Yesterday, I wrote about the need for a Congressional inquiry into the pay package given to Countrywide Financial (NYSE: CFC) CEO Angelo Mozilo:
The people getting royally screwed over by Mozilo's pay package are the company's shareholders. Compensation committee members Harley Snyder, Robert Donato, and Oscar Robertson should be hauled before Congressional hearings to explain this abject failure of corporate governance. It would be a much better use of taxpayer resources than holding hearings on what Roger Clemens did or didn't inject into his buttocks.
Well, now it looks like we're going to get those congressional hearings. A Congressional panel invited Angelo Mozilo, Charles Prince and Stan O'Neal in to answer question on February 7th. Congressman Henry Waxman said the inquiry was part of an "ongoing investigation into executive pay."
Unfortunately, these hearings don't go far enough. The people that need to be called in are the dormant compensation committee members who signed off on this garbage, and the institutional (especially pension fund) money managers who have allowed these clowns to remain on the company's board.
All Mozilo et al. need to say is "We were given these packages by our board" and that'll be that. This is a corporate governance, and the people responsible for the systematic breakdown of corporate governance in America need to be called to answer for this failures.
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Reader Comments (Page 1 of 1)
1-16-2008 @ 12:48AM
Steve said...
Zac --
Excellent post. I completely agree with you -- it is the board that is responsible.
My question is -- when will everyone wake up, forget their personal political biases and philosophies, and call for regulation? I just don't understand it.
1-16-2008 @ 12:20PM
Americas Watchdog said...
Hi Zac;
Great Blog. We have the National Mortgage Complaint Center & the thing that Congress has to do is to level the playing fields with respect to how much banks/mortgage bankers make on a mortgage versus brokers.
The dirty little secret in the mortgage industry is a kick back called a yield spread premium. Mortgage Brokers must disclose it, Banks or Mortgage banks do not. We estimate that 9 out of 10 US homeowners pay a higher monthly mortgage payment because of this kick-back. A "yield spread premium", is a kick back for inflating a homeowners interest rate. (higher monthly mortgage payments)
Are we disgusted because of people like the CEO of Countrywide and his options activity----YES! But nothing meaningful happens with mortgage reform or consumer friendly mortgages unless Congress requires complete disclosure of all fee's or compensation------regardless if its a bank or a broker. Banks & Mortgage Bankers have been getting away with murder on this topic for years. Brokers never explain it to the consumers either.
If 75 million US homeowners were allowed to actually see how much the lender was actually making on the loan---we don't think the borrower would have never done the deal in the first place.
If you ever want to do a blog on this----I'll send you whatever information you need. I think you would be stunned.