Subprimal scream, chapter 13

 

From Wall Street to Main Street, the tremors continue to move across the land as a result of the subprime mortgage debacle, a word that doesn’t even come close to encompassing the fallout from the greed and stupidity that made up the foundation upon which the house of cards was built.

More “For Sale” signs are sprouting on lawns as you drive through the neighborhoods of the Hudson Valley region. Foreclosures continue to mount. Last week, RealtyTrac reported 234,685 foreclosure filings nationwide. That amounted to a 5 percent increase from the previous month and a huge 57 percent increase from March 2007. One in every 538 households nationwide received a foreclosure filing during the month.

On the plus side, New York is still holding its own in the rankings; it came in at 30 with 3,384 filings. Consider ourselves lucky, if you can believe it. In Nevada, 1 in every 139 households received a foreclosure filing during March, nearly four times the national average. It had the dubious distinction of having the highest state foreclosure rate for the 15th consecutive month. Foreclosure rates in California and Florida ranked second and third highest, respectively.

As more borrowers fall behind in their payments, the banks, which perhaps didn’t do their due diligence, are now having their mistakes come back and bite them in their assets.

Washington Mutual, best known for making fun of straitlaced suit-and-tie bankers, took a hit last week when it posted a $1.14 billion loss for its first quarter.

Shareholders revolted at the news and reportedly withheld votes on new board members at the annual meeting. Shareholders also demanded that management be held accountable for the mistakes made by the savings and loan.

As we pointed out in an editorial earlier this month, if you screw up, you’re fired, and that goes for the board of directors. We also wrote that: Perhaps, shareholders should start their own form of revolution when they start casting their ballots for board members. No-confidence votes would shake things up a bit.

People are getting angry at the same old way of doing things. Rewarding bad behavior is simply insane. Handing out millions of dollars as Bank of America did to keep the Countrywide Financial Corp. president on board after the merger is not the way to run a company.

Somebody at WaMu must have taken notice of all the bad press about awarding bonuses. It decided last week to do an about face on how it compensated executives; rather than venture into a fairytale land where the mortgage-related credit losses were not calculated into the bonus numbers, the bank now will institute a target for which executives are held accountable. Miss the mark, lose your bonus.

Accountability, who would’ve thunk?

Maybe oversight is next.

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