[stand856]

3 CEOs made $460 million - House panel - Mar. 6, 2008

NEW YORK (CNNMoney.com) -- Three chief executives with ties to the mortgage crisis were paid $460 million over five years, according to a congressional report issued Thursday.

On Friday, the House Committee on Oversight and Government Reform is set to examine CEO pay in light of huge losses in the financial sector stemming from the mortgage crisis.

The panel, chaired by Rep. Henry Waxman, D-Calif., will hear testimony from Charles Prince, former CEO of Citigroup Inc.; Stanley O'Neal, former CEO of Merrill Lynch & Co.; and Angelo Mozilo., chief executive of Countrywide Financial Corp., the nation's largest mortgage lender.

The committee asked each company for internal documents about executive pay. Committee staffers reviewed company email, board minutes and federal regulatory filings, according to the 23-page memo made public Thursday.

The memo states that the three companies combined lost more than $20 billion in the last two quarters of 2007, as investments related to subprime mortgages fell apart. Meanwhile, the stock of Citigroup, Merrill Lynch and Countrywide declined drastically.

"The hearing provides a lens through which to examine whether the executive compensation and severance arrangements at these companies provided appropriate incentives to protect shareholders from these losses," the committee said.

The committee is also expected to look at how the compensation and severance packages of Mozilo, O'Neal and Prince were set and approved by their respective boards.

"In many cases, the consultants hired to advise on executive pay were simultaneously receiving millions of dollars from the corporate executives whose compensation they were supposed to assess," according to the memo.

Also scheduled to testify are Richard Parsons, chair of Citigroup's compensation committee and former CEO of Time Warner, the parent company of CNNMoney.com. The chairmen of the Countrywide and Merrill Lynch compensation committees are also set to address the committee.

Calls to Merrill Lynch (MER, Fortune 500) and Countrywide (CFC, Fortune 500) were not immediately returned. A Citigroup (C, Fortune 500) spokesman declined to comment.

Damon Silvers, associate general counsel of the AFL-CIO, which is often critical of executive compensation, believes the hearing will have an important symbolic impact.

"We hope it will put pressure on folks to give some money back and send a signal to other execs that they can't get away with these perverse incentives," Silvers said.

[pentupentropy]

The guy who ruined the internet as far as searches go has a house a few miles from me and he got 1.63 billion over 5 years. Of course, he didn't take anyone's house away =)

I know what these guys did was wrong, I really do. But do you honestly hold no accountability to the people in the world who sign a mortgage and don't realize what they're getting into? I took the realtor's course and state test in NY so I would know what I was doing when I bought property. Maybe my conditions were more unique because I bought my first house 8 years ago when I was 23 and making good money, and then inherited another one too, so I got scraed and felt like I needed to know more... but I recommend everyone spend $500 or so dollars on that exam if you ever want to own a home.

I don't say these guys are OK, nor that they shouldn't be held accountable in some way, but I put most of the blame on people who didn't bother to read their contracts or have a lawyer look at them and maybe an accountant. Especially if the accountant has been your personal accountant for a while. They would tell you "Hey, this is all well and good now, but if you're ARM goes up 3% you're going to lose a house and be broke or bankrupt"

[stand856]

Yea people that do not read contracts are in deep ish. That is just so basic, how can they not understand that the price would have went up in a couple of years on their mortgage.

[JaytheCreative]

It is much more complex than that guys. Much more complex than "not knowing". And the fault is not on the shoulders of the common person.

The government and corporations have been faulting on their debts as well. Heck, the Federal Reserve doesn't even have enough money to insure all the major national banks compared to decades ago!

[trailblazer802]

true. it wasn't their faults 100%. It was due to irresponsible lending and irresponsible living.

[Freakintelligent]

Originally Posted by stand856

Yea people that do not read contracts are in deep ish. That is just so basic, how can they not understand that the price would have went up in a couple of years on their mortgage.

Yeah people just sign anything today. A large percentage of people dont take the time out to really READ before they sign. Thats where they mess up.

[Mark D]

^^^^ A lot of people are not in a financial situation to have other options. And preying on these low-income households is illegal. Therefore, I think there is warrant to investigate the situation, not necessarily prosecute.

IMO I highly doubt people are signing because they're lazy.

Assuming that this is the underlying reason seems rather ignorant and/or lazy.

[FollowtheDream]

All of the irresponsible parties that were involved with real estate a few years back should be held accountable for this whole mortgage and subprime lending crisis. The lenders were obviously being irresponsible since they were taking full advantage of the market at the time by lending to low income people who didn't really qualify for a mortgage loan in the first place. On the other hand, many subprime borrowers did not even stop to question whether or not they were going to be able to afford their loan once the interest rates adjust.

Yes, I agree that the CEO's should be held accountable to a certain extent since they were the ones in charge of the entire business model, but at the same time it's just plain dumb for anyone not to read a mortgage contract which is tied to their biggest investment of their life time.

And that's my 2 cents.

[Ju3561]

I don't think we've seen the last of this kind of carry-on. These days, accountability and responsibility have been replaced by the culture of blame - because people can profit from it. Government (the USA & UK ones in particluar) during the last decade are fully responsible for promoting this attitude.

[chriswick]

For the love of paper cups that's a lot of cash for people who I just see as another employee of the company.