You’ve got to give the money-makers credit: when their giant, festering wound of an enterprise was pried open, cleansed with salt and rubbing alcohol, what did they do?
They invested in pieces of the scars even before the healing began.
This more-graphic-than-necessary depiction comes to you with the news reported yesterday in The New York Times that Stanford Kurland, the former Countrywide second-in-command under Angelo Mozilo, is now operating PennyMac, an enterprise that buys delinquent mortgages that the government took over from failed banks, in some cases, for pennies on the dollar.
Obviously, the initiative is good, but the people who are doing it have, of course, something of a checkered past.
The investors, according to The Times include “ big investors who are buying up failed banks taken over by the federal government and lobbyists.
Mr. Kurland has raised hundreds of millions of dollars from big players like BlackRock, the investment manager, to finance his start-up. Having sold off close to $200 million in stock before leaving Countrywide, he has also put up some of his own cash.
This is necessary, Kurland said, because operations like PennyMac, are part of the solution. More from the article:
While some critics are distressed that Mr. Kurland and his team are back in business, the executives say that PennyMac’s operations serve as a model for how the government, working with banks, can help stabilize the housing market and lead the nation out of the recession. “It is very important to the entire team here to be part of a solution,” Mr. Kurland said, standing in his office, which has views of the Santa Monica Mountains.
So while Bank of America, which purchased Countrywide last year, is phasing out any branding of the company whose high-risk loans came back to bite it, Kurland is now looking to capitalize on disaster, in part, created by him and his team. A good quote from Blair A. Nicholas, a lawyer representing retired Arkansas teachers who are also suing Mr. Kurland and other former Countrywide executives. goes like this:
“It is tragic and ironic. But then again, greed is a growth industry.”