WASHINGTON (Reuters) - Democratic presidential candidate Barack Obama warned U.S. regulators on Tuesday it would be "a gross violation of the public trust" if they did not use their power to block excessive severance payments to executives leaving Fannie Mae or Freddie Mac.

In a letter to Treasury Secretary Henry Paulson, IllinoisSen. Obama cited news reports that the CEOs of Fannie and Freddie could get millions of dollars in severance pay. He said "under no circumstances" should such payments be allowed.

Paulson on Sunday unveiled a stunning agreement for a federal takeover of the two mortgage finance giants.

"I urge you immediately to clarify that the agreement with Fannie Mae and Freddie Mac voids any such inappropriate windfall payments," said the letter obtained by Reuters.

Obama said that when Congress gave regulators the power to step in and rescue the companies, it also granted the power to block any severance payments to CEOs.

"It would be a gross violation of the public trust to fail to use this authority now," Obama wrote in the letter.

(Reporting by Kevin Drawbaugh)

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