The collapse of the mortgage industry and the ensuing credit crisis could cost the U.S. economy nearly $1 trillion. Working families hurt by ballooning mortgage payments and falling real estate prices are struggling to make ends meet. The steep stock market decline also has forced many older Americans to postpone their retirement. But chief executive officers of companies at the center of the mortgage crisis have collected hundreds of millions of dollars, even on their way out.
“The obvious question is this: How can a few executives do so well when their companies do poorly?” Rep. Henry Waxman, chairman of the U.S. House Oversight and Government Reform Committee, asked at a hearing on the pay of CEOs of firms that played a key role in the mortgage meltdown.
Angelo Mozilo, the chairman and chief executive officer of Countrywide Financial Corp., once the nation’s largest home lender, now under investigation by the FBI and the U.S. Securities and Exchange Commission, embodies the subprime mortgage crisis more than any other chief executive. Read about Mozilo’s role in the subprime crisis here:
Kerry Killinger, the chief executive officer of Washington Mutual Inc., is one of those lucky CEOs who doesn’t have to worry about his performance. The company’s board of directors changed the performance measures of its 2008 bonus plan for top executives to exclude the effect of the mortgage crisis from the bottom line.
Morgan Stanley reported its first loss in its 72-year history in 2007 because of a $9.4 billion charge related to subprime mortgage investments. John Mack not only kept his job as chairman and chief executive officer, he also collected nearly $42 million in compensation.
Nero fiddled while Rome burned. James Cayne played bridge while Bear Stearns’ hedge funds collapsed last summer. Ultimately, the federal government stepped in to prevent the collapse of the firm and shareholders were once again the big losers.
Charles Prince lost his job as chairman and chief executive officer of Citigroup after accepting responsibility for the bank’s nearly $6 billion write-downs for risky mortgages. But, he stopped to collect a $10.4 million bonus on his way out. And Stanley O’Neal collected $161.5 million when he was forced out as chief executive officer of Merrill Lynch & Co.
Wachovia Corp. CEO G. Kennedy Thompson pushed the bank’s expansion through risky new businesses, but when the mortgage crisis hit the bottom line, Thompson didn’t suffer as much.
