From 2007 through 2009 Mortgage Blues reported on the subprime crisis. Daily articles highlighted a nation in turmoil as financial greed and abuse rocked the country.
Now Mortgage Blues gets to report on the aftermath. Lawsuits continue to see America in search of a single culprit. In one such suit by the SEC three former executives of Irvine California-based New Century Financial Corp were accused by regulators Monday of misleading investors as its subprime loan business faltered.
Shouting “Our company is doing well” while slipping into bankruptcy or facing lawsuits is nothing new. For example Household International Chairman William F. Aldinger told employees at an annual meeting that Household International was doing well. Charges of predatory lending, followed by depressed stock prices, were filed almost immediately thereafter.
In the New Centruy case it is interesting to note that the SEC took almost three years to file charges. New Century was the nation’s second-largest lender to borrowers with spotty credit before its demise in April 2007 signaled an unfolding crisis in the mortgage and housing markets that set off a deep global recession.
New Century was late getting out in front of problems. By contrast HSBC alerted everyone to problems in the summer of 2007. HSBC, thanks in part to the bank’s purchase of Household International, lost approximatley $45 billion before the debacle was over.
Shady lenders, shady practices, questionable loans, poor standards, and not government regulation allowed these rogue companies to ruin the United States. Job losses, falling home prices, and foreclosures followed.
The final result is a United States economy in shambles as unemployment reaches levels not seen since the Great Depression.