The Leading Subprime Lenders Most Responsible for the Mortgage Meltdown

As promised, below is the 2009 list of the top 25 subprime lenders that crushed the U.S. housing market in 2007-08.  As discussed earlier this week, nearly every executive at the below banks have more than landed on their feet and are now reengaged in the business of writing loans . . .

Courtesy of The Center for Public Integrity:

"These top 25 lenders were responsible for nearly $1 trillion of subprime loans, according to a Center for Public Integrity analysis of 7.2 million “high interest” loans made from 2005 through 2007. Together, the companies account for about 72 percent of high-priced loans reported to the government at the peak of the subprime market. Securities created from subprime loans have been blamed for the economic collapse from which the world’s economies have yet to recover.

1. Countrywide Financial Corp.
   Amount of Subprime Loans: At least $97.2 billion
   
2. Ameriquest Mortgage Co./ACC Capital Holdings Corp.
   Amount of Subprime Loans: At least $80.6 billion
   
3. New Century Financial Corp.
   Amount of Subprime Loans: At least $75.9 billion
   
4. First Franklin Corp./National City Corp./Merrill Lynch & Co.
   Amount of Subprime Loans: At least $68 billion
   
5. Long Beach Mortgage Co./Washington Mutual
   Amount of Subprime Loans: At least $65.2 billion
   
6. Option One Mortgage Corp./H&R Block Inc.
   Amount of Subprime Loans: At least $64.7 billion
   
7. Fremont Investment & Loan/Fremont General Corp.
   Amount of Subprime Loans: At least $61.7 billion
   
8. Wells Fargo Financial/Wells Fargo & Co.
   Amount of Subprime Loans: At least $51.8 billion
   
9. HSBC Finance Corp./HSBC Holdings plc
   Amount of Subprime Loans: At least $50.3 billion ***
   
10. WMC Mortgage Corp./General Electric Co.
    Amount of Subprime Loans: At least $49.6 billion
    
11. BNC Mortgage Inc./Lehman Brothers
    Amount of Subprime Loans: At least $47.6 billion ***
    
12. Chase Home Finance/JPMorgan Chase & Co.
    Amount of Subprime Loans: At least $30 billion
    
13. Accredited Home Lenders Inc./Lone Star Funds V
    Amount of Subprime Loans: At least $29.0 billion
    
14. IndyMac Bancorp, Inc.
    Amount of Subprime Loans: At least $26.4 billion
    
15. CitiFinancial / Citigroup Inc.
    Amount of Subprime Loans: At least $26.3 billion
    
16. EquiFirst Corp./Regions Financial Corp./Barclays Bank plc
    Amount of Subprime Loans: At least $24.4 billion
    
17. Encore Credit Corp./ ECC Capital Corp./Bear Stearns Cos. Inc.
    Amount of Subprime Loans: At least $22.3 billion
    
18. American General Finance Inc./American International Group Inc. (AIG)
    Amount of Subprime Loans: At least $21.8 billion ***
    
19. Wachovia Corp.
    Amount of Subprime Loans: At least $17.6 billion.
    
20. GMAC LLC/Cerberus Capital Management
    Amount of Subprime Loans: At least $17.2 billion ***
    
21. NovaStar Financial Inc.
    Amount of Subprime Loans: At least $16 billion
    
22. American Home Mortgage Investment Corp.
    Amount of Subprime Loans: At least $15.3 billion
    
23. GreenPoint Mortgage Funding Inc./Capital One Financial Corp.
    Amount of Subprime Loans: At least $13.1 billion
    
24. ResMAE Mortgage Corp./Citadel Investment Group
    Amount of Subprime Loans: At least $13 billion
    
25. Aegis Mortgage Corp./Cerberus Capital Management
    Amount of Subprime Loans: At least $11.5 billion
    

***Total includes subsidiaries"

Checking Back In On the Mortgage Crisis Perpetrators

Five years after the collapse of Lehman Brothers which ushered in the crushing mortgage crisis of 2008, perpetuated primarily by subprime lenders, it appears that those most at fault for originating, selling and packaging predatory subprime loans are fully back in business.  Most now agree that lowered lending standards, predatory loans, and an insatiable Wall Street appetite for packaging loans into investment instruments, all at massive profit margins, led to the 2007-08 implosion of global markets.  Now, those individuals most responsible for creating the reckless loans that enabled the crisis have reentered the lending market after facing next to no genuine discipline for their recklessness.

