Monday, April 7, 2008


After driving Countrywide Financial to the brink of financial ruin (in part by issuing $40.6 billion in subprime contracts), former president Stanford Kurland was recently named chairman and chief executive of Private National Mortgage Acceptance Co. (PennyMac). In his new position Kurland will help PennyMac buy loans "from financial institutions seeking to reduce their mortgage exposures.”

Cutting through the jargon, this means Kurland will take his knowledge of "which mortgaged-backed securities are toxic" and will help his new company pick out the ones with real value (we can all guess who's going to pick up the tab for the worthless stuff, right?). Putting Kurland's charmed financial life in perspective, reports ...

... If Kurland thrives at his new venture, he certainly won’t be the first person in the investment world to cause huge losses and then rebound ... Victor Niederhoffer, who first made his reputation as a partner of the legendary hedge fund mogul George Soros, has apparently made and lost at least two fortunes through his investments ... There is a difference between Niederhoffer and the Countrywide crew, however ... Niederhoffer’s mistakes hurt himself and his clients. Countrywide’s mistakes helped push the economy into what probably is a recession and the financial system into a serious crisis ...
As pointed out, while many people are to blame for the subprime mess, "the leaders of Countrywide ... played a role."

No doubt considering the recent billion dollar Countrywide bailout engineered by the government, consumer lawyer Irv Ackelberg told The Wall Street Journal, "The whole subprime mortgage fiasco was built on sort of Wall Street’s snake-oil salesmen convincing America this is a can’t-miss scheme.” Nouriel Roubini was even more blunt: "The lesson of this sad and sleazy episode is that when profits are privatized and losses are socialized we get sleaze capitalism ..."

- Mark

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