It’s America, and Universal Health Care Is Socialist !

But fleecing borrowers and shareholders … hey, that’s good ole free enterprise.

Via the NY Times …

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Enron’s Second Coming?
By Paul Krugman
October 1, 2007

In May 2005 NYSE Magazine featured an article titled “American Dream Builder” — a glowing profile of Angelo Mozilo, the chairman and C.E.O. of Countrywide Financial, the nation’s largest mortgage lender. The article portrayed Mr. Mozilo as a heckuva guy — a man from a humble background determined to help other people, especially members of minority groups, achieve the American dream of homeownership.

The article didn’t mention one of Mr. Mozilo’s other distinguishing characteristics: the extraordinary size of his paychecks. Last year Mr. Mozilo was paid $142 million, making him the seventh-highest-paid chief executive in America.

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In late 2006, even as Countrywide began using shareholders’ money to buy back its own stock at more than $40 a share — it’s now worth only $19 — Mr. Mozilo was selling. Between November 2006 and August 2007 — that is, during the months before investors fully realized the extent to which his company would be hurt by the subprime mortgage crisis — he unloaded $138 million worth of Countrywide’s stock.

Again, unless the stock sales lead to insider-trading charges, there’s nothing in this story that involves illegality. Still, how can it be that so soon after Enron, WorldCom and other scandals rocked the business world, we’re once again hearing about executives cashing in just before their companies are revealed as less successful than advertised? The answer, of course, is that we never dealt properly with those scandals.

Here’s what I wrote back in May 2003:

“Last summer it seemed, briefly, as if the torrent of scandals — and the revelations about how closely some of our politicians were tied to scandal-ridden companies — would bring about a public backlash against corporate malfeasance. But then the topic largely vanished from the news, driven out by reports about Iraq’s nuclear weapons program and all that. And after the midterm elections, which put apologists for corporate insiders back in control of all the relevant Congressional committees, we might as well have had the sirens sound the all-clear.”

Sure enough, C.E.O. paychecks, which came partway back to earth in 2002, more than doubled between 2003 and 2006. And with those huge paychecks came renewed incentives for malfeasance. Once again, executives could become richer than Croesus by creating the illusion of success, even for a little while.

There is one big difference this time: the number of victims — misled borrowers, homeowners whose neighborhoods are being destroyed by foreclosures, investors who thought they were buying safe assets — is even larger.

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Tags: Countrywide Financial, Antony Mozilo, ABCP, potential crook

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