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January 11, 2008
The Facts
Bank of America announced today that they would buy out Countrywide Financial as a rescue. Angelo R. Mozilo (pictured right), CEO of Countrywide Financial, will receive over $100 million in a buy out when he eventually steps down as CEO of Countrywide and leaves. This is on top of the hundreds of millions of dollars he has received over the past several years in salaries, bonus’, stock gains, etc. He is currently rated in the 9th spot of the top paid CEO’s.
My View
In case you haven’t seen the news in the last few day, Countrywide is bankrupt. That’s because of their losses due to loaning money to people they should never have loaned money to in the first place. Not only did they loan them the money, they “tricked” most of those people into taking the loans knowing that when the low interest rate they flashed in their client’s faces expired, the people would be forced to default on the loans. Now their CEO is being richly rewarded for all this. Reports put his departing total in excess of 100 million dollars. Not bad for a bankrupt company and one that destroyed thousands of people’s lives. A great rewards program; no reward & punishment program for these guys.
Stock holders of Countrywide will receive approximately 1 share of Bank of America Stock for each 5 shares of Countrywide stock due to the decline in Countrywide’s stock price, according to an AP report. Great deal for them; I bet they’re very happy that Mozilo is walking away with over $100 million. And I bet the 15,000 Countrywide employees are just as happy for him. And guess who’s helping Bank of America buy out Countrywide? We are; the taxpayers. Now, aren’t you also happy that Mozilo is getting his millions?
There is always a report in the press about CEO’s of big corporations getting these unearned and immoral bonuses. I’ve already written one post on this subject, and several others on greed and corruption in general. Forbes has a good web site about CEO compensations. Many of them get these bonuses in spite of the fact that the company does not do well. It’s all in the contract they get the Board of Directors to sign up front. So no matter how bad of a job they do, they still get their unjust rewards. And just as with Mozilo, the working people end up paying for these compensations in one way or the other. Don’t you wish you could get a contract like that when you get hired; don’t perform but still get paid!
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