The Daily Sandwich

"We have to learn the lesson that intellectual honesty is fundamental for everything we cherish." -Sir Karl Popper

Location: Boston, Massachusetts, United States


Monday, January 14, 2008

This tale of efficiency brought to you by the Imaginary Free Market

With additional support from the Meritocracy Council.

When I saw the headline Millions Lose Homes, Lender CEO Gets $88 Million, I had no idea this story would be such a worthy example (you know, in a dark, hellish, eternal-nightmare-of-the-soul sort of way) of everything that's wrong with our corporatist system.

Angelo Mozilo, the co-founder and public face of troubled mortgage giant Countrywide, is eligible for tens if not hundreds of millions in compensation and perks on the sale of the company to Bank of America.

During calendar 2006, the latest period available for review in Securities and Exchange Commission filings, Mozilo took home $48.1 million in compensation. An early analysis of SEC filings by the Los Angeles Times suggests he could get upward of $115 million when he leaves after the sale is complete, despite the fact that the company tanked during the recent subprime mortgage crisis.

In December, Countrywide reported a record number of foreclosures and delinquencies in its loan portfolio. The value of shares has fallen more than 84 percent since mid-May of last year.

I'll bet you can see where I'm going with this. It's been the long, sad story of the mortgage/credit mess we're still walking blithely into in this country. And the preferred business model of revered executive minds like Ken Lay or Dennis Kozlowski. It's exactly the same model promoted by one of my undergraduate business professors-- the most reviled individual in the department, at least by students, for being a complete prick and damn proud of it, thank you very much.

Fitting that his company is being picked up by Bank of America, issuer of credit cards to people carefully selected for their ability to be debt slaves for decades to come.

You know, if I were to enumerate the many ways in which this article gives the lie to the entire myth of GOP economic policies, I'd lose my entire day. Read it, be outraged, pass it around. The lesson I take away is this: the Republican definition of a free, open, and competitive market is one in which the wealthy are able to restrict, close, and manipulate the market to provide themselves with impossibly large sums of money, airtight job security, and a Soviet-era guarantee that even failure will bring a personal windfall if you know the right people. All you have to do is deprive as many less-wealthy people as you can of money, job security, a future of possibility, and preferably health care and a home.

Okay. So the guy with decades of experience walked right into a moneymaking scheme that anyone with half a brain could have told him would mean an inevitable day of reckoning. At least, in spite of his carefully constructed safety net, he'll be leaving the company in shame and disgrace, right?

The company will retain Mozilo as a consultant. Mozilo is obligated to make himself available for a specified period of time each month through December 2011 and at the rate of $400,000 per year.