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Tag(s): American Facism; Banking; Banking Crime; Banks; Dollar; Ethics; Management; Markets; Money; Other
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March 7, 2008 at 18:20:27

American Banking Bunko: The WaMu Mob Gets The Loot

by Michael Fox (Posted by Michael Fox) Page 1 of 1 page(s)

www.opednews.com

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What is a CEO? A Chief Executive Officer is an employee; granted, the “top” employee of a corporation, the one who, theoretically, has the overall performance and reputation of that corporation resting upon his shoulders.

What is a Bank? A bank is a very specific kind of corporation; one which commands its customers trust more than any other company with which they conduct business, because the bank is entrusted first and foremost with holding and protecting their money.

It is only in this upside-down, through-the-looking-glass time in which we are living that criminal mismanagement and risk taking is the “conservative” norm, and, in which bank CEOs are rewarded for heretofore inconceivable losses of money (your money). The swindle this week (and there is no other word for it) is critically newsworthy, as it turns out – because it is filled with details that you need to know, because you must decide if this is where you want to or should trust to keep your money.

Washington Mutual is the largest savings bank in the United States. The CEO of Washington Mutual, Kerry Killinger, as well as the top executives supporting him, have constructed a most extraordinary compensation system for themselves: In spite of the fact that WaMu (and lemme tell you how I much abhor that tacky self-constructed moniker) is, as I write, hemorrhaging $25 million a day in bad mortgage loans, these executives will have their bonuses calculated on the business of the bank exclusive of the mortgage losses!

According to Bloomberg, Mr. Killinger is eligible in 2008 for a bonus package equal to 365 times his salary, which itself was $1,000,000 (in 2006). The way this particular bunko scheme is designed, 2,900 of Washington Mutual’s nearly 50,000 employees will be eligible for this bonus calculation scheme, however, only Mr. Killinger’s share may amount to $365 million. The rest of them are more subject to stock options. Of course under their stellar management, the company’s stock has fallen to about $11 per share from a one-time high of nearly $50 per share just two years ago. So much for the value of their stocks – but, then, in what political environment are business ethics so utterly dispensable that there could even be a discussion of the head of a bank earning a million dollars a day for every day of a year in which the bank is losing billions?

Where is the “bunko squad”? Where is the FDIC? The SEC? The FBI? The House Banking Committee? After watching these parasites, the heads of Merrill Lynch, Citigroup, Countrywide – all given hundred million dollar farewell gifts after losing tens of billions on their watch – when they should’ve been led off in handcuffs; now reading of the twisted accounting that is afforded this bank CEO (and just enough of the lesser executives for them not to contest it), I was glad to see the analysts at Egan Jones rating service describe this as, “… outrageous to insulate management from the disastrous effects of the mortgage crisis”

It is outrageous indeed. And you should be deeply concerned about keeping accounts with that bank, or any of these banks that are rewarding the very men who are and have been creating the collapse of the entire world’s financial markets. And what they have been up to is no less than just that. These executives are going to live like sultans while accountholders will be left with pennies on the dollar if it ends up in the hands of the FDIC.

It is now inconceivable to leave large sums of cash (especially dollars) in any bank whose recklessly imprudent participation in bundled loan security schemes have left the depositors savings at risk; beyond a safe deposit box – to hold precious metal coins – there is no sense in keeping cash in any account that these criminal executives can get their hands on, in the name of “compensation” (Is that what they call it nowadays? In early Warner Bros. movies it was just referred to as “the loot.”)

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4 comments

I live in the heart of America, and am haunted by the saying:
"Evil succeeds because good men do nothing." by Edmund Burke.

Albert Einstein had another way of saying it:
"The world is a dangerous place, not because of those who do evil, but because of those who look on and do nothing."

So I do what I can.
Edward Ulysses CateI live in the heart of America, and am haunted by the saying:
"Evil succeeds because good men do nothing." by Edmund Burke.

Albert Einstein had another way of saying it:
"The world is a dangerous place, not because of those who do evil, but because of those who look on and do nothing."

So I do what I can.

