March 31, 2008

More Money for the Countrywide Execs!

While our government is figuring out how to save the American financial system from complete collapse, the two top executives at Countrywide Financial — you know, the company that bankrupted itself on subprime mortgages and is being bought by Bank of America — are getting $19 million in stock next week.  And that’s not the end of it:  The Los Angeles Times reports that these payments are among a series of windfalls that Chief Executive Angelo Mozilo and President David Sanbol are scheduled to get because of the B of A takeover.

How is it possible that these overpaid executives will be allowed to get even MORE money, even as the government is swooping in with billions in loan guarantees to save reckless financial institutions such as Bear Stearns? All this while the Securities and Exchange Commission is investigating Mozilo for dumping $140 million in Countrywide stock while the company was tanking?

I think my taxpayer dollars would be better spent going after people like Mozilo who profited from irresponsible lending.  Who’s with me?

If you believe our government should not bail out the folks who rolled the dice on the housing market and lost, you’re not alone.  A new Web site, Stopthemortgagebailout.com, shows you what you can do to let members of Congress know how you feel, including writing to your congressperson and signing a petition.

Here’s the site’s list of reasons a bailout is fiscally irresponsible:

A bailout props up over-inflated housing prices, thereby putting homeownership out of reach for young families and responsible Americans who realized that housing prices were out of control. The housing market needs the correction that the bailout seeks to prevent because houses are not affordable for the average American. “You cannot be both in favor of affordable housing and in favor of propping up home prices!”

A bailout creates perverse incentives.  Rather than punishing their behavior, it encourages fiscal irresponsibility among bankers, brokers, speculators, and refinancers. Why change your behavior when you benefit from it?

A bailout shifts the risks of falling market prices from financially secure banks to the American taxpayer.  As a result, either taxes or the federal deficit will skyrocket! This is a government handout to the super-wealthy, and it is wrong!

A bailout is contrary to the free market principles upon which our economy is based.   It jams a huge wrench into the works, with negative effects that will be both severe and long-term.

Amen!

Recent Redfin posts:
Next Stop, Crown City
Angelino Heights:  History with a Price

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