Angelo Mozilo, the chairman and chief executive of Countrywide Financial, America's biggest mortgage lender whose warnings were at the heart of the credit crisis, is giving up $37.5 million (£18 million) of severance pay and benefits on retirement in the face of pressure from politicians.

Millions of Americans face the threat of foreclosure as the sub-prime mortgage crisis has spread into the wider mortgage and housing market and Senator Hillary Clinton has called his pay-off "outrageous".

Associated Press reports that the company is due to release a statement today revealing that Mr Mozilo is waiving his rights to the pay when he retires following the purchase of the mortgage lender by Bank of America.

However, it says, he will still retain retirement benefits and deferred compensation that he has already earned, worth some $24 million.

In addition to $36.4 million cash severance payments, Mr Mozilo also waived $400,000 per year he was to be paid under an agreement to serve as a consultant to the company following his retirement, and perks including the use of a private airplane, the company said.

Mr Mozilo said: "I believe this decision is the right thing to do as Countrywide works toward the successful completion of the merger with Bank of America."

The executive has sold shares of the company's stock since last year and the SEC launched an informal inquiry last autumn into his sales of Countrywide stock. Mozilo has denied making any trading decisions based on material nonpublic information.

He is among several banking industry executives who have been asked to appear next month before the House Oversight and Government Reform Committee for a hearing to examine whether their compensation and severance packages are justified.

Damon Silvers, associate general counsel of the AFL-CIO, told Associated Press: "It would be best if Countrywide and Bank of America froze all of his compensation until a thorough inquiry could be completed as to exactly what happened at Countrywide."

He was referring to allegations raised in shareholder lawsuits filed last year that the company failed to warn investors about the depth of its financial troubles.

Countrywide shares closed at $6.02 on Friday, 19.5 per cent below what each share would be worth in Bank of America stock, suggesting investors fear Bank of America may not complete the deal or may cut the price.

The chief executive has come under criticism since the deal was announced and media reports suggested that he stood to receive a multimillion-dollar payout when he leaves the company.

Estimates of Mr Mozilo's total payoff package have varied between $66 million and $110 million.

Under his employment agreement, Mozilo was entitled to a severance cash payment equal to three times his annual salary of $1.9 million, and three times his incentive cash bonus for the year preceding a change in the company's ownership.

Now, he will leave with a pension plan and supplemental executive retirement plan that totaled $23.8 million as of December 2006, according to the most recent proxy statement the company filed with the Securities and Exchange Commission.

Mr Mozilo also accrued about $20.6 million in deferred compensation, according to the filing.

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