Magazine article American Banker

Hearing on Exec Pay Ends without A Knockout Blow

Magazine article American Banker

Hearing on Exec Pay Ends without A Knockout Blow

Article excerpt

WASHINGTON -- A congressional hearing Friday was supposed to be a chance for lawmakers to skewer fat-cat executives who reaped huge sums from companies crushed by the subprime mortgage woes.

The executives - Angelo Mozilo of Countrywide Financial Corp., E. Stanley O'Neal of Merrill Lynch & Co. Inc., and Charles O. Prince of Citigroup Inc. - were to be the fall guys for the foreclosure crisis.

It did not quite turn out that way.

The executives, along with the chairmen of their companies' compensation committees, defended their records and made no apologies for the pay packages.

What's more, the Republicans on the committee outmaneuvered the Democrats with crisper questions for the witnesses.

The notoriously tough House Oversight and Government Reform Committee Chairman Henry Waxman was anything but. His line of questioning produced not a single "gotcha" moment.

After calling the witnesses "classic American success stories," the California Democrat said, "What's also true is you were in the middle of a tremendous debacle. It seems like everyone is hurting except for you."

But John Finnegan, a Merrill director and the chairman and chief executive of Chubb Corp., said Mr. O'Neal was indeed hurt. "He lost his job. He got no severance. He got no bonus."

All three executives tucked personal details into their testimonies - Mr. O'Neal's grandfather was a slave, Mr. Prince was the first in his family to go to college, and Mr. Mozilo is the grandson of an immigrant.

Mr. Mozilo received the harshest treatment, and even though he conceded errors in judgment, he praised Countrywide's record and his stewardship of the company he founded 40 years ago.

Rep. Elijah Cummings, D-Md., asked why someone making hundreds of millions of dollars would write a memo objecting to paying taxes on his wife's flights on Countrywide's plane. …

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