The former chief executive of mortgage giant Freddie Mac will receive about $60 million in compensation that was withheld by the company on orders from its regulator.
A federal judge ruled Monday that the Office of Federal Housing Enterprise Oversight lacks the legal authority to freeze the assets of Leland Brendsel, who was ousted during last year's accounting scandal. The regulator told Freddie Mac to stop all pay and benefits for Brendsel while it was pursuing a civil lawsuit against him, the Wall Street Journal reported.
U.S. District Court Judge Richard J. Leon wrote, “OFHEO's arguments that it has the power to freeze assets pending the outcome of the administrative proceeding in this case is simply overreaching."
Leon said OFHEO tried to impose “what amounts to a temporary cease-and-desist order” against Brendsel by telling Freddie Mac in several letters to withhold his compensation.
Congress gave OFHEO the authority to issue temporary cease-and-desist orders "only under certain narrow circumstances, none of which are present in this case," Leon wrote. OFHEO argued that its enforcement powers are more broad, but Leon disagreed. "Congress did not intend to grant to OFHEO the power to effect a freeze of assets in the manner in which it did in this case."
Leon also said that OFHEO may not be able to recover any of Brendsel's pay, even if it is found to be excessive, because his employment agreement had been in place before OFHEO was created in 1992.