Saturday, September 27, 2008

Fair Play

WARNING: Political posting
Information in this article was heavily borrowed from articles in our paper by The Associated Press reported by Lolita C Baldor about the Generals and Rachel Beck and Ellen Simon for the CEO story. Thank you ladies.

I am going to put up a political posting but I am very reluctant to do so. Over the past 300 or so posts I have refrained from politics, except of course to make fun of it. I have left those directions to the pundits , pollsters and bloggers out there who revel in that type of active and for the most part are good at it. My problem is I just get mad and then I don't make much sense. I thought it only fair to give you warning about that which I am about to publish as you are probably as tired of political things as I am and with a fair warning you can leave without damage. You won't hurt my feelings and I will know by looking at my readership counter and seeing how long you stayed on this posting. I know a lot about each of you and I promise not to be upset if you don't read this entire postings. For those of you that do foolishly disregard this warning, thank you very much and I hope you are a bit enlightened and not upset.

Every morning I completely digest the morning newspaper The Springfield Republican from Springfield MA as I also digest my bowl of cereal [Honey Nut Cheerios] all the while the news is running on the TV. First the local news and then one of the morning type shows partially gets my attention. This AM the headline buried on page 16 boldly sounded the alarm "8 Army, Air Generals disciplined". Acting Air Force Secretary Michael Donley Disciplined 17 senior officers including the three-star general in charge of logistics, for poor oversight in connection with the mistaken shipment of fuses for nuclear warheads to Taiwan. He stated he could not ignore the "breaches of trust that occurred on their watch". Two army Two Star Generals have also been disciplined. A lot of the punishment was career ending. Our military has a policy of "The Buck Stops Here" and they seem to hold the top in command responsible when things go wrong. I for one am very glad to see it.

The reason I am discussing this issue is because of the next story that I had just read, in the same paper, on page 11. The headline reads "Some CEO's got out with millions." Some of the CEO's have already fled the scene of the financial crisis taking million of dollars in severance packages with them.

Stanley O'Neal walked away from Merrill Lynch with a package worth $66 million. Ken Thompson was ousted from Wachovia in June with a "golden parachute worth $5million and Chuck Prince was forced out at Citigroup with a parting gift of $36million. According to Barry Ritholtz, who writes the popular financial blog The Big Picture and is CEO of research firm Fusion-IQ, "These guys took all this risk, and ultimately they won't have to suffer the consequences of their decisions".

We, the American Public, have to suffer the consequences and once again we have to come in and bail out their screw-ups to the tune of $700 Billion. As you read this, Congress is putting this bailout package together but with our money. I feel that OUR Congress and the President must include punishment for those who led us astray and they must not be allowed to walk away unscathed. I think real investigations must be launched. They also must put in sufficient oversight so it doesn't happen again. Harry Truman has said it best "The Buck Stops Here". If it is good enough for our Military Generals it is certainly good enough for the CEO's that gave us this financial Crisis in the first place.

There must be some way for us, as taxpayers, to get involved in this process with some meaningful results. I cannot believe that any of you reading this would allow these executives to write in these Golden Parachute escapes for lousy work and then dump the burden covering up their misdeeds on us. Our congressmen and women do or have, it appears. No skin off their noses and most of them are in the back pockets of these CEO's anyway. They spend their lucrative days in Congress whiling away their time on expensive junkets or soliciting out donations from these people. Playing golf on expensive courses. The Japanese have a good outlook on these things as you are encouraged to commit suicide if you screw up like these people did and the Chinese put you in jail and take away all you have earned, or stolen as the case may be leaving you and your family destitute. Issuing sharp knives to these ceo's instead of Golden Parachutes might just be the answer. Something to look at or am I just getting old?

Here is another one for you to get upset about before you go to bed tonight from the magazine Newsweek. Bruce Karatz, CEO, KB Homes. His Golden Parachute was $175 million. Karatz retired under pressure in November after an internal investigation found he manipulated stock-option grant dates to inflate value to himself and other executives. The board of directors ensured he'd walk away with $175 million in severance pay, pension benefits, and stock options, provoking an outcry from shareholder groups who say Karatz has been overpaid for years. Over the last three years, Karatz made $232.6 million—substantially more than heads of bigger and more profitable competitors like Pulte Homes and Centex. Where is our Congress, security and exchange commission and the FBI when you need them. Maybe the Board of Directors need some investigation and being held financially responsible for letting Karatz have the Golden Parachute in the first place. Karatz is sitting on some tropical beach with his $408 million plus bail out package and where is the incentive for him to do good in the first place? I would bet that the board is the "Other Executives" in the stock-option manipulation mentioned above. Don't you think the system is a bit flawed?

Sleep well friends.

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