By NATALIE KEITH
With dropping home values and mounting foreclosures, the financial impact the housing crisis is having on homeowners is clear.
But, as homeowners look for scapegoats to blame for their misfortunes, the crisis is also having an impact on executives who — rightly or wrongly — are shouldering much of the blame for the collapse.
"Americans are seeing their jobs and their hopes for the future evaporate," said Dr. Rosalind Dorlen, a clinical psychologist based in Summit, N.J. "We’re seeing a lot of blame being placed on executives."
Among Dorlen’s specialties is psychotherapy for financial stress. As a suburb of New York City, Summit is home to many Wall Street workers. Like others in her field she is seeing more referrals for services, not just from executives but from rank-and-file workers as well.
"We’re seeing more and more anxious people seeking help," she said. "There are some people who have feelings of shame, humiliation or guilt," she said. "If they have nobody to talk to, these feelings can result in hopelessness."
News reports Wednesday that Freddie Mac’s acting Chief Financial Officer David Kellermann was found dead of an apparent suicide (see Inman News) is a vivid portrait of tragedy involving an executive who was close to the mortgage-market crisis. A 16-year veteran of the company, Kellermann had been serving as acting CFO since late September.
Although the circumstances surrounding his death are unclear, it comes at a time when the company — which lost more than $50 billion last year and has received $45 billion in government assistance — is being investigated by the Securities and Exchange Commission and Justice Department for issues such as possible accounting violations.
In some cases executives — hailed for their business acumen during the boom times — saw their reputations turn with the economy. …CONTINUED
David Lereah, former chief economist for the National Association of Realtors, found acclaim during the height of the housing market making housing forecasts on behalf of the trade group, according to a report by the Wall Street Journal. But, when the housing market began to show signs of weakening, Lereah was criticized for his overly optimistic forecasts. Lereah said he was pressured by executives to make positive remarks and left to face blame when the market went sour. He eventually left the NAR voluntarily.
In addition to scarred reputations, others are facing criminal charges as a result of alleged shady business dealings. Among the most prominent examples involves financier Bernard Madoff, who pleaded guilty in March of defrauding investors in a Ponzi scheme on the order of $65 billion.
But there are other, less-high-profile cases. Former KB Home CEO Bruce Karatz is facing charges that he committed fraud in manipulating stock options, the Los Angeles Times reported. Authorities say Karatz, who earned $232 million in compensation for the three years ending in 2005, benefited from the illegal actions.
This is a reversal of fortune for Karatz, who was once lauded as a marketing genius. In 2006, KB Home was named the country’s "most admired" home builder by Fortune magazine. The firm’s market capitalization increased more than 1,200 percent from 1995-05.
As companies work to get their financial houses in order, management reshuffling has become commonplace across many industries. Realtor.com operator Move Inc. has seen several top management posts turn over in the past two years, for example. A Move investor group in March 2008 called for the dismissal of two company executives — one has since retired from the company and the other’s pending departure was announced this month.
Although there is no firm data to support a claim of a higher suicide rate, there is anecdotal evidence. In addition to Kellermann, chief executive of auction firm Sheldon Good & Co. Steven L. Good was found dead of an apparent suicide in January, according to the Wall Street Journal.
Natalie Keith is a freelance writer in Florida.
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