Wednesday, April 22, 2009

Freddie Mac Tragedy

Everyone knows that the stories of brokers throwing themselves from tall buildings in the Crash of 1929 are apocryphal urban legends. I think. While not yet clear why Mr. Kellermann, CFO of Freddie Mac, apparently chose to take his own life late last night, it is not hard to imagine. The despair that can overtake one in the midst of a personal and professional maelstrom can strip even the brightest and most outwardly successful of logic as well as hope.

No one else can be blamed for Mr. Kellermann's decision. We all make decisions daily under the guise professional responsibility, shareholder interest, orders from the top or even personal gain. We would all do well to remind ourselves that somewhere behind the paperwork, the policy and the profit, there are people.

The list of individuals who have taken their own lives because of reversals of fortune or because of shame grows as the current crisis continues. The asset manager in London, the real estate attorney in New York, the industrialist in Germany, the foreclosed widow in Toledo, all saw no way better way out.

Each of these is another reason to clean the system of the moral hazard that creates undue risky behaviour. Too often the consequence of ill considered actions is shifted. In some cases, it cannot be reversed. Even in death Mr. Kellermann left a wife and daughter to deal with them.

John Barnyak