"Doing What Is Required" by Chronicling the final days and eventual bankruptcy of First NLC as well as the subsequent effort by the exec team to get RPM Oversight launched.
Securitizing loans into bonds isn't a "Get Out of Jail Free" card. You still have to sell the bonds, and in this market you're likely to incur a loss. Or, you can hold the bonds on balance sheet, which means you're likely deferring losses until a later date. Either way, the market for subprime loans and bonds is probably worse today than it ever has been. Now that investors who previously bought subprime loans and bonds are getting creamed on their investments, the investor demand for subprime is withering (or dried up), which means prices for newly originated loans are withering. Throwing capital away in this subprime tailspin is akin to being on tilt in Vegas, trying to make back your big losses at the blackjack table. I'd like my odds in Vegas (against the dealer)better than in Subprimeland (against Wall St., money managers, warehouse lenders, Rating Agencies and the Yield Curve).
Anonymous, if the loans and bonds market is in the crapper, how do you make a profit? Can't you start getting the loans for less? I would jack the rates sky high.
First NLC's strategy of moving into Alt-A is like swallowing a bunch of barbituates and vodka. Big Alt-A lenders like Impac and American Home are having big-time problems with buybacks and their stock prices are down 35% in the past 6 weeks (FBR is down 23% in the past six weeks). Alliance Bancorp was a big Alt-A player for 20 years and shut down yesterday. First NLC is running out of the subprime forest fire and into the Alt-A forest fire, and it's probably going to leave them cooked extra well done. Subprime wholesalers who are still operating have no value, due to market conditions, loss of top AEs, pending lawsuits and big paychecks to senior management. WMC just let go half of their senior management but First NLC hasn't laid off a one. It's all about them, folks.
It's true about the Alt-A market. It's really messed up. Let's look on the bright side: 1) The Henschels have millions in the bank. 2) Since our volume has come to a stand still, we can spend our time at work fine-tuning our resumes and searching for new jobs with real companies online!
12 comments:
no speculation needed. Big loss in income primarily derived from FNLC subprime division. Loss will be worse than 1st qtr.
Securitizing loans into bonds isn't a "Get Out of Jail Free" card. You still have to sell the bonds, and in this market you're likely to incur a loss. Or, you can hold the bonds on balance sheet, which means you're likely deferring losses until a later date. Either way, the market for subprime loans and bonds is probably worse today than it ever has been. Now that investors who previously bought subprime loans and bonds are getting creamed on their investments, the investor demand for subprime is withering (or dried up), which means prices for newly originated loans are withering. Throwing capital away in this subprime tailspin is akin to being on tilt in Vegas, trying to make back your big losses at the blackjack table. I'd like my odds in Vegas (against the dealer)better than in Subprimeland (against Wall St., money managers, warehouse lenders, Rating Agencies and the Yield Curve).
Here's an interesting exercise: Run the URL below for the list of current FNLC Senior Management:
http://www.firstnlc.com/executive.aspx
Then run this URL for LinkedIn.com, a public, career "networking" site, to see which members of senior management have established accounts:
http://www.linkedin.com/
Click on "People" and type Senior Manager name (First and Last) and company (First NLC).
If you can match 4 members of senior management to 4 accounts on the LinkedIn website, you win! Win what? The right to know.
Ok, let's see if all you smart people can get this one:
FNLC is to FBR what Iraq is to _________ (hint: he's the president).
I found another member of managment, but he's not a member of senior managment. He's an architect. Is that the systems department?
Anonymous, if the loans and bonds market is in the crapper, how do you make a profit? Can't you start getting the loans for less? I would jack the rates sky high.
First NLC's strategy of moving into Alt-A is like swallowing a bunch of barbituates and vodka. Big Alt-A lenders like Impac and American Home are having big-time problems with buybacks and their stock prices are down 35% in the past 6 weeks (FBR is down 23% in the past six weeks). Alliance Bancorp was a big Alt-A player for 20 years and shut down yesterday. First NLC is running out of the subprime forest fire and into the Alt-A forest fire, and it's probably going to leave them cooked extra well done. Subprime wholesalers who are still operating have no value, due to market conditions, loss of top AEs, pending lawsuits and big paychecks to senior management. WMC just let go half of their senior management but First NLC hasn't laid off a one. It's all about them, folks.
It's true about the Alt-A market. It's really messed up. Let's look on the bright side: 1) The Henschels have millions in the bank. 2) Since our volume has come to a stand still, we can spend our time at work fine-tuning our resumes and searching for new jobs with real companies online!
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