Follow the Money
Loose lenders, greedy investors, slow-to-the-plate regulators, and even naive borrowers have been attacked for contributing to the subprime mortgage meltdown.Now House Oversight and Government Reform Committee Chairman Henry Waxman is blaming executives who pocketed millions as the companies they ran lost billions.
The California Democrat has asked the former chief executives of Citigroup Inc. and Merrill Lynch & Co. Inc. — Charles Prince and E. Stanley O'Neal — as well as Countrywide Financial Corp.'s embattled CEO, Angelo Mozilo, to justify their pay at a hearing scheduled for Feb. 7. Late last week Rep. Waxman expanded the witness list to include the men who ran the three companies' compensation committees.
So far none of the six potential witnesses have agreed to appear. The committee expects they will show up, but it is not expected to subpoena them.
Mr. Mozilo, who is expected to receive $110 million when Bank of America Corp. buys Countrywide, has become a favorite target among members of Congress.
Last week CNN reported that Sen. Charles Schumer had said he would "like to boil Angelo Mozilo in hot oil." And his fellow New York Democrat, Sen. Hillary Clinton, said during a presidential debate last week: "Countrywide gets bought, and the CEO, who was one of the architects of this whole subprime mess, is set off with $100 million … in severance pay. You know, the priorities and the values are absolutely wrong."
House Financial Services Committee Chairman Barney Frank got there first, saying in a press release when the deal was announced Jan. 11 that Mr. Mozilo, "who will be profiting from this transaction personally," should "donate a substantial portion of the $150 million he has collected over the last several years to nonprofits and other institutions that are helping us deal with the problem he helped to create."
Scorecard, Please
Treasury Secretary Henry Paulson and Federal Reserve Board Chairman Ben Bernanke are certainly two of the biggest players in financial services, but Rep. Marcy Kaptur, D-Ohio, had to be reminded Thursday which was which.During Mr. Bernanke's appearance before the House Budget Committee, Rep. Kaptur asked whether bank executives who profited from the housing boom should be forced to hand over their paychecks to taxpayers.
"Seeing as how you were the former CEO of Goldman Sachs, what percentage …" she said before being cut off by fellow lawmakers, who explained that she had mistaken the Fed chief for Mr. Paulson.
"I've got the wrong person?" Rep. Kaptur asked as the committee room burst into laughter. "Who were you the CEO of?"
Mr. Bernanke quipped, "I was the CEO of the Princeton economics department."
His first congressional appearance of the year also attracted two protestors: one dressed as a polar bear, and another holding a sign reading, "Stop your greed for oil."
Brown Joins FDIC
Luke Brown, the head of Fannie Mae's regulatory affairs group, has been hired as an associate director in the Federal Deposit Insurance Corp.'s division of supervision and consumer protection. He will oversee efforts to ensure compliance with consumer protection laws, including the Community Reinvestment Act and the Fair Lending Act.Robert Mooney, who was the senior adviser to FDIC Chairman Sheila Bair, has been named deputy director for consumer protection and community affairs.
