To be included on a weekly list of the Five Dumbest Things on Wall Street is an accomplishment, but to be enshrined in the yearly list requires a true gift for the imbecilic gaffe, gesture or strategy.
Any one of us, after all, can inadvertently do something that falls along the continuum from silly to downright stupid and luck into a weekly award, but can we all reach dumbness that can be immortalized each final Friday of the year?
That, my friends, takes more than dumb luck. So lean back, take a big breath, sit back up, take a swig of something strong without spilling any down your chin, then lean back down. And behold: the Five Dumbest Things of the Year on Wall Street, brought to you by the same CEOs who have maddened shareholders of
. May we all share in their seeping sense of accomplishment.
The List's Sweet, Sweet Lord
We were late into December, and we had no clear winner of this award. Only a few dim frontrunners had bumbled their collective way toward the finish line. Then, one of the frontrunners -- a man I have taken to calling My Sweet Lord -- finished the year with such a momentous flourish that he left the sweetly orange Angelo Mozilo choking in the dust. We will be lucky to see the likes of a such a zestfully idiotic performance again.
Ladies and gentleman, Albert L. Lord, the CEO of Sallie Mae.
My Sweet Lord launched into the fray when he blamed a half-billion-dollar profit swing on the distracting nature of buyout chatter. But he was just getting warmed up.
Next, he got himself into such a margin-call fix that he had to sell 1.2 million shares of his company stock, 90% of his total. You know what they say -- he who borrows what isn't his'n, pays it back or goes to pris'n. And Lord does not seem swift enough to keep them off him in the old prison yard.
Even stopping there, Lord would have made the yearly list, but he was not satisfied to rest on his laurels. No, after that gem, he kicked it into high gear and carved out his own place in the annals of the obtuse.
A recent conference call with analysts turned into a piece of performance art in obfuscation and offensive asides. Oh, and don't forget the cursing and threats. He told analysts that they would be put through a metal detector at an upcoming meeting -- a spokesman later disavowed this comment as a joke (Sweet Lord, stop, you're killing me). And when it was time to sign off, the Lord said: "Let's get the **** out of here." To which all of Wall Street silently responded: "Holy moly."
Dumb-o-Meter Score: 100. That's right, my Sweet Lord was granted this column's only perfect 100 score. He is our own Nadia Comaneci. Our children's children may not live to see another.
To err is human. So let's be kind and just say that Angelo Mozilo, the embattled, investigated, alarmingly orange CEO of Countrywide, is really, really human. He's more human than most, in fact, to judge by the ton of dumb errors this year.
You got that? He was never acting out of corrupt self-interest. And he never, ever tried to pull the wool over the market's eyes. He just had this funny knack of consistently misconstruing what was going to happen in the future. Like I said, to err is human.
And so where do we start when discussing Angelo Mozilo's brazen humanity? Hmmm ... so much flesh and blood to choose from, so little time. Let's begin in the lead-up to this year, when Mozilo was accidentally selling stock at an increasingly frenetic pace.
How do we know it was an accident? Well, it was either that or the darnedest coincidence. That's because Countrywide, as a company, was busily buying back stock. Fortunately, Mozilo explained away the apparent goof (a silly little mishap really) by this year blaming financial wonks who work in his firm -- the one he created -- but who get such a wide, comfortable berth that they can be gobbling up stock ravenously as he is unloading it with a shovel.
Give the help too much freedom, and look what you get.
But selling all that stock -- more and more, faster and faster -- was probably in itself another mistake made by Mozilo. That is because over the summer, when all those loans had started to turn rancid, Mozilo said: "Nobody saw this coming." See? Unloading all that stock was just a
mistake. He did not see this coming. Oh, the humanity.
But there were more innocent mistakes to come. After having not seen even a bit of bad stuff coming, Mozilo accidentally started talking about how the nation was entering another Great Depression. Some thought he was trolling for an interest rate cut or federal bailout, but if you are hip to the pattern, you'll just see that he was confused.
Luckily, Countrywide cleared up the confusion in a matter of weeks. By late November, the company, toiling away as this Mozilo declared that the Great Depression had descended, said it was going to make a significant profit in the fourth quarter of this year and more money in 2008.
See? That Great Depression talk was just a dumb mistake ... like the stock selling ... false assurances ... and claims that no one saw it coming ... even the guy unloading stock like there's no tomorrow when his lackeys mistakenly buy. There are not, financially speaking, many of those buyers stepping in to pick up current Countrywide shareholders and loan holders.
Dumb-o-Meter Score: 95. The business media, which quite often hung on Mozilo's word and reported it without raised eyebrow, can come forth to share this award.
Whole Foods' Mr. Lonelyhearts
It must be suffocating to be a CEO in the modern world, where every word is controlled and contorted by lawyers and public relations officials. Some must feel like a baited bull, and that probably explains why Whole Foods' John Mackey saw red this year.
To be fair, Mackey's qualifying event wasn't just this year. Indeed, it was just discovered this year that, in one of the most deliciously stupid developments, for most of the past decade Mackey masqueraded online under aliases like "Rahodeb," trashing the competition and blowing wet verbal kisses to none other than Whole Foods.
