKinnell of Pfizer and Phillip Purcell of Morgan Stanely, who have also achieved this dubious distinction. Or this time could be different: Congressional lawmakers (who failed to protect taxpayers with better oversight of Fannie and Freddie) are now calling on Paulson to nix those payouts or at least cut them way back. Syron and Mudd have hired lawyers and public relations reps to help them manage the battle.
And guess what? Under Daniel Mudd's employment contract, the company -- now owned by the U.S. taxpayer -- is supposed to pay his legal bills.