Three chief executives with ties to the mortgage crisis received nearly a half-billion dollars in compensation over the past few years, according to a congressional report issued last Thursday; these paydays come despite the fact that the values of their underlying companies have collapsed under the enormous weight of the so-called "sub-prime mortgage crisis". Moreover, these men will continue to receive multi-million dollar paydays going forward--even if not actively employed--in the form of stock awards, deferred compensation, and golden-parachute retirement plans.

I sat watching Angela Mozilo, CEO and President of Countrywide Mortgage, testify in front of Congress (yes, I watch C-SPAN regularly), and the corporate apathy was quite clear. Members of his compensation committee also testified that they saw "no irregularities" in the hundred-million-dollar payouts to departing executives of these Titanic-like sinking corporations they leave behind.

The congressional report stated that America's top 3 sub-prime lenders, whose CEOs all testified before this congressional committee, lost a combined $20 billion in the last two quarters of 2007 alone, as investments related to sub-prime mortgages fell apart.

But Wait...There's More
In other gloomy news, Jeannine Aversa of the AP reports that U.S. employers cut jobs by 63,000 in February, the most in five years, a clear sign of our country's continued economic decline:

"Job losses were widespread, with hefty cuts coming from construction, manufacturing, retailing, financial services and a variety of professional and business services. Those losses swamped gains elsewhere including education and health care, leisure and hospitality, and the government...the health of the nation's job market is a critical factor shaping how the overall economy fares. If companies continue to cut back on hiring, that will spell more trouble."

Shoes Continue to Drop
Consumer confidence also continues to fall even as the Federal Reserve has signaled that the central bank will keep on cutting a key interest rate to bolster the economy.

"We've gotten to a point where there's very little for the consumer to cheer about. Everywhere you look — homes, grocery stores, gasoline stations — there are things that are all weighing on consumer attitudes," said Richard Yamarone, economist at Argus Research. "You have soaring energy and food prices, rising home foreclosures and uncertainties about the jobs climate. When you mix it altogether it is a recipe for miserable consumer sentiment."

Congress and the White House, meanwhile, have speedily enacted a relief package that includes tax rebates for households and businesses. Rebates of up to $600 for individuals or $1,200 for married couples should start going out in May. Beginning this week, the IRS will begin issuing letters to over 130 million households reminding them to file a 2007 federal income tax return in order to receive a rebate check.

The Fed has already cut its target for short-term interest rates, which influences borrowing costs across the economy, to 3% from 5.25%, where it stood in September. Fed Chairman Ben Bernanke and his colleagues are widely expected to cut rates again when they meet next week...many analysts predict a rate cut as high as three-quarters of a percentage point, departing drastically from the more typical quarter or half-point cut.

Back on the Home Front
According to the Wall Street Journal, the number of American homes entering foreclosure rose to the highest level on record in the fourth quarter of 2007.

"We are likely to be living with a high degree of uncertainty for some period of time about the ultimate magnitude and duration of the slowdown under way," said Federal Reserve Bank of New York President Timothy Geithner

And in the next article...

"I believe we are facing the most serious...economic and financial stresses that the U.S. has faced in at least a generation -- and possibly much longer," Lawrence Summers, who was Treasury secretary during the Clinton administration, said Friday at a Stanford University conference. "We are in nearly unprecedented territory with respect to financial strain."

How You Should Move Forward
We are actively advising our clients to stick to the plan. Continue watching cash flow. Keep an eye on your costs. The price of food and fuel are rapidly rising and must be accounted for in your monthly budget. Ultimately, you must remain prudent, focused, and educated. Read the newspaper. Stay informed of current national events as they will now--more than ever--affect us all.