Foreclosure Crisis Translates Into Millions For CEO’S

What is poison for one can be meat for another. The foreclosure crisis has translated into millions for some CEO’s. New officers will find their pockets slimmer with thin pay packets. Many walked away with good-bye dollars bulging in their pockets – all thanks to the foreclosure crisis.

Stanley O’Neal bid adieu to Merrill Lynch with a bundle of notes worth $66 million. Within a year the investment house was humbled and taken over by the Bank of America. Ken Thompson had to leave Wachovia with a golden handshake that is now valued at over $5 million. Chuck Prince was chucked out of Citigroup with a thank-you gift of $16 million. These are some of the familiar faces in the banking industry of USA. Soon after their departure the industry was brought down on its knees that has made lawmakers of all shades panic about another replay of the Great Depression. Blogger Barry Ritholtz comments, “These guys took all this risk, and ultimately they won’t have to suffer the consequences of their decisions.”

The Congress and the Bush government is hot on the trail of a bailout deal that will cost the nation $700 billion to buy off bad debts from collapsed banks. After a wave of foreclosures stemming from questionable mortgages the banks had to bite the dust facing a credit crunch. There was no money in their coffers but a bunch of worthless securities.

Strangely the government plan does not refer to the CEO’s having to return any part of the questionable good-bye handshakes. Steven Adamske of the House Committee on Financial Services said that constitutionally there was no method by which the money could be taken back from these lucky guys.

Wary of a public hue and cry the lawmakers from both parties are in a huddle working out controls and regulations on the new incumbents. It means the companies have to trim the pockets of the new entrants to the previous posts. But the damage has already been done. In all likelihood there will be a total ban from now on all adieu packages for the companies that will be running with government help foreclosure. The new personnel will not cause problems but those that have, seem to have vanished for all practical purposes. The former CEO’s and their employers remained tight lipped and refused to comment. They might not be quite all that calm as word is going around about FBI sniffing around!