Officials at Mortgage Firms Forced to Explain Salaries

[Mar 12, 2008.]

 

The leaders of a trio of companies involved in the nation's housing crisis are being asked to answer to Congress. The House Oversight and Government Reform Committee wants to know why the corporate executives garnered hundreds of millions of dollars while their firms were actually losing money.

Those being called to task include Angelo Mozilo of the country's largest mortgage lender, Countrywide Financial Corp.; Stanley O'Neal, who used to be with Merrill Lynch; and Charles Prince, who was once with Citigroup.

The House Oversight Committee is chaired by Rep. Henry Waxman, a Democrat from California. The panel has been holding hearings on high corporate salaries. In December, the committee considered publicly-traded businesses that hire high-priced compensation consultants.

Meanwhile, Republicans are questioning the worth of the hearings. They say that the probe is outside of the committee's mission of examining waste and fraud in the federal government.

For instance, Rep. Tom Davis (R-VA) said that a search for scapegoats may feel good, but doesn't benefit anyone.

The committee also recently held a hearing where legislators grilled baseball pitcher Roger Clemens about steroid use.

Meanwhile, the committee estimates that corporate executive Mozilo received $250 million from Countrywide from 1998 through 2007. At the same time, Countrywide reported a $1.2 billion loss in the 3rd quarter of 2007 and a $422 million loss in the 4th quarter.

Similarly, O'Neal nabbed a retirement package of $161 million when he left his company in October. In 2007, Merrill Lynch recorded $18 billion in writedowns connected with the subprime mortgage crisis.

Meanwhile, Prince received a bonus of $10.4 million for 2007 and was permitted to hold onto nearly $28 million in unvested stock and stock options because Citigroup permitted him to retire instead of firing him.

The probe comes as many workers face the prospect of job loss because of sluggish economic times.

Julie Ann Amos
March 12th 2008

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