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Homeowners Struggle While CEOs Get Sweet Deals
Three CEOs behind mortgage mess testify to Congress about pay packages.
March 7, 2008 — -- Though a record number of Americans have lost their homes to foreclosure in 2007, some corporate executives have made huge profits from the country's mortgage crisis.
Three of those executives who have been accused of fueling the foreclosure fallout will appear before Congress today to defend their huge compensation packages.
Charles Prince resigned as the head of Citigroup in disgrace after the mortgage meltdown, but even now he maintains an assistant and office in Citigroup's headquarters, as well as a car and driver, and he's collecting $40 million in severance pay.
Stan O'Neal was the CEO of Merrill Lynch, where shareholders lost more than 41 percent of their investment value after the subprime disaster. He left his job with $160 million in stock and retirement benefits.
Angelo Mozilo is still the CEO of Countrywide Financial, a mortgage company often cited as one of the most egregious subprime lenders. He is set to receive nearly $44 million in pension benefits.
As Congress questions these corporate titans, many homeowners feeling the pinch like Rachel Kahny from Cincinnati will be watching
The mortgage mess hit the Kahny family hard. When Kahny became too ill to work three years ago, she and her husband refinanced their home with a subprime mortgage that in the short term lowered her payment, but now is skyrocketing.
The mother of two is forcing her family to cut corners.
"I limit each member of the family to one load of laundry a week. We wash dishes by hand versus using the dishwasher. Fill up our gas tanks only $20 at a time, and I'm always bargain hunting, always cutting coupons," Kahny said.
Meanwhile, some stockholders profited off subprime mortgage loans, which were sold on Wall Street, just like any other stock.
"Before the ink was dry on the mortgage, her mortgage was chopped up into a million pieces and sprinkled all over Wall Street for people who got paid by taking those pieces and moving them around like pieces on a checkerboard," said Neil Minow of The Corporate Library, a research group that examines corporate governance.
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