Very good points, Michael

If I might add a little support, as we are definitely on the same wavelength here, there's a commentary posted at:

http://GreatRedDragon.com :: titled

"Executive Pay: Heads They Win, Tails You Lose"

by Edward Ulysses Cate (0 articles, 0 quicklinks, 0 diaries, 217 comments) on Saturday, March 8, 2008 at 9:18:01 AM

Michael Fox is a writer and economist based in Los Angeles. He has been a corporate controller, professor, and small business entrepreneur. After a life-altering accident, he spent five years learning more about medicine and the healthcare industry than he ever intended. In addition to writing about economics and related geopolitical issues, he is passionate about the performing arts and writes theatre, film, and opera criticism.
Michael FoxMichael Fox is a writer and economist based in Los Angeles. He has been a corporate controller, professor, and small business entrepreneur. After a life-altering accident, he spent five years learning more about medicine and the healthcare industry than he ever intended. In addition to writing about economics and related geopolitical issues, he is passionate about the performing arts and writes theatre, film, and opera criticism.

Thank you for an excellent link

Your link is a well-researched and detailed deconstruction of the 4 companies you address. I highly suggest readers link over to it. I have dealt in lesser detail with Merrill and Citi in previous articles.

IMPORTANT UPDATE

I must adjust my own figures, as it appears there is a mis-statement from my source (Bloomberg), and the compensation package, bonus + salary+ stock optionss is less than $100million. They reported incorrectly, and I am obligated to point this out. Nevertheless, The situations I discuss in the column are the same, wheter it's $365 milllion or $100 milllion. It's a huge sum of money and based on highly creative accounting.

by Michael Fox (47 articles, 0 quicklinks, 4 diaries, 34 comments) on Saturday, March 8, 2008 at 10:24:26 AM

Thanks for the kind words, Michael

Here's the link for the Washington Mutual breakout:

http://greatreddragon.com/commentary/WashMutual.htm ::

The point is that these top executive are hired hands, "agents" if you will, for financiers behind the scenes. These Major Holders get behind certain individuals who they know would sell out their mother, puff up the shares of that corporation to great heights, making billions along the way. We call that "going long."

Then when THEY decide, they pull the plug and "go short." Then they make billions all the way down. Their "agent" makes sure nothing goes wrong and are simply being rewarded for their role in the collapse. You might even call it "hush money."

The individual investor has no knowledge of which way the whip handle is being moved. They only can chase after the end of the whip. Those that manipulate the whip's handle belong to "The Great Red Dragon."

by Edward Ulysses Cate (0 articles, 0 quicklinks, 0 diaries, 217 comments) on Saturday, March 8, 2008 at 10:54:12 AM

I am a 47 years old,married and have a 17 year old daughter.My hobbies are bicyling, weight training and off road motorcycling.I have lived in a midwestern red state my entire 46 years.Now that I have reached middle age I have become interested in politics and its related fields of study.I dont often think of things being either liberal or conservative,I like to veiw political events in an objective manner and find the agenda or reason that a bill or policy is brought to bear.Simply put seeking ...

to see more of bio, click on member name
Gary DensonI am a 47 years old,married and have a 17 year old daughter.My hobbies are bicyling, weight training and off road motorcycling.I have lived in a midwestern red state my entire 46 years.Now that I have reached middle age I have become interested in politics and its related fields of study.I dont often think of things being either liberal or conservative,I like to veiw political events in an objective manner and find the agenda or reason that a bill or policy is brought to bear.Simply put seeking ...

to see more of bio, click on member name

CEO compensation

I know it seems utterly ridiculous to pay your CEO 365 million a year while his bank is losing billions but some very smart man I know who is also an economist told me that this is perfectly OK. He explained to me that Adam Smith in his book wealth of nations wrote that this is perfectly OK and there is no need to be alarmed, this is the way markets operate in their natural state. Some may starve to death while some live prosperously, to intervere would be a crime against nature. Darwin also beleived in survival of the fittest and sometimes millions may have to starve to inflate the stomachs of those who progress to the level of the Alpha.

Some may diagree with the above logic and claim that Human beings are intelligent and civilized and dont fall into animal behavior models. That humans have evolved into compassionate and caring creatures who look out for each other and seek to distribute wealth so all can enjoy a decent quality of life. What I have to say to them is GRUNT GRUNT GRUNT.

by Gary Denson (2 articles, 0 quicklinks, 1 diaries, 217 comments) on Saturday, March 8, 2008 at 11:05:48 AM