Two Slices of the Mortgage Scandal
Two news stories from earlier this month:
First, the CEO of Countrywide Bank is accused by the state of North Carolina of dumping stockshortly before the company’s poor performance became widely known.
What he did was amend his automatic withdrawal plan to sell his shares a whole lot faster–and the second time he did that was just as the stock was cresting. He’s converted $300 million from stock into cash.
The whole idea of an automatic stock sales plan, of course, is to protect against insider trading. Obviously, the system needs some tinkering.
According to the New York Times, North Carolina’s State Treasurer, Richard Moore, wasn’t very happy about this news:
“I’m steaming when I think of the schoolteachers, sanitation workers and firefighters who have taken a loss on this stock and he’s still cashing out,” Mr. Moore said yesterday in an interview. “Where is the sense of shared sacrifice?
North Carolina’s portfolio with Countrywide is about $9.5 million.
Meanwhile, the Wall Street Jourjnal reported that Merrill Lynch had to write off $5.5 billion in third-quarter earnings, directly related to the subprime mortgage crisis and its self-admitted poor oversight. The weird thing is–its stock went up on the day of the announcement. I will never understand the stock market.