Execs don’t deserve special deals on loans
There has been much grandstanding over the past few weeks, mostly by congressional Democrats, about ensuring that there are caps on executive compensation in any government rescue legislation for the country’s beleaguered financial system.
That, of course, misses the more central point, which is saving the system. Executive compensation, as lavish as much of it was, didn’t create the problem, and regulating what the major players on Wall Street make won’t solve the problem.
That said, we’re not opposed to capping it. The country, understandably, wants to see a few perp walks. If those don’t happen, the next best thing might be knowing that former Masters of the Universe might have to take the subway instead of their limos.
Maybe the subway is what they deserved.
• Former Fannie Mae CEO James Johnson got a $971,650 mortgage from Countrywide with an interest rate of 3.875 percent.
• Former Fannie Mae CEO Franklin Raines got a mortgage of $986,340 from Countrywide at a rate of 4.125 percent.
• Former Fannie Mae Vice Chairman Jamie Gorelick got a $960,149 Countrywide mortgage at 5 percent.
• Former Fannie Mae COO Daniel Mudd received a nearly $3 million Countrywide loan at 4.25 percent.
• And we’ve known for some months now about Senate Banking Committee Chairman Chris Dodd’s $506,000 Countrywide mortgage at 4.25 percent.
In every one of those cases, the rate was at least a point below prevailing rates at the time the mortgages were made. And in every instance, the recipients of those sweetheart deals said he or she was unaware of any special favors.
Think about that. That means that the executives running the biggest mortgage brokerage in the world were unaware of prevailing mortgage interest rates, as was the chairman of the Senate Banking Committee.
If that in fact is true, and we doubt very much that it is, then these captains of finance should have had their
salaries cut long ago, not because Congress demanded it, but because they didn’t understand the financial system they’re supposed to manage.