That, of course, is dumb. But we all have dumb impulses when it comes to our creations. (Wanna see my kids' art wall?) What merits Mr. Mackey's inclusion on this list has to do with vanity getting harnessed to the stupidity of doing something he had to know he was eventually going to get caught for. When one message board brayer made a disparaging remark about his hairdo, Mackey, writing as the masked "Rahodeb" struck back: "I like Mackey's haircut," he wrote, about himself: "I think he looks cute."
Dumb-o-Meter Score: 93. At least he named his tricky anonymous screen self after his wife. And he is kind of cute. And now we can all rest easy, since Whole Foods established a new policy about executives posting on message boards.
Citigroup's Dancin' Fool
There is a temptation to give Citigroup a yearly award for waiting until December to rate a basket full of banks and Countrywide as sells, on account of the credit crisis. If anything, Citigroup should have known from the credit crisis early and gotten the scoop passed on to its analysts.
But as we'll soon be dancing New Year's Eve away, let's give this award instead to the dearly departed Chuck Prince, who merged images of dancing shoes and the corner office he no longer occupies in a way that made shareholders want to cry in their wedding soup.
Back in July (maybe it was the heat) when the stock market was supremely nervous about subprime, Prince was asked if caution was in order. He responded with his dancing feet aflutter:
"As long as the music is playing," Prince told The Financial Times, referring to favorable markets, "You've got to get up and dance."
Musical chairs rarely ends well, though, even for Good Time Charlies who are supposed to be leading, not following, trends. In a bit of irony that might send shareholders into a bit of murderous rage, Prince also managed to say: "When the music stops, in terms of liquidity, things will be complicated." If only he could have heard himself above the music...
Dumb-o-meter Score: 91. For dancing his company's life away, Prince should be sentenced to doing the bump and grind with three of the larger drag queens to work a Wall Street Christmas party. Don't be embarrassed. I thought she was a woman too.
Cablevision's Public (and Private) Disgrace
Cablevision might be suffering from a few lingering consequences of putting family pseudo-scion Jimmy Dolan in charge of Madison Square Garden, but the blowouts, courtroom disgraces and near-biblical squandering of a brand name is nothing in monetary scale next to the Dolan family's inability to take Cablevision private.
Are we all sure New York Knicks coach Isiah Thomas wasn't put in charge of that too?
First, a summary, which is a bit like combat duty to write. While young Jimmy Dolan is often found playing the blues with his "band," the Knicks have gone through enough players and coaches to fill their rapidly emptying stands, where fans chant more often for Thomas' blood than for the Knicks to score.
Not content losing games, respect and money, Madison Square Garden also lost a sexual harassment suit. While maintaining innocence, the company agreed to make a huge payout to settle the case, simultaneously dropping appeals. When it got similarly hot on the ice, the company settled a lawsuit from a former New York Ranger cheerleader. "We didn't do it. No one saw us do it. You can't prove we did it. Will you take a cashier's check?"
Through it all, every unsightly bit of it, Cablevision continued to go after another fan base: their shareholders. But Cablevision shareholders have treated these offers like another fast break for the Celtics. Good thing the Dolans, who when they are not fighting each other in the business pages are being drawn as turkeys by the tabloids (and that's been some of the more favorable coverage), have developed a tough skin. Because it's these buyouts that have let the dumbness truly shine through.
Back in October, shareholders rejected the third (count 'em) offer by the privacy-obsessed family to take their company, which in addition to MSG, the Knicks and Rangers owns some nice monopoly cable properties, private. This latest offer, scoffed at in resounding fashion by shareholders, was for $10.6 billion.
"While we are disappointed that shareholders did not approve the transaction," the family said, "there is really nothing negative about today's outcome." The line held eerie echoes of one of many uttered by Coach Thomas, after a 30-point blowout. Is Isiah writing the Dolan's material or vice versa?
Dumb-o-meter Score: 90. Rumor has it that the fourth Dolan offer will include a free bag of popcorn at Madison Square Garden, though if you dare to boo the Knicks, you will be thrown out of the Garden by the seat of your pants and scruff of the neck. Good luck on the Eighth Avenue side of the Garden at night, with $10.6 billion and a bag of popcorn sticking out of your pockets.
At the time of publication, Fuchs had no positions in any of the stocks mentioned in this column.
Marek Fuchs was a stockbroker for Shearson Lehman Brothers and a money manager before becoming a journalist who wrote The New York Times' "County Lines" column for six years. He also did back-up beat coverage of The New York Knicks for the paper's Sports section for two seasons and covered other professional and collegiate sports. He has contributed frequently to many of the Times' other sections, including National, Metro, Escapes, Style, Real Estate, Arts & Leisure, Travel, Money & Business, Circuits and the Op-Ed Page. For his "Business Press Maven? column on how business and finance are covered by the media, Fuchs was named best business journalist critic in the nation by the Talking Biz website at The University of North Carolina School of Journalism and Mass Communication. Fuchs is a frequent speaker on the business media, in venues ranging from National Public Radio to the annual conference of the Society of American Business Editors and Writers. Fuchs appreciates your feedback;
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