Senator Barack Obama and two other prominent Democrats urged federal housing regulators on Tuesday to cut the golden parachutes of the ousted leaders of Fannie Mae and Freddie Mac, another sign that the government bailout of those mortgage giants could reverberate through the presidential campaign.
Mr. Obama, the Democratic presidential nominee, asked that any “inappropriate windfall payments” to the chief executives and senior managers of those agencies be voided, in a letter to Treasury Secretary Henry M. Paulson Jr. and the director of the Federal Housing Finance Agency, the new regulator for Fannie and Freddie.
Together, Daniel H. Mudd of Fannie Mae and Richard F. Syron of Freddie Mac are eligible for as much as $24 million in severance, retirement benefits and deferred compensation.
“Under no circumstances should the executives of these institutions earn a windfall at a time when the U.S. Treasury has taken unprecedented steps to rescue these companies with taxpayer resources,” Mr. Obama wrote.
Senator John McCain, the Republican presidential nominee, has said on the campaign trail that the government rescue of Fannie and Freddie should not turn into a bailout for their top executives and Wall Street investors.
Two Democrats on the Senate banking committee, Charles E. Schumer of New York and Jack Reed of Rhode Island, wrote a letter similar to Mr. Obama’s. They called the pay packages “out of line” and urged the agency to “substantially reduce or eliminate” them using new powers granted in a housing law passed this summer.
Neither letter questioned the oversight of Fannie Mae and Freddie Mac’s previous regulator, which was absorbed into the agency. That regulator, the Office of Federal Housing Enterprise Oversight, had final approval on the pay deals struck with Mr. Mudd and Mr. Syron. It was run by James B. Lockhart, who also oversees the new regulator.
In an interview, Mr. Schumer said that the regulator “should have probably limited” their pay on its own. But he added that with taxpayers now stuck with the bill, the bailout underscored the need to trim the pay packages.
“We now see the compensation wasn’t deserved,” Mr. Schumer said. “I don’t think taxpayers want their money to go to the C.E.O.’s of these very large institutions.”
An agency spokeswoman confirmed the receipt of both letters and said it would respond soon. “We are working through the compensation issues,” Mr. Lockhart said in a statement, declining further comment.
Outsize executive pay has been a hot-button issue, resonating with Democratic and Republican voters. Compensation for leaders of government-sponsored agencies is particularly controversial, even though it typically pales in comparison to the pay of Wall Street executives.
Anticipating public pressure, Mr. Lockhart said at a news conference on Sunday that the new chief executives, Herbert M. Allison Jr. at Fannie Mae and David M. Moffett at Freddie Mac, would receive compensation that was “significantly lower” than their predecessors.
Details of the exit packages for Mr. Mudd and Mr. Syron are being worked out. Under the terms of his employment contract, Mr. Mudd could receive a package worth up to $9.3 million if his dismissal is deemed to be “without cause,” according to an analysis by the consulting firm James F. Reda & Associates. That is on top of $12.4 million in salary, bonuses and profits after cashing in stock options he has taken home since becoming chief executive in 2004, according to Equilar research.
Mr. Syron could receive an exit package of at least $14.1 million on top of the $17.1 million he has taken home in cash, bonuses and stock option profits since becoming chief executive in 2003.
A big chunk of that exit package comes from an unusual clause that was left in his employment agreement when it was renegotiated in November. That provision, part of a contract extension negotiated by Freddie Mac’s board and approved by its regulator, allows Mr. Syron to give up a stock award that has plummeted in value for an $8.8 million cash payment.
Mr. Mudd and Mr. Syron are bracing for scrutiny. Mr. Syron has hired legal and public relations advisers and is paying for them himself.
A spokesman for Mr. Syron, George Sard, said his client was not seeking a windfall and was helping with the transition. Mr. Syron also does not plan to seek the $8.8 million cash payment, according to a person briefed on Mr. Syron’s thinking.
Mr. Mudd has hired Robert B. Barnett, a high-profile Washington lawyer, to represent him in any negotiations with the government. His legal fees, according to Mr. Mudd’s employment agreement with Fannie Mae, will be paid by the company. “We are discussing all matters with the government, and Mr. Mudd has been asked to stay on in a transitional role, and he is open to doing so,” Mr. Barnett said.