# Crybaby capitalists whine for more



## R y a n (Apr 4, 2005)

Crybaby capitalists whine for more
Freddie Mac's CEO collected $38 million while the company he ran fell into a financial morass. He's just one example of corporate chiefs who want taxpayers to bail them out.
By Bill Fleckenstein
http://articles.moneycentral.msn.com/In ... rMore.aspx

It would be reasonable to expect that reckless behavior begets negative consequences. But on Wall Street, the rules are different. Especially if you are CEO Richard Syron of Freddie Mac.

Financial trouble turns to disaster under your irresponsible watch, and for your efforts, you get to keep your job and earn $38 million.

*Syron says: What, me worry? *
That's the surreal theme of a story in last week's New York Times *titled "At Freddie Mac, chief discarded the warning signs". *The subtitle wasn't "Gee, who'd have guessed?" but it should have been. To wit: "Mr. Syron received a memo stating that the firm's underwriting standards were becoming shoddier and that the company was becoming exposed to losses. . . . David Andrukonis (Freddie's former risk officer) recalled telling Mr. Syron in mid-2004 that the company was buying bad loans that 'would likely pose an enormous financial and reputational risk to the company and the country.' " So a company that was one of the buyers of last resort for some of this ridiculous mortgage paper that many of us were writing about *at the time knew that it was no good and still kept doing it*. (Last week, Freddie Mac wound up posting losses that were quite a bit worse than expected. And amid fears that subsequent losses may be larger than forecast, Freddie suspended its guidance for losses.)*Now our government wants to bail out the same people and keep them in command.* Chances are, whatever amount it winds up giving and Freddie sibling Fannie Mae initially won't be sufficient. In all likelihood, they'll be back asking for more somewhere along the way.

*Alms for the poor *
And it's not just Fannie and Freddie that feel entitled to a bailout. As reported by Bloomberg last week, Mark Mobius, a very successful investor and wealthy man, believes the Fed should cut interest rates to 1% in order to fuel growth. Now _why_ -- with inflation running at somewhere between 6% and 10% a year in this country and raging higher around the globe (even if oil has backed off its 18% pace) -- would any sane person advocate that sort of policy, especially given what happened the last time the Fed drove rates to 1%? The answer is: Because his closed-end fund is down about 17% on the year. (I don't mean to single out Mobius. He's just a recent example of a long list of folks advocating similar policies.) It is just despicable that under the guise of capitalism this kind of behavior is permitted. Multimillionaires whine for bailouts and get them. *CEO Daniel Mudd at Fannie Mae has pocketed $42 million since he took over in 2004*. _That, of course, doesn't count what ex-CEO Franklin Raines and his crew in the previous regime skated off with_.

*Blemish-free Franklin Raines *
Apparently, Mr. Raines remains clear of conscience. Last Tuesday, The Wall Street Journal accorded him op-ed privileges, which he used to defend his tenure at Fannie (and the company's behavior generically). Raines noted that an investigation by Warren Rudman's law firm found no evidence that he knew the company's accounting practices departed from generally accepted accounting principles, or GAAP, in significant ways. This is a complete whitewashing of the problem. If you didn't know the facts when reading this op-ed (as Raines must have assumed that most Journal readers would not), you'd be tempted to believe that Fannie and Freddie have done nothing wrong and in fact are in perfectly wonderful shape. So the atmosphere surrounding the housing bubble, the economy and the stock market continues to be surreal. To quote a friend who captured this: Treasury Secretary Henry Paulson "begs for money, and authorities help him save the GSEs (Fannie and Freddie),_ then says _*he has no plans to use the money*  . . . and hires Morgan Stanley (low bidder at $95,000)* to help him understand the authority he has received*. If all the foregoing weren't so pathetic, it might actually be funny."

*Lunacy shapes a landscape *
When historians look back at the summer of 2008, they will find the mind-set even harder to comprehend than the goings-on of the summer of 2007, when there was so much denial about the deflating of the housing bubble in the first place. (It was, of course, originally deemed to be just a subprime problem).

One individual decidedly of another persuasion is economist Nouriel Roubini. In the Aug. 2 issue of Barron's, he predicted that before all is said and done, the financial sector might be facing $2 trillion in write-downs because banks have not yet factored in the losses that have extended beyond subprime. Roubini also believes that the consumer credit side of the banks' business -- specifically HELOCs, home equity lines of credit -- might turn out to have insufficient reserves. He thinks that hundreds of banks will go bust -- the implication being that other banks will become scared, credit will further contract and business will get worse. That process feeds on itself, and it's all part of what happens as the real-estate and credit bubble collapses and affects the economy.

*Shhh! Crybaby capitalists at work* 
Tough truths for those who plead for a bailout because it's good for their business. Bailouts are terrible for the country and terrible for everyone's kids. Why should the reckless make millions along the way, then have the public pay for their mess?

I for one think it's about time that people started acting like adults. I know that wanting something to happen is certainly not going to make it happen, but I find the whole scene simply galling.

