Whenever a company blows like a head gasket on a Chyrsler Sebring, I enjoy going back in the archives and seeing what the CEO said in conference calls, press releases and television interviews.
There is no better way to highlight the arrogance, stupidity or perhaps dishonesty of the used car salesmen we often hire to run our companies.
Case in point, my latest column on the CEO who ran BankUnited, the bank regulators recently seized in Florida. As he flooded the Sunshine State with mortgages, he opined Florida was virtually recession-proof. Click here to read column.
One of my first columns for Dow Jones Newswires was about comments IndyMac Bancorp Inc. CEO Michael Perry made in the quarters before regulators seized his institution.
“The difficult market environment we are facing -though unpleasant now, particularly in its negative impact on our stock price – will have longer-term benefits as it separates the weak from the strong, weeds out some of the more reckless competitors and causes us to get better and better at everything we do,” he wrote in a letter to shareholders. “For many of our competitors … who took on too much risk, it is now time to ‘pay the piper.”
It’s like that old saying, whatever doesn’t kill you makes you stronger … until it kills you.
Then there was Rick Wagoner, CEO of General Motors.
On Aug. 18, Wagoner was on PBS’ Charlie Rose Show, boasting of a $26 billion liquidity position that would carry GM through at least 2009. No bailout or bankruptcy plans here.
“We believe, under conservative market scenarios… we’re good through ’09,” he told Rose. “And we’ve got capability to work beyond that… At this point, I think the message I would like to leave you with here is GM is here to stay …”
Then there was Countrywide Financial CEO Angelo Mozilo.
“Over the entire history of this country, housing prices have never gone down nationally,” Mozilo told CNBC in May 2005. “Over the longer term, there’s no better investment that I’ve observed than owning a home.”
What about defaults?
“They’re pretty low,” he said. “And I think one of the reasons being is because you’ve had such an escalation in real-estate prices that if anybody gets into trouble, they have a way out; you know, they can sell the home. As long as we continue the job formations that we have, the momentum that we have, you’re going to have very little incident of default.”
And what if housing values actually do go down?
“If you’re in a home and you’re going to live in that home, whether the value of the house goes up or down, except for your psyche, nothing really happens.”
