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Congress panel wants to grill subprime CEOs on pay

Kevin Drawbaugh
WASHINGTON
Mon Jan 14, 2008 9:48pm EST

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Angelo Mozilo (R), Chairman and CEO of Countrywide Financial, sits on a panel of experts at a national housing summit held by the Office of Thrift Supervision in Washington, December 3, 2007. Current and former CEOs of three major U.S. financial institutions deeply involved in the widening subprime mortgage crisis were asked on Monday by a Congressional committee to testify at a hearing next month on their massive pay and severance packages. REUTERS/Jonathan Ernst

WASHINGTON (Reuters) - Current and former CEOs of three major U.S. financial institutions deeply involved in the widening subprime mortgage crisis were asked on Monday by a Congressional committee to testify at a hearing next month on their massive pay and severance packages.

A House of Representatives panel invited Countrywide Financial Corp CFC.N CEO Angelo Mozilo, former Citigroup Inc (C.N) CEO Charles Prince and former Merrill Lynch & Co Inc MER.N CEO Stanley O'Neal to appear and answer questions on February 7.

House Oversight and Government Reform Committee Chairman Henry Waxman, a 17-term California Democrat, said he was seeking testimony from the executives as part of an "ongoing investigation into executive pay."

In a letter on the hearing sent to Mozilo, Waxman wrote: "According to recent press reports, if Bank of America Corp (BAC.N) completes its proposed purchase of Countrywide Financial, you stand to collect tens of millions of dollars in severance payments and other compensation."

Waxman asked Mozilo to be prepared to explain how his compensation package aligns with shareholders' interests and whether it "is justified in light of your company's recent performance and its role in the national mortgage crisis."

Bank of America said on Friday it agreed to acquire Countrywide -- the largest U.S. mortgage lender and the poster child, say critics, for the subprime crisis -- for $4 billion.

Prince quit in early November as chief executive while Citigroup posted billions of dollars in subprime losses and O'Neal was ousted amid similar circumstances at Merrill Lynch.

Despite these problems, Merrill said O'Neal would collect about $161.5 million in stock awards and benefits after leaving. One expert estimated shortly after his resignation that Prince would depart Citi with about $31 million.

The same House committee held a hearing last month on executive pay during which Waxman said: "In the 1980s, the CEOs of the nation's largest companies were paid 40 times more than the average employee. Now they make over 600 times more. At a typical company, 10 percent of corporate profits -- a staggering sum -- goes into the pockets of top executives."

(Reporting by Kevin Drawbaugh; Editing by Andre Grenon)


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