Congress got to ask the subprime CEOs what everyone else is thinking: Why did you get millions and millions of dollars to fail so spectacularly?
From ABC News:
“There seem to be two different economic realities operating in our country today. And the rules of compensation in one world are completely different from those in the other,” said Rep. Henry Waxman, D-Calif., chairman of the House Committee on Oversight and Government Reform. “Most Americans live in a world where economic security is precarious and there are real economic consequences for failure. But our nation’s top executives seem to live by a different set of rules.”
In 1980, chief executives in the United States were paid 40 times what the average worker made. They now make 600 times the average worker’s salary, Waxman said.
“I think there’s merit to pay for performance,” Waxman said. “But it seems like CEOs hit the lottery even when their companies collapse.”
The panel included a who’s who of failures: Countrywide Financial Corp. chairman and chief executive officer Angelo Mozilo, former Merrill Lynch CEO E. Stanley O’Neal, and Charles Prince, former chairman and CEO of Citigroup. If you were expecting these guys to take personal responsibility for the subprime meltdown, you’d be wrong.
Instead, the CEOs talked about tough economic conditions and about how they helped many Americans who might not otherwise have been able to afford homes.
Mozilo just can’t seem to figure out why people are always blaming the poor adjustable rate mortgages:
“Much blame has been leveled lately at the variety of products, such as adjustable rate mortgages,” Mozilo said. “Before the onset of the current housing crisis, these products were widely offered by industry because they made homes more affordable for more people and helped homeowners consolidate other, more expensive debt.
“In fact,” he continued, “adjustable rate mortgages had been popular with both borrowers and lenders for many years. From my perspective, then, the issue is not so much the products, but the housing market.”
O’Neal gave an acceptance speech:
“Whatever I have achieved in life has been the result of the unique combination of luck, hard work and opportunity that can only exist in this country.”
ABC News says that over a five-year period, these three CEOs received more than $460 million in compensation. Mozilo says he’ll give up $37 million of his $115 million parachute in order to be less “distracting.”
Subprime CEOs Explain Why They Made Millions While Americans Lost Homes [ABC News] (Thanks, Natalia!)
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