Fortress Investment Group (NYSE: FIG) has named former Fannie Mae CEO Daniel Mudd as its new top guy.

Yes, that's right: Daniel Mudd. The same guy who was pushed out as CEO of Fannie Mae after driving it into insolvency and a federal takeover. Mr. Mudd had been CEO since 2004 and was responsible for the company's disastrous push into higher risk mortgages, which makes him an interesting choice to run a $300 million public company (that used to be a $3 billion public company, but hey).

That makes him a very strange choice for the title of CEO at Fortress, even though he already serves on the company's board of directors (and a lot of good that's done). With the share price in the toilet and its operations in a state of flux, this seems unlikely to do much in the way of building up confidence in the company and its operations. Worse, Mr. Mudd may still be the target of SEC and Justice Department investigations into disclosures at Fannie Mae prior to its demise.

Countrywide Financial, which is now owned by Bank of America (NYSE: BAC), somehow managed to insinuate itself into nearly every housing related scandal of the current crisis.

Today's Wall Street Journal reports (subscription required) on some Countrywide loans made to senior executives at Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE). In 2003, when Jamie Gorelick was vice chairman of Fannie, she received a $960,000 refinancing through Countrywide's now infamous Friends of Angelo program, which offered special deals to people CEO Angelo Mozilo wished to curry favor with. While he was COO of Fannie, Daniel Mudd received two $3 milion refinancings through Countrywide, but it's not known whether he received special treatment. Not surprisingly, everyone denies knowledge of having received special treatment.

As corruption scandals go, this one seems pretty weak. If a 1% interest rate reduction on a mortgage refinancing was enough to buy Countrywide influence, then these multi-million dollar executives were pretty cheap.

The real corruption in the mortgage industry was the disconnect between compensation and the long-term results of the loans made. Executives were corrupted by their own poorly-aligned pay packages, not floral arrangements and discounts on loans.

Democratic presidential candidate Barack Obama today sharply criticized the pay packages given to the departing chief executives of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE).

Obama told reporters that he wrote letters to Treasury Secretary Henry Paulson and Federal Housing Finance Agency Director James Lockhart stating that "it would be unacceptable for executives of these institutions to earn a windfall at a time when U.S. Treasury has taken unprecedented steps to rescue these companies with taxpayer resources," according to CNBC.

He's absolutely right.

Yes, I realize that compared with the fallen CEOs of Wall Street, the pay packages are chump change. Fannie Chief Executive Daniel Mudd is 'only' getting around $9.3 million and his counterpart at Freddie Mac Richard Syron stands to receive $14.1 million. But just because Mudd and Syron are getting less than 10% of the $160 million parting gift awarded to Stan O'Neal for ruining Merrill Lynch & Co. (NYSE: MER) does not make them any less egregious.

To understand why as much as $800 billion in taxpayer money could be at risk in this bailout, it pays to look at its winners and losers. Last month I appeared on CNBC's Power Lunch discussing the potential winners and losers from a bailout of Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE).

The bailout has been announced -- featuring a government takeover of their operations, receipt of senior preferred stock worth $1 billion paying 10% dividends, the promise of buying up to $200 billion more worth of senior preferred each quarter to keep their net worths positive, $5 billion worth of open-market mortgage-backed securities (MBS) buys, and a demand that they reduce their MBS holdings by two-thirds over the next several years.

It is clearer today that this takeover was triggered by a report from Morgan Stanley (NYSE: MS) that Fannie and Freddie needed $50 billion in capital "to offset the companies' combined losses," according to the New York Times. They had reported $84 billion in capital at the end of June, $12 billion more than the minimum required to trigger a government takeover. The Morgan Stanley report suggested that overly optimistic accounting understated their capital needs.

Fannie Mae (NYSE: FNM) fired a few of its most senior managers. That includes its CFO and head of risk management. At a mortgage finance company, that is as close to the top of the pyramid as an executive gets unless that person is already the CEO.

The timing was awfully odd. All of the people moved out had been at Fannie Mae for at least a year. Over the last several days, the company's shares have turned upward as the market begins to believe that a federal bailout will not be needed to shore up its finances.

According to the AP, "banking industry consultant Bert Ely, a longtime Fannie and Freddie critic, was unimpressed by the changes, noting that the company promoted current executives, rather than hiring from outside." Ely makes some sense. When Fannie Mae began to get into trouble in early March, all of the key executives kept their jobs. They seemed to be good at what they were doing, or why would CEO Daniel Mudd have kept them on the job? When Fannie Mae's stock began to sell down aggressively in June, the team was not booted. When shares collapsed in July and were off over 70% from the beginning of the year, the whole gang was still getting salaries.

Wall Street may want to ask Mudd why he waited so long. At a lot of places, he would be the guy on his way out.

Douglas A. McIntyre is an editor at 247wallst.com.

Both Republican and Democratic members of Congress agree that Fannie Mae (NYSE: FNM) and Freddie Mac (NYSE: FRE) may need a taxpayer-funded bailout. Amounts of the bailout have ranged as high as $25 billion.

While this is a whopping big bucket of money, it pales in comparison to the $217 billion worth of non-agency securities that have fallen in value and the $1.5 trillion in debt downgrades in 2Q alone. In order to mitigate objections from taxpayers opposed to using public monies to bail out a quasi-private industry, those bulwarks of fiscal responsibility in Congress are beginning to draw up plans to curb executive compensation for those who will help Fannie and Freddie crawl out of the hole.

In 2007, Fannie Mae President Daniel Mudd earned a $2.2 million bonus on top of his $10 million salary. Members of Congress want to know why the executives who ran the ship aground were rewarded handsomely for doing so. Some members of Congress have suggested that previous executive bonuses should be given back to the companies. I bet some taxpayers might want to apply this same reasoning to Congressional salaries and perks.