To paraphrase Utah Phillips, the sub-prime mortgage market is not crashing. Rather, the families and communities induced to borrow and invest are being killed. And the people killing them have names and addresses. I thought I would post links that would illuminate some of the names and addresses as well as their salaries, bonuses and stock options.
Publically traded companies file proxy statements annually with the SEC. Go to the Investors Relations section of a website, link to the 2007 proxy statement and see the names and compensation of board and management as well as names of the leading shareholders.
Here is a link to the 2007 Proxy Statement for Bear Stearns. In 2006, the top 5 officers, including the President who was just fired (but gets to keep the money) made $1.25 million in salaries, $71.5 million in bonuses, $61.5 million in stock awards (the stock is dropping) and $21.6 million in other compensation. That is a total of $155.9 million.
At the new Federal minimum wage of $5.85, assuming a 2000 hour work year, I calculate it would take 13,338 young people living in the communities pumped and dumped by Bear Stearns to make that much money.
These numbers demonstrate the financial incentives of being a “pumpor” and “dumpor” as opposed to a “pumpee” and “dumpee.” Such financial incentives translate into incentives to ensure that the schools are no good and that citizens do not have government financial statements for their Congressional districts. That way lots of money and credit can go to support federal mortgage guarantees and market intervention. The amount of taxpayer backed credit used by Bear Stearns and their co-conspirators proves that whatever this was about had nothing to do with markets and everything to do with a Wall Street-Washington manipulation.
As Richard Ravitch, NY developer and Chairman of the AFL-CIO Housing Trust, said to me over dinner at the Jockey Club in Washington in 1997: “As long as I can get government subsidies, what do I care if people have education or jobs?”
Well, if you are an investor holding securities backed by mortgages, you do indeed care whether the people who live in the houses collateralizing your mortgages have education and jobs. Ask and answer this question: “What is the median value of a home in a country where there are minimal reading, writing and critical thinking skills and the average wage is $5.85 per hour?”