Friday, January 26, 2007

what goes around comes around: subprime stooge's karma's not instant, but quick enough

Tremors at the Door - New York Times--Two days ago, Cuyahoga County Treasurer Jim Rokakis alerted us to this phenomenon as it had made itself manifest just across the Harvard-Denison Bridge, in the North Broadway and Fleet areas. The podcast should be posted shortly over at Meet.The.Bloggers. From a moral standpoint, this guy Dallas, the subprime mortgage lending company poster child, is, in my opinion, reprehensible. If this "hey, it paid more money, what would you do?" attitude passes for business ethics, we need to do a lot of re-tooling. Here's the poster child's whiny lament, now that HE no longer has credit:

...William D. Dallas, the founder and chief executive of Ownit, would argue that his company has become an early case of road kill.

In mid-November, JPMorgan Chase, which provided Ownit with money to make home loans, notified the company that it was in default and would lose access to a $500 million credit line by Dec. 13 because it was losing money. It had taken on too much debt and its net worth had fallen, according to bankruptcy documents and people briefed on the company’s finances

....For his part, Mr. Dallas acknowledges that standards were lowered, but he placed the blame at the feet of investors and Wall Street, saying they encouraged Ownit and other subprime lenders to make riskier loans to keep the pipeline of mortgage securities well supplied.

“The market is paying me to do a no-income-verification loan more than it is paying me to do the full documentation loans,” he said. “What would you do?”

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