Comments on: Obama Using Fannie/Freddie Debacle to Strengthen His Class Warrior Credentials http://www.kipesquire.net/2008/09/obama-using-fanniefreddie-debacle-to-strengthen-his-class-warrior-credentials/ A Stitch in Time Saves Nine ... But Haste Makes Waste Tue, 13 Jul 2010 16:53:45 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: Dr. Kenneth Noisewater http://www.kipesquire.net/2008/09/obama-using-fanniefreddie-debacle-to-strengthen-his-class-warrior-credentials/comment-page-1/#comment-7248 Dr. Kenneth Noisewater Wed, 10 Sep 2008 14:27:23 +0000 http://www.kipesquire.net/?p=5944#comment-7248 It's not clear to me why the promises made by an insolvent company in an employment contract should always be honored before other promises made by that company in things like bond issues. Call it sophistry if you wish, but we're still left with a line of people trying to draw water from a nearly dry well. You state that the CEOs deserve to be at the head of that line without explaining why. It's not clear to me why the promises made by an insolvent company in an employment contract should always be honored before other promises made by that company in things like bond issues. Call it sophistry if you wish, but we're still left with a line of people trying to draw water from a nearly dry well. You state that the CEOs deserve to be at the head of that line without explaining why.

]]> By: KipEsquire http://www.kipesquire.net/2008/09/obama-using-fanniefreddie-debacle-to-strengthen-his-class-warrior-credentials/comment-page-1/#comment-7247 KipEsquire Wed, 10 Sep 2008 14:04:56 +0000 http://www.kipesquire.net/?p=5944#comment-7247 <blockquote><i>I look at it this way: The Fannie and Freddie CEOs are simply creditors of an enterprise that was driven to insolvency in large part by the decisions of these same CEOs. </i></blockquote> You look at it, um, wrong. The CEOs are contractual employees with vested benefits packages that were duly earned. All else is sophistry. Performance-based pay is all well and good. But we're not talking about that here. We're talking about stripping employees of their vested benefits in direct contravention of their (perfectly legal) employment contracts. That is both absurd and obscene.

I look at it this way: The Fannie and Freddie CEOs are simply creditors of an enterprise that was driven to insolvency in large part by the decisions of these same CEOs.

You look at it, um, wrong. The CEOs are contractual employees with vested benefits packages that were duly earned. All else is sophistry.

Performance-based pay is all well and good. But we're not talking about that here. We're talking about stripping employees of their vested benefits in direct contravention of their (perfectly legal) employment contracts. That is both absurd and obscene.

]]> By: Dr. Kenneth Noisewater http://www.kipesquire.net/2008/09/obama-using-fanniefreddie-debacle-to-strengthen-his-class-warrior-credentials/comment-page-1/#comment-7245 Dr. Kenneth Noisewater Wed, 10 Sep 2008 13:25:08 +0000 http://www.kipesquire.net/?p=5944#comment-7245 I look at it this way: The Fannie and Freddie CEOs are simply creditors of an enterprise that was driven to insolvency in large part by the decisions of these same CEOs. It seems to me that the procedures that govern how the firms must satisfy their obligations to creditors should place these guys at the end of any line of people holding their hands out. Moral hazard applies to CEOs just as much as it applies to us mere mortals. And insofar as the law allows it, when the risky behavior of CEOs leads to ruin, they shouldn't be rewarded for it before other creditors are made as whole as they can be. I look at it this way: The Fannie and Freddie CEOs are simply creditors of an enterprise that was driven to insolvency in large part by the decisions of these same CEOs. It seems to me that the procedures that govern how the firms must satisfy their obligations to creditors should place these guys at the end of any line of people holding their hands out. Moral hazard applies to CEOs just as much as it applies to us mere mortals. And insofar as the law allows it, when the risky behavior of CEOs leads to ruin, they shouldn't be rewarded for it before other creditors are made as whole as they can be.

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