Freddie Mac CEO: Woe is Me, for I must serve two masters, and one of them does not pay
It’s a hard hard life being Richard "Richie Rich"Syron, CEO of Freddie Mac since 2003. Seems having to create profits for investors AND serve the public by boosting the housing market has just been ripping him apart.
Truly, I feel for him. Truly. The day before I had to announce another 1.3 billion in losses I too would be looking for excuses. I too would be ripped apart by the uncertainty of whether or not to make myself filthy rich by engaging in risky behavior so I could drive up stock prices and thus justify multi-million dollar bonuses, or whether I should be prudent and pass on on some of that filthy lucre. It’s a hard choice, and I’m sure it’s just coincidence that Syron decided to engage in stupid and risky behaviour, that happened to drive up his stock bonuses. (I do however believe him when he said he thinks it impossible for him, since there’s no evidence he so much as tried.)
And hey, when your company is going south, the books are looking bad, when your company looks like it’s heading for bankruptcy, I agree with Richie Rich—the best thing to do is spend a billion dollars buying back shares. It’s not like you might need that billion dollars for something else.
But in truth, Richie’s right. Clearly modern executives are not capable of doing the right thing if there are financial incentives to do the wrong thing. So I think we should take Richie’s implicit advice and just nationalize Freddie and Fannie and drop the CEO’s salary to what bureaucrats in the public service get at the same level. That’ll be the end of the "competing objectives" and that’ll be the end of CEOs who stand to lose millions if they do the right thing.
As for Richie Rich, well, he’s rich. That’s how the modern CEO job works. You burn down the house to generate heat, take your profits "it’s a hot company, baby!" and once everyone realizes they’re homeless, well, whatever, you’re still rich, and they’re suckers.
And just like Richie Rich and the American taxpayer, you never, ever, give a sucker an even break.