As mortgages went bad, New Century executives cashed out

[DogPoundPup]

Source: L.A. Times

The subprime lending industry was starting to buckle under the weight of bad loans in November 2006, when executives at Irvine-based New Century Financial Corp. held a conference call to release their latest earnings.

Loan volume was down and defaults were up, the earnings report showed, and in recent weeks at least five stock analysts had downgraded the company's shares. Moreover, four executives had sold nearly $20 million in stock in the last four months, six times as much as they had sold over the previous 12 months.

That led one analyst to ask whether there was anything investors should know.

"It's just part of their personal financial diversification plan," Chief Executive Brad Morrice said in response to the question during the Nov. 2 earnings call.

Those executive stock sales, however, have emerged as a central element in the Justice Department's criminal investigation of New Century, according to a person familiar with the inquiry who was not authorized to speak publicly.

Read more: http://www.latimes.com/business/la-fi-newcent26-2008nov26,0,94233.story

[Doremus]

1. A strongly worded letter is being drafted as we speak.

[MannyGoldstein]

5. Along With A Bailout Of $25 Billion

Because if we don't act immediately, the consequences will be dire.

[Amonester]

2. Another bunch of "neo" Marie Antoinette's ready to get...

"guillotined"

[bemildred]

3. Gee, who could have predicted this?

The perpetrators of a Ponzi scheme bailing out at the top? What a surprise.

[UpInArms]

4. pay no attention to the man behind the curtain

"It's just part of their personal financial diversification plan," Chief Executive Brad Morrice said in response to the question during the Nov. 2 earnings call.

[RUMMYisFROSTED]

25. I read no further. Everything is obviously on the up-and-up.

[aquart]

6. Jail. And fines of every damn penny they have.

Not a drop of mercy in me just now.

[rocktots]

7. uHM, where have y'all been?

Fanni and Freddi got the cash a month ago, Citi got it last weekEND, etc...and its going into the trillions, and NO ONE IN CONGRESS (few anyway) are complaining.

This is bigger than bush and co, it involves democrats as well, and no one is fighting it.

NO ONE!!

Trillions of dollars???

Why not, no one in congress, or too few, will speak out against the corruption, or incompetence.

[Hubert Flottz]

8. Damn, they pulled A George W Bush!

[Solly Mack]

9. Imagine that

[BootinUp]

10. The following clip from the story is just amazing...

But the examiner hired to review the company's finances by the U.S. Bankruptcy Court said New Century's troubles had surfaced by 2004.

"New Century knew from multiple data sources that its loan quality was problematic, starting no later than 2004," examiner Michael J. Missal wrote in his report this year, adding that "senior management before 2006 took few steps to address the troubling loan quality trends."


For example, the proportion of borrowers who had failed to make payments in the first three months of a loan reached 10% by November 2004 -- up from 4.2% in March, according to an internal report filed in a federal lawsuit against New Century by the New York State Teachers' Retirement System.
-----------------------------

10% couldn't make even one payment in 3 months? Holy crap.

[kpete]

11. As mortgages went bad, executives cashed out

Source: Los Angeles Times

As mortgages went bad, executives cashed out
Glenn Koenig / Los Angeles Times

While Irvine subprime lender New Century was failing, key executives continually changed their stock trading plans and often sold within days of colleagues' trades, a Times investigation shows.

By William Heisel
November 26, 2008

The subprime lending industry was starting to buckle under the weight of bad loans in November 2006, when executives at Irvine-based New Century Financial Corp. held a conference call to release their latest earnings.

Loan volume was down and defaults were up, the earnings report showed, and in recent weeks at least five stock analysts had downgraded the company's shares. Moreover, four executives had sold nearly $20 million in stock in the last four months, six times as much as they had sold over the previous 12 months.

That led one analyst to ask whether there was anything investors should know.

"It's just part of their personal financial diversification plan," Chief Executive Brad A. Morrice said in response to the question during the Nov. 2 earnings call.

Read more: http://www.latimes.com/business/la-fi-newcent26-2008nov26,0,94233.story

[slackmaster]

12. I'm surprised this piece didn't even mention Countrywide

Angelo Mozilo's sudden "retirement" was one of the most blatant examples of what it describes.

[snappyturtle]

13. Oh, I get it, thievery is now called a 'personal financial diversification plan'.

Great. Nothing to see here.

[Demobrat]

14. The other ones who need investigation are

the couple who ran World Savings up until they sold it to Wachovia - Marion and Herb Sandler. They lied to their employees, telling them the company would never be sold and that there was a succession plan in place, up until the day of the sale - and then blamed the employees, who according to them were suddenly "not ready" to run the company - when they suddenly did sell. Of course the toxic mortgages in their loan portfolio brought down Wachovia. Did they lie to Wachovia too? Those two need to answer some questions - under oath.

[WriteDown]

15. I am surprised anyone actually believed them...

I have never worked for a company that told you what was "really" going on.

[Demobrat]

17. I never have either

and don't believe anything I'm told. But it took me a while to get to this point. People trusted the Sandlers. Don't ask me why.

[WriteDown]

18. Probably took me 5 years....

of life outside of school to realize that. I used to believe all the pep rallies that companies would throw.

[Demobrat]

20. That was about it for me too.

At this point I've been lied to so many time i know the company lines by heart - and know that the more reassuring they are the worse the truth is.

[WriteDown]

22. "and know that the more reassuring they are the worse the truth is"

Truer words were never spoken. Haha.

[TheEuclideanOne]

16. Where the @#$@%^%! are investigative reporters?

How come major crises and major crimes are only covered in post-mortem format? Is it too much to ask for an investigative reporter, and I use that term loosely, to cover something as it is unfolding (or before) rather than pointing out obvious information only after the crimes have been committed? What do they teach them in news reporter school anyway?

On a related note, am I the only one who is sick of hearing "The Federal Govt is giving XXX Bank wants YYY Billion dollars. It is pretty clear that they should not recieve this money. It is pretty clear that we don't have the money to give. It is pretty clear that this money will not solve the problem. Yet we are going to give it to them anyway otherwise the results will be catastrophic". (for the record, I realize that I am definitely not the only one, but just wanted to vent)

[quidam56]

19. Ahhhhhhhh, THE AMERICAN WAY

Profit comes ahead of People ! http://www.wisecountyissues.com

[deepwater152]

21. bailout=$7.76 trillion the usa is about finished

Nov. 24 (Bloomberg) -- The U.S. government is prepared to provide more than $7.76 trillion on behalf of American taxpayers after guaranteeing $306 billion of Citigroup Inc. debt yesterday. The pledges, amounting to half the value of everything produced in the nation last year, are intended to rescue the financial system after the credit markets seized up 15 months ago.

The unprecedented pledge of funds includes $3.18 trillion already tapped by financial institutions in the biggest response to an economic emergency since the New Deal of the 1930s, according to data compiled by Bloomberg. The commitment dwarfs the plan approved by lawmakers, the Treasury Department’s $700 billion Troubled Asset Relief Program. Federal Reserve lending last week was 1,900 times the weekly average for the three years before the crisis.

[truthisfreedom]

23. Of course they did. bush got away with it when he ran his companies into the ground. The SEC

conveniently dropped their investigations into his insider trading. He set the example for America when he came into office, dragging his history of insider trading behind him as a shining beacon to anyone who wanted to rip off American investors, so they'd all know it's perfectly okay, just do it! This is bush's legacy... operating your business and the US government just like a mafia.

[SOS]

24. Is this an example of how the 15% capital gains tax creates jobs?

nt