Reuters is reporting that the New York Times has interviewed numerous executives who told Freddie Mac’s CEO to dial back on the risky loans and increase their capital cushion, but Syron knew better and was simply too afraid to say no to anyone.

When I was an underwriter, loans often went through Loan Prospector (LP). This is the proprietary system created by Freddie Mac, Desk Top Underwriter (DU) was the one created by Fannie Mae for their loans.

Over the years, I watched as loans that I reviewed had increasingly bad credit, no assets or a combination of factors and they were getting through LP. In the early days of LP, it processed the easy loans, the A1 credit the loans with high credit scores (above 660) or ones that had lot of cash left over. But LP is really only as good as the user inputting the data and too often, mortgage brokers would send it through time and time again until they got an accept and once they did, whatever requirements they needed they made sure the paper work would be in the file.

For instance, if a borrower had 10 open credit accounts and borrowing money from their 401k meant that they could pay off 2 or 3 of those credit card debts, they might get through LP because those paid in full accounts meant that LP might issue an accept.

I thought of these tactics as gaming the system. In the early days, I didn’t see this sort of thing very often. But by around 2002, I was seeing it on nearly all the loans that were pulled for quality review due to an early default (loan that went into foreclosure the 1st year of the loan).

So, when Reuters wrote this:

In an interview with the paper, Freddie Mac's former chief risk officer, David Andrukonis, recalled telling Syron in mid-2004 that the company was buying bad loans that would likely pose an enormous financial and reputational risk to the company and the country.

Syron received a memo stating that the firm's underwriting standards were becoming shoddier and that the company was becoming exposed to losses, the paper said, citing Andrukonis and two others familiar with the document.

But Syron refused to consider possibilities for reducing Freddie Mac's risks, the paper cited Andrukonis as saying.

Having been associated with the industry and witnessed these loans myself (I never worked for Freddie or Fannie nor did I work for a mortgage company in anyway), it makes me wonder what was really going through Syron’s mind in 2004. That’s when Reuter’s sealed the deal for me with this little ditty:

Those and other choices initially paid off for Syron, who has collected more than $38 million in compensation since 2003, the NY Times said.

I suppose for Dick Syron, it’s just like his counterpart Dick Dauch (American Axle), it’s all about the money in their pockets and to hell with the rest of us.

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So, I was reading Dean Baker's column in the Guardian and came to the conclusion that this guy is F&*king BRILLIANT!!

Then we have the issue of executive compensation. One of the main reasons that most workers have seen little benefit from economic growth over the last three decades has been that so much money has been redistributed upwards to the people who run companies like Fannie and Freddie.

Last year, Richard Syron, the CEO of Freddie Mac pulled down $19.8m in compensation. This is an interested number. With the new minimum wage hike, a full-year minimum wage worker would earn $13,100 a year. That means that in 1,511 years and five months, a minimum wage worker will earn as much as Syron did last year. That's good news, because before last week's increase, a minimum wage earner would have been forced to work 1,692 years and three months to equal Syron's pay.

Of course, this comparison is unfair because it doesn't consider their differences in productivity. A minimum wage worker might clean a building or run a check out counter, in other words, provide a benefit to the economy.

Syron, a man whose only job is to follow the housing market, was too incompetent to notice the largest housing bubble in the history of the world. As a result, he kept pumping in credit to hugely over-valued housing markets, allowing prices to become even more over-valued. With house prices now plummeting, tens of millions of families are seeing their life savings vanish before their eyes. Syron's productivity is considerably below that of the custodian or the checkout clerk.

Last week, government action helped to support the pay of both minimum wage workers and Bill Syron. And almost everybody in Congress thinks this is fair.

Head over to MSNBC for more of the story on Syron (or in my book Sauron...I guess I sound like a Lord of the Rings Geek, huh?)

Freddie Mac Chairman and Chief Executive Richard Syron pocketed nearly $19.8 million in compensation last year, according to a Securities and Exchange Commission filing Friday, even though the mortgage company's stock lost half its value in 2007.

If Syron stays at the helm of Freddie Mac through the end of next year, he will receive nearly $20 million in stock awards if the board says he has met certain goals. This year, he is guaranteed to get $8.8 million in stock grants regardless of performance.

For 2007, Syron received a $1.2 million salary, a $3.45 million bonus, including $1.25 million to remain at the company, and $771,585 in other compensation. He also received stock and options valued by the company at $14.3 million at the time they were awarded.

I find it fascinating that he was paid $1.2 mill TO STAY at Freddie Mac despite the de-valuation of the stock price. If I were a waitress and my average check sale fell like the devaluation of Freddie, well, I'd be looking for another job. Wouldn't most of us?

But I keep forgetting CEO's are like caviar, they smell, only the rich want it and yet, it's really just the inner scrapings of bottom feeders. I suppose this is what Dick Dauch meant by the "Entitlement Mentality" comment. Cause it sure looks like boards keep rewarding those with his kind of mentality, you know, like their ENTITLED to it.

BTW, you aren't Dickey boy nor are you Sauron, oops, I mean Syron.

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