According to The Center for Public Integrity's report Subprime Lending Execs Back in Business Five Years After Crash: "Five years after the financial crisis crested with the bankruptcy of Lehman Brothers Holdings Inc., top executives from the biggest subprime lenders are back in the game. Many are developing new loans that target borrowers with low credit scores and small down payments, pushing the limits of tighter lending standards that have prevailed since the crisis.  Some experts fear they won’t know where to stop.

The Center for Public Integrity in 2009 identified the top 25 lenders by subprime loan production from 2005 through 2007. Today, senior executives from all 25 of those companies or companies that they swallowed up before the crash are back in the mortgage business. Most of these newer “non-bank” lenders are making or collecting on loans that may be too risky to qualify for backing by the U.S. government. As the industry regains its footing, these specialty lenders represent a small but growing portion of the market."

As always seems to be the case when financial fraud and debauchery are involved, U.S. citizens continue to struggle economically, as foreclosures and joblessness continues, meanwhile, banking executives that engaged in the reckless lending that led to the market collapse are back at it with very little meaningful or realistic consequences. Later this week, I will post the list of the top 25 subprime lenders from 2005 to 2007, whose executives are now fully re-engaged in the loan business.

Occupy Wall Street-Where Did You Go?: The Widening American Wealth Gap

I just ran across a thought provoking article on CNN-Money entitled the "Split Economy."  The article reminds us that "[t]he divide between the 'haves and the 'have-nots' has never been greater."  "And every day brings a reminder of the rich making and spending huge sums of money  while the poor struggle to support their basic needs."  The article juxtaposes examples of wealth and conspicuous consumption against images of dire poverty in our country.  Here go examples:

• Dow 16,000-Stock market hits all-time high - 46.5 million Americans still living in poverty;

• Painting fetches record $142.4 million in auction - 47.5 million need food stamps to buy groceries;

• Twitter IPO created 3 billionaires - On the same day, 5 Wal-Mart workers arrested while striking for higher pay;

• NYC apartment listed for $125 million - A record 1.2 K-12 students are homeless;

• Lamborghini Veneno goes on sale for $4.5 million - Public transportation fare hikes across the US. 

This just makes me ask-Occupy Wall Street-Where did you go?  At least the Occupy Wall Street Movement kept the woes of the 99% in the news for a while.  Today, it is easy to become complacent and detached and forget to look around and spot the issues that are plaguing our society.  This article was food for thought.  I hope you find it thought provoking as well.   

Hedge Fund Giant SAC Capital Pleds Guilty to Criminal Insider Trading Charges

Hedge fund giant SAC Capital pled this week to criminal insider trading charges leveled by the Securities and Exchange Commission ("SEC").  As part of the plea deal, SAC Capital agreed to pay a record $1.8 billion fine for engaging in insider trading.  Additionally, prosecutors announced that SAC Capital will shatter it's investment advisory business--in essence ending the hedge funds ability to manage money for outside investors.  This does not mean that SAC Capital is dead.  The plea deal still allows SAC Capital's founder, billionaire Steve Cohen, to operate the firm as a "family office," to invest  Cohen's and other SAC Capital insider's own money. 

Cohen is one of the nation's most high flying hedge fund managers.  Cohen has an estimated net worth of $9.4 billion.  It remains an open question as to whether or not the SEC plans to bring criminal insider trading charges against Cohen.  Cohen is facing civil liability in connection with civil charges the SEC brought against him in July, for failing to supervise employees engaged in insider trading. 

Federal prosecutors alleged that SAC Capital engendered a institutional culture of blatant insider trading "that was substantial, pervasive, and on a scale without precedent."  A number of instant messages and emails among SAC Capital traders suggested and insinuated that these traders had obtained illicit inside information from corporate insiders.

SAC Capital's legal troubles have had an impact on investors.  as of January 1, 2013, SAC Capital managed $15 billion in assets, today the firm only manages approximately $9 billion in assets, mostly all of which belongs to Cohen and other employees.  SAC Capital's legal troubles are not new.  In March of 2013, SAC Capital agreed to pay $616 million to settle allegations of insider trading in a separate SEC initiated civil action.  Monday's plea deal will count this earlier amount paid in settlement of the civil charges-SAC Capital will have to come up with an additional $1.2 billion to settle the criminal charges.