Fremont Agrees to C&D, Will Exit B&C

Fremont General Corp., Santa Monica, Calif., is in discussions to sell its subprime division -- one of the largest in the nation -- after agreeing to a cease-and-desist order with the Federal Deposit Insurance Corp.The news broke late March 2. In trading Monday morning its share price was once again spiraling downward. The company said it will remain a commercial real estate lender and will continue to gather deposits. (FGC is the parent of an industrial loan company and subprime wholesaler called Fremont Investment & Loan.) In a filing with the Securities and Exchange Commission, FGC says it is exiting the subprime arena in light of "recent regulatory events, as well as changing competitive dynamics in the sub-prime market." The C&D order from the FDIC says FI&L will cease and desist from a long list of activities, including "Operating with a large volume of poor quality loans." According to the Quarterly Data Report, the company ranks seventh among subprime funders and 14th among servicers. After the SEC filing, Fitch Ratings downgraded Fremont General's long-term issuer default rating from B-plus to CCC, its short-term issuer rating from B to C, and its long-term senior debt from B to CC.