CNN MONEY had a great article that illustrates some of what is wrong in business today. Click here to read "3 CEO's MAKE $460 MILLION."
To summarized, the House of Representatives is investigating the CEO's of Merrill Lynch, CitiBank and Countrywide. Each of these businessmen contributed significantly to the current financial crisis by allowing and supporting poor business practices at the firms they represented.
It doesn't take a brain surgeon to know that loaning money to people without certifying their capacity to repay the loan is poor policy. Yet, this is precisely what Countrywide Home Loans promoted and what Merrill and Citibank backed.
Prior to 2000 there were very few lenders who would accept a loan without documentation, and perhaps only one or two vehicles for a 100% LTV, no document loan. A brief survey of the lender market in 2004-2005 suggests there were well over 50 such loan programs available.
Merrill, Citigroup and Countrywide were players in the creation, implementation and backing of these high risk loans. Their CEO's were part of the brain trust that, somehow, thought such practices were reasonable and sensible. Time has proven the concept and support of these loan programs was reckless.
So, what happens to such inept business leaders? Well, 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., were paid over 450 million for their fine leadership.
When will we start demanding good management practices from our business leaders. American stockholders rise up. Stop celebrating ineptitude with hugh payoffs. Most Americans are paid for performance, our leadership needs to live by such standards.
Gene Urban
