If Only This Happened At The Fed, Things Would Be Vastly Different

Tyler Durden's picture


Something surprising happened in the early days of August: a person was actually held accountable for his mistake.

As the WSJ reported previously, "a billion-dollar forecasting error in Walgreen Co.'s Medicare-related business has cost the jobs of two top executives and alarmed big investors." Specifically, at an April board meeting, Chief Financial Officer Wade Miquelon forecast $8.5 billion in fiscal 2016 pharmacy-unit earnings, based partly on contracts to sell drugs under Medicare. This did not pan out as expected and last month, just a few months later, the CFO unexpectedly cut that forecast by $1.1 billion. And then, In early August, the CFO of the nation's largest drugstore chain was gone. He wasn't alone: Walgreen said several days earlier that its pharmacy chief, Kermit Crawford, would retire at year-end.


Behind the botched numbers and management shake-up are Walgreen's efforts to capture a larger role as a middleman dispensing prescription drugs under Medicare's Part D, which subsidizes costs for the elderly and disabled. The saga at Walgreen—which derives 25% to 30% of its prescriptions from Medicare Part D plans—shows the broader risks for those operating in the Medicare ecosystem.


The bottom line: Walgreen hadn't factored in, among other things, a spike in the price of some generic drugs that it sells as part of annual contracts.

That said, don't feel bad for the CFO: "Mr. Miquelon's departure as CFO ends a sometimes rocky tenure. He was arrested for alcohol-related incidents in 2009 and 2010, according to public records. He said he paid for a driver, has "fully accepted personal accountability" and "never been convicted of a DUI or any crime." He will get severance of $3.2 million and a performance bonus of nearly $1.2 million; Mr. Crawford will get severance of $3.3 million and consulting pay."

But other bottom line: this is what is also known as accountability in the private sector, where if you are wrong you lose your job. Now imagine this taking place at the Federal Reserve, whose forecasting track record is so bad even tenured Ivory Tower economists have had no choice but to comment on it. The same Fed whose forecasts about everything have been always and without fail wrong ("it's contained" being the most glaring example though certainly not the only one), the only question was when.

Would the Marriner Eccles building have any employees then, and what world would we be living in if the the US monetary authority was actually held accountable for their relentless series of errors? Sadly that is one of those rhetorical questions whose answer we will almost certainly never get.

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Thu, 08/21/2014 - 11:24 | 5125264 Grande Tetons
Grande Tetons's picture

 Walgreen said several days earlier that its pharmacy chief, Kermit Crawford, would retire at year-end and spend his remaining days with life long companion, Ms. Piggy. 

Thu, 08/21/2014 - 11:27 | 5125277 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

Ms. Piggy digs on "Mothers Little Helper".

Thu, 08/21/2014 - 11:31 | 5125292 AlaricBalth
AlaricBalth's picture

"accountability in the private sector..."

Jon Corzine we still haven't forgotten about you. If I wanted to kill myself, I would climb up your ego and jump down to your IQ level, you oxygen thief.

Thu, 08/21/2014 - 11:34 | 5125300 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

+1 I like that.

Thu, 08/21/2014 - 13:25 | 5125696 Boris Alatovkrap
Boris Alatovkrap's picture

Even in Russia is accountability... if Boris is miscalculate for subterranean copper ore recovery either family is go hungry or perhaps maybe major city center is now absent of electrical power.

Thu, 08/21/2014 - 14:59 | 5126144 drendebe10
drendebe10's picture

That's exactly why we have elected and entrenched govt bureaucrats... so they don't have to be accountable and have guaranteed job security, can never be fired and with better health insurance, vacation, holidays, sick leave and retirement plan than all the sap private sector hard working tax paying US citizen serfs and peasants....  been trying to get on the gumming gravy train for ten years and haven't figured out how to land one of them plush, lucrative jobs where all  you have to do is show up and get paid... except on snow days or other bullsh*t excuse days, you don't even have to show up to get paid...

Thu, 08/21/2014 - 11:27 | 5125280 Dr. Richard Head
Dr. Richard Head's picture

Butterfly and unicorn wishes....

Thu, 08/21/2014 - 11:29 | 5125286 WhyDoesItHurtWh...
WhyDoesItHurtWhen iPee's picture

Wonder when CVS will announce simular problems ?

Thu, 08/21/2014 - 12:04 | 5125405 Calmyourself
Calmyourself's picture

CVS is in much better shape.

