Representative Henry Waxman, chairman of the Committee on Oversight and Government Reform has invited three chief executives who he said were implicated in the sub-prime mortgage crisis to testify on February 7 about their severance and compensation packages – Prince, O’Neal and Angelo Mozilo, the chief executive of Countrywide Financial, the mortgage lender acquired by Bank of America last week.
In a letter to Prince, Waxman said: “According to press reports, you collected tens of millions of dollars in payments and other compensation upon your departure from Citigroup. You should plan to address how it aligns with the interests of Citigroup's shareholders and whether this level of compensation is justified in light of your company's recent performance and its role in the national mortgage crisis.”
Waxman sent similar letters to O’Neal and Mozilo.
O’Neal had led Merrill since December 2002 but was forced to leave in the wake of multi-billion dollar writedowns last October. At the start of the month Merrill warned it would write down $4.5bn (€3bn) at its fixed income, currencies and commodities trading unit from its exposure to collateralised debt obligations and US sub-prime mortgages, but this rose to $7.9bn.
John Thain, chief executive of NYSE Euronext, the transatlantic exchange, and former president and chief operating officer of Goldman Sachs, was hired to succeed O'Neal in November, becoming the first outsider to be appointed chairman and chief executive of the Wall Street bank.
Prince also stepped down in November after increasing the amount of writedowns in its mortage business and was replaced by Vikram Pandit, the former Morgan Stanley banker and founder of hedge fund Old Lane, as chief executive.
Citigroup is reporting its fourth quarter and annual results today and Merrill Lynch on Thursday.
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