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The dumbest banking moments of 2008

Two or three great lists were published over the holidays, such as the Top 11 CEO Firings of 2008 from Forbes magazine

Strangely enough, 7 of the top 11 were bankers and financiers:

  • Richard Fuld, Lehman Brothers;
  • Martin Sullivan, AIG;
  • Kerry Killinger, Washington Mutual;
  • Ken Thompson, Wachovia;
  • Richard Syron, Freddie Mac;
  • Daniel Mudd, Fannie Mae; and
  • James Cayne, Bear Stearn.

Similarly, Fortune magazine has the 21 dumbest moments of 2008 with more than half of them related to the banking system and credit crisis:

  • Hank Paulson telling Congress he won't need to use the funds he's requesting to support Fannie Mae and Freddie Mac;
  • The initial $700 banking bailout proposal;
  • The final bailout;
  • The e-mail from former Countrywide CEO, who mistakenly broadcasts his thoughts on a customer's plea for help with a home loan;
  • Daniel Mudd saying Fannie Mae will "feast" on weakened competition in the mortgage market
  • Congress passing a bill to keep hundreds of thousands of troubled borrowers in their homes and only 321 applications get filed;
  • The SEC outlaws short-selling on 799 financial stocks and so the sector sinks by another 25 percent;
  • The SEC admitting they had investigated Bernie Madoff for years … and missed it;
  • John McCain declares "the fundamentals of this economy are strong" on the morning of September 15, as Lehman Brothers declares bankruptcy;
  • John McCain's campaign co-chair and former senator Phil Gramm appeals to voters and their economic anxieties by calling them a "nation of whiners" and dismisses a troubled economy as a "mental recession"; and
  • The fund manager Bill Miller, whose contrarian bets on Bear Stearns, AIG and Freddie Mac cost his investors millions.

The Street's list pretty much concurs with Fortune's.

My #1 on the dumbest lists has to be the Countrywide CEO Angelo Mozilo's email.

A distressed mortgage customer, Dan Bailey, emailed several Countrywide staff with the following missive:

“I am writing this letter to explain my unfortunate set of
circumstances that have caused me to become delinquent on my mortgage.

"I have done everything in my power to make ends meet but unfortunately
I have fallen short and would like you to consider working with me to
modify my loan.

"My number one goal is to keep my home that I have lived
in for sixteen years, remodeled with my own sweat equity…this home
means the world to me… it’s to the point where I cannot afford to pay
what is owed to Countrywide.

"It is my full intention to pay what I owe.
But at this time I have exhausted all of my income and resources so I
am turning to you for help.”

In response, Mozilo meant to reply to a member of staff with the following:

“This is unbelievable. Most of these letters now have the same
wording. Obviously they are being counseled by some other person or by
the internet. Disgusting."

but hit the 'Reply All' button.

Now that's unbelievable!

Anyways, I'm sure the lists this year will be different.

About Chris M Skinner

Chris M Skinner
Chris Skinner is best known as an independent commentator on the financial markets through his blog, the Finanser.com, as author of the bestselling book Digital Bank, and Chair of the European networking forum the Financial Services Club. He has been voted one of the most influential people in banking by The Financial Brand (as well as one of the best blogs), a FinTech Titan (Next Bank), one of the Fintech Leaders you need to follow (City AM, Deluxe and Jax Finance), as well as one of the Top 40 most influential people in financial technology by the Wall Street Journal’s Financial News. To learn more click here...

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