Thu, 08/21/2014 - 11:29 | 5125288 oudinot
oudinot's picture

Ms. Piggy gets $9,500 every paycheck

Thu, 08/21/2014 - 11:34 | 5125290 Keltner Channel Surf
Keltner Channel Surf's picture

At the Fed’s Jackson symposium

more dove talk from Yellen's podium

But given their task

it seems prudent to ask

What’s in their pipe?   Ah yes – it’s opium

Thu, 08/21/2014 - 11:34 | 5125302 Agent P
Agent P's picture

If I had $4.4 million coming my way, I'd be trying hard to get fired..."Hey, Susan, come over here and let me get a handful of them titties!" 

Thu, 08/21/2014 - 11:40 | 5125327 disabledvet
disabledvet's picture

I think it was a DUI...not any of the "extra-curricular" stuff.

Top shelf Brand...Family Dollar as well. Reputations matter at these types of enterprises...

Thu, 08/21/2014 - 13:42 | 5125757 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

Yes, $4.4 million for fucking up.  I wondered what you get paid for not fucking up?

Thu, 08/21/2014 - 16:04 | 5126533 JRobby
JRobby's picture


Thu, 08/21/2014 - 11:36 | 5125310 Hyperagora
Hyperagora's picture

Functioning market:  mistakes = failure.

Corrupt Government:  mistakes = reward/oportunity to grow the program.

Thu, 08/21/2014 - 11:38 | 5125314 HUGE_Gamma
HUGE_Gamma's picture

so the stock is back to where it was in March.. ohh the humanity

Thu, 08/21/2014 - 11:41 | 5125333 disabledvet
disabledvet's picture

Like I said..."bailout tycoons."

Power to print, power to destroy.

Thu, 08/21/2014 - 11:38 | 5125315 Cangaroo.TNT
Cangaroo.TNT's picture

During a conference call to investors, CFO Miquelson stated he would "spend time with his family, and intruduce his wife to "Mr. Suppository."  Know what I mean?  Huh?  Huh?  Little back door action.  Dude from Fidelity you know what I'm talkin' about!  Can I get a wut wut!"

Thu, 08/21/2014 - 11:53 | 5125366 FieldingMellish
FieldingMellish's picture

But they are not different because that won't happen at the Fed. Let's face reality as it is presented to us. Its the bankers a.k.a. paper bugs that are now laughing and the gold bugs are leaping off buildings.

Thu, 08/21/2014 - 12:09 | 5125419 eddiebe
eddiebe's picture

If only pigs could fly.

Thu, 08/21/2014 - 12:17 | 5125453 RaceToTheBottom
RaceToTheBottom's picture

Distraction from the real game of criminality.

Throw some low level functionary (albeit C Level) under the bus while the real criminals on WS gear up their game for higher level theft.

Thu, 08/21/2014 - 12:38 | 5125511 rbianco3
rbianco3's picture

Walgreens has another problem, they are deathly afraid of the DEA and often will not fill basic controlled medications. If you are en epilepsy sufferer and need Klonopin to control siezures, too bad, the DEA has imposed quotas on each medicine in most CVS stores in Florida, most near Orlando receive shipments on Wed., and are uaually out by noon-- customers turned away for 6.5 days.  Now Walgreens on the other hand has seen what the big old DEA has done to CVS and they have their own internal systems that ban your script for various reasons, if you fill the script too many miles from the doctor office, and they are rapidly becoming known as the place NOT to bring your scripts in FL. Many CVS stores in the Orlando area are banned from filling ANY controlled medicines indefinitely because they wrote more scripts than the average national pharmacy... nevermind that Orlando typically has a visitor population that is extremely large compared to the resident population.  I sure wouldn't invest in Walgreens, and CVS is going to have revenue problems in the near future if not already.

Thank our controlling government and the war on drugs for part of this problem.

Thu, 08/21/2014 - 13:56 | 5125821 TheABaum
TheABaum's picture

The problem with Klonopin is that it has psychotropic effects and it's anticonvulsant properties are subordinate. That having been said, I despise this invasion of privacy.  

Thu, 08/21/2014 - 13:14 | 5125658 guessagain
guessagain's picture

He (they) probably won't get his (their) big multi-million dollar bonuses then...  Oh, wait...

Thu, 08/21/2014 - 13:39 | 5125742 NeedleDickTheBu...
NeedleDickTheBugFucker's picture

Looks like the CFO was again DUI except this time while working on an Excel spreadsheet.


Thu, 08/21/2014 - 16:05 | 5126537 headhunt
headhunt's picture

WTF - they give projections first and then negotiate contracts which are a third of your income?

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