{"id":1974,"date":"2008-09-18T17:35:38","date_gmt":"2008-09-18T23:35:38","guid":{"rendered":"http:\/\/www.sequence-inc.com\/fraudfiles\/?p=1974"},"modified":"2013-03-24T09:16:24","modified_gmt":"2013-03-24T14:16:24","slug":"the-financial-crisis-no-downside-for-executives-who-have-been-paid-millions","status":"publish","type":"post","link":"https:\/\/www.sequenceinc.com\/fraudfiles\/the-financial-crisis-no-downside-for-executives-who-have-been-paid-millions\/","title":{"rendered":"The Financial Crisis: No Downside for Executives Who Have Been Paid Millions"},"content":{"rendered":"

It\u2019s easy to blame short sellers for troubles in the stock market. After all, they make money when a stock\u2019s price goes down. That\u2019s bad, right? No, not really. It\u2019s no worse than the longs holding stock and hoping a company has good news so they can profit from stock prices going up.<\/p>\n

Are we really na\u00efve enough to believe that the current financial crisis is the fault of short sellers? Government officials are promoting the idea that short sellers promoted false negative information in order to make stock prices go down.<\/p>\n

Except the problem is that companies hype themselves and publish false positive information all the time, in an effort to make the stock price go up. The difference? That\u2019s not viewed nearly as dimly. And the SEC doesn\u2019t investigate hardly any of these cases.<\/p>\n

The crisis is a function of companies that played fast and loose with money. They gave credit to anyone with a pulse, and even sometimes to people or companies that didn\u2019t exist. While real estate was flying high (and values were inflated largely due to this easy money which created bidding wars for real estate and idiots who were hoping to become amateur flippers), the companies gave out risky loans, pretended they weren\u2019t risky so that they could get investors to buy them, and now the defaults have become overwhelming.<\/p>\n

Did these companies really think that this could go on forever? Of course not. They had to know that at some point people would not be able to pay what they owed. Then what? The executives don\u2019t pay the price. Taxpayers do. Good consumers who deserve loans but now can\u2019t get them pay. Retirees with pension and IRA money in funds which invested in the financial industry, who now are losing tons of money. Everyone who invests in the stock market with their own hard earned money (not the \u201cfree\u201d stock options). We\u2019re all paying.
\n
\nI agree with Mark Cuban on this one:<\/a> The financial crisis is largely a result of CEOs who have no downside.<\/p>\n

I\u2019ll take it a step further and add greed to the mix. If they weren\u2019t greedy, they would take such huge risks with companies\u2026. Risk for which they\u2019re the ones who personally benefit. And when the risks are huge flops and cost taxpayers billions of dollars? Well, the executives have their severance packages. Millions of dollars in golden parachutes that are paid even when a CEO has cost others billions.<\/p>\n

Cuban is right: It seems that the only downside to ruining a company is the personal embarrassment. Even on the low end, you\u2019ll still walk away with $20 million. Where do I sign up? I promise I\u2019ll ruin a company good!!!<\/p>\n

I believe that the executives who profited handsomely from the companies now being bailed out by taxpayers should have to pay back the huge bonuses they received. Stock options? Wiped out. Any personal benefit while the companies were engaging in the behavior that caused the markets to unravel should be taken away from them.<\/p>\n

Someone else got all the profits while the companies were successful, and now the taxpayers have to pay for the losses. Where\u2019s my piece of those profits from prior years? I don\u2019t get any. Yet I have to pay to help fix this mess.<\/p>\n

Here\u2019s Cuban\u2019s idea:<\/p>\n

If the government must step in and provide any sort of financing or guarantees for any part of a public company\u2019s business, then all officers and directors lose all rights to severance pay and all outstanding vested or unvested options or warrants immediately become canceled. In the event the CEO of such corporation is not fired, but instead chooses to step down voluntarily, then the last 12 months of earnings is considered to be an interest free loan which the CEO must pay back over no more than a 10 year period.<\/p>\n

Honestly, i dont think it would have changed the actions of CEOs who have been bailed out. They would have thought it \u201ccouldnt happen to them\u201d. But once it happened a couple of times to a couple of big company CEOs, it would be in the decision making process of every CEO running a huge financial company.<\/p><\/blockquote>\n

I can\u2019t help but feel that we are moving closer to Socialism each day. Companies looking to the government for bailouts. Individual consumers failing to buy insurance, save for retirement, and save for a rainy day are expecting the government to solve all their problems. We are losing our entrepreneurial spirit. We are losing our independence.<\/p>\n

We are moving away from being a country in which people are self-sufficient and ensure that their own needs (and the needs of their family members) are taken care of. Everyone wants someone else to take care of them and pay for all of life\u2019s events. Our economy can\u2019t survive that way, and it is wholly unfair to the hard working taxpayers who do take care of themselves.<\/p>\n","protected":false},"excerpt":{"rendered":"

It\u2019s easy to blame short sellers for troubles in the stock market. After all, they make money when a stock\u2019s price goes down. That\u2019s bad, right? No, not really. It\u2019s no worse than the longs holding stock and hoping a […]<\/p>\n","protected":false},"author":2,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_jetpack_memberships_contains_paid_content":false,"footnotes":"","jetpack_publicize_message":"","jetpack_publicize_feature_enabled":true,"jetpack_social_post_already_shared":false,"jetpack_social_options":{"image_generator_settings":{"template":"highway","default_image_id":0,"font":"","enabled":false},"version":2}},"categories":[810,827],"tags":[],"class_list":["post-1974","post","type-post","status-publish","format-standard","hentry","category-financial-investigations","category-public-companies"],"jetpack_publicize_connections":[],"jetpack_featured_media_url":"","jetpack_shortlink":"https:\/\/wp.me\/p6Z0e-vQ","jetpack_sharing_enabled":true,"_links":{"self":[{"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/posts\/1974","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/comments?post=1974"}],"version-history":[{"count":0,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/posts\/1974\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/media?parent=1974"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/categories?post=1974"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.sequenceinc.com\/fraudfiles\/wp-json\/wp\/v2\/tags?post=1974"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}