I keep searching for the right phrase to describe what our present environment has become, and my current favorite remains *"crybaby capitalism."*

Shockingly amazing. Un. be. lievable.


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## Plainsman (Jul 30, 2003)

Don't do your job and still get paid. I sent to an orthodontist in Bismarck like that. A year after an $1100 the tooth was abscessed and he said we would have to do another $1100 root canal on the same tooth. Nice gig.

Somehow we need to tie these people and their money into the company. If the guy has 38 million and the company goes bankrupt send his 38 million off to the investors. I'll bet that would cure many problems. Put their salary on a percentage of profits and not a fixed amount. No annual salary for losses. They get paid what they are worth.

Somehow we have to control these white collar unarmed robbers without destroying capitalism.

Why do you link crybaby and capitalist? It's as if you don't approve of capitalism. Would you prefer socialism?


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## Whistler31 (Feb 1, 2007)

With Ryan more like Communism/ :stirpot:


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## Plainsman (Jul 30, 2003)

I keep forgetting about the emoticons. I need to put more strategically placed  in here at some points so Ryan knows I am having as much fun as he is.


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## Whistler31 (Feb 1, 2007)

Me too


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## Plainsman (Jul 30, 2003)

Ya, and we have to thank Ryan for keeping the political form lively. The true liberals might not debate much this year. Their golden boy is going down hill faster than an Olympic bob sled team. A few good speeches and they threw caution to the wind voting with their "hopeful" hearts and not their brains. 
We didn't do much better. Of course that occurred because of liberal meddling too. I can not remember an election with such poor choices. It's like choosing between a head cold or cancer. Neither are very nice, but the choice isn't hard.


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## R y a n (Apr 4, 2005)

Whistler31 said:


> Me too


 :lol: No Worries guys.

It's kinda like a proverbial online bar ... we need to be able to come here everyday and call each other names and then tip one back together and laugh.

Bottom line we have a lot of fun, and its likely that any one of us would buy the other guy a drink at the bar just for keepin' a good conversation going.

We may not always agree... but we can agree that at least we live in a country that lets us talk freely, debate hard, have political parties, vote on issues, and then accept the outcomes and move on without resorting to bombings or genocide.

It could be a LOT worse.

Just look at Darfur, Georgia, Pakistan, Venezuela, China, etc etc

I just try to keep it all in perspective you know?


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## Shu (Oct 21, 2003)

great post Ryan - we all need reminding of that once in a while.


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## Plainsman (Jul 30, 2003)

> and then accept the outcomes


We have to do that?????  aw come on.

Nobama, Nobama, Nobama, :jammin: Nobama :jammin: Nobama :jammin: Come on now everyone :jammin: Nobama Nobama Nobama. Ahhhh that felt good.


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## R y a n (Apr 4, 2005)

Plainsman said:


> > and then accept the outcomes
> 
> 
> We have to do that?????  aw come on.
> ...


I'm truly amazed that some of you think McCain will win come election day.

:stirpot:


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## MSG Rude (Oct 6, 2003)

R y a n said:


> Plainsman said:
> 
> 
> > > and then accept the outcomes
> ...


Ryan, or what ever your name is  , care to put your dungeness crab up for a friendly side wager?

I know that you know that your fella hasn't got a shot in he11 of making it but this will either make you admit that or it will get me some crab from out there that I have not had since '97 when I was stationed out there.

What say you?

MMmmmm, I can almost taste it. Crab from shore to shore in the same year? AWESOME!!!!


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## Plainsman (Jul 30, 2003)

> I'm truly amazed that some of you think McCain will win come election day.


Well, I wouldn't want the election right now. However, given that the liberals had no resolve in the Iraq war I expect that when their over their Obamagasm they will start to think. When they start to think Obama is in trouble. Sort of like when you young guys start to sober up Sunday morning. I would guess some of you would like to chew your arm off right now and get away without Obama noticing.


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## R y a n (Apr 4, 2005)

MSG Rude said:


> R y a n said:
> 
> 
> > Plainsman said:
> ...


Julio... my name is Julio... err wait... different forum.

Dungeness crab it is. You're on! Loser buys winner $2lbs of crab to be consumed at your place in North Dakota over the Christmas holiday(or your cabin in Mn ?) 

(btw.. you know at one of the golf courses out here in the winter, they have dungeness all you can eat special for $7.... It is a helluva deal after coming in from a round of golf after work)

oke:


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## USAlx50 (Nov 30, 2004)

> Tough truths for those who plead for a bailout because it's good for their business. Bailouts are terrible for the country and terrible for everyone's kids. Why should the reckless make millions along the way, then have the public pay for their mess?
> 
> I for one think it's about time that people started acting like adults. I know that wanting something to happen is certainly not going to make it happen, but I find the whole scene simply galling.


Seems like a conservative standpoint to me... But I can see where the crybaby socialists can cry about the large incomes of CEOs.


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## MSG Rude (Oct 6, 2003)

Ryan,

Heck no I did not know that! Any more info on that one?

And sure as heck...your on!

Just want you to know:

:beer: between us.


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