At First NLC, Lies Start At The Top

Here's some insight into the typical line of BS we receive from the CEO. This was sent to us a few days after they axed a significant amount of the workforce. My comments are included.

Dear Fellow Employees,

Last Friday, First NLC was forced to implement a restructuring plan that required us to close some of our wholesale operations and to lay off employees. We did our best to ease the pain for the individuals involved (unless they were in actual pain and had to see a doctor and couldn't because we stripped them of their health coverage that very evening - however, that one week's severance for every year of service should allow them to eat Top Ramen and cat food for the next couple of months), and every affected employee was notified personally by a senior manager (to this day, some of the affected (former) employees still haven't spoken to a senior manager and weren't even notified of their dismissal that day - they found out through colleagues on the grapevine).

Since the founding of this great company, this was the most difficult thing we have had to do. You know what is going on as well as I do: nonperforming loans have disrupted the secondary market, which has caused a tide of put-backs to the originators. The whole subprime industry is a mess. In the big picture (big picture = all lenders),this is an anomaly (this is a long-term fact of life and NOT an anomaly for subprime), but in the meantime, many of our competitors - from the most respected to the marginal - have been put out of business, and many others are on the edge.

As painful as the restructuring has been, First NLC is better off than many (a boldfaced lie, especially in light of FBR's financial statement that came out three weeks later). We have been able to take steps to ensure our long-term success (long-term = "until our contracts with FBR expire this summer"). (Name Witheld) and I were in New York at a series of meetings to work through strategic alternatives. We're also investigating ways to enhance the value of our originations, including the possibility of holding loans in portfolio. And we are fortunate to be a wholly owned subsidiary of FBR (not for long), a well capitalized company (not sure the Washington Post agrees with that) totally committed to our franchise (totally committed to unloading us to anybody who will pay pennies on the dollar for us, that is).

My experience tells me that what we have seen these past few months is not the Ghost of Subprime Future. The market will restabilize, and First NLC will thrive again (with only his family on the payroll). In our industry, loan performance and loan quality are key. Our future depends on our continuing to work to originate the best product available, and I know we will.

(Name Witheld), your senior managers, our parent company, and I are proud to stand with you during this difficult period (as we scramble to save our hides). Tough times show what we are made of (ask any employee what you are made of - when the going got tough, your only solution was to downsize and cut overhead without actually attacking the issues at hand). We thank you for doing what you do every day, and we remain confident in our (my family's) future (fortune).