It probably won't be a merry Christmas for ex-Bear Stearns managing director Ralph Cioffi. A new lawsuit filed by Barclays Bank (against Bear) calls into question Mr. Cioffi's reputation in the mortgage business, as well as the reputation of Bear executive Matthew Tannin. Mr. Tannin remains as an employee of Bear's asset management group (BSAM) while Mr. Cioffi was given his walking papers last week. The two men are accused of fraud and self-dealing in managing the firm's two subprime hedge funds. Both collapsed this summer and the world knows little about them since the bankruptcy papers were filed in the super secret
Bear, by the way, issued a statement on the Barclays civil action, saying:
"We believe that the lawsuit is unjustified and without merit. While we do not like to see investors or counter parties lose money, we believe this lawsuit is an attempt by Barclays to avoid taking responsibility for its own actions." It added that, "Barclays is a highly sophisticated financial institution with scores of analysts and economists capable of evaluating investment risk." Translation: Barclays lost money because it didn't know what it was doing...
One last thought on the Bear hedge fund scandal: Bear executive Warren Spector -- who in August was let go by chairman and CEO James E. Cayne, appears to have had nothing to do with the two hedge funds and their problems. Yet, he was the fall guy. Why?..
In case you missed it, the Federal Reserve on Tuesday issued proposed rules that would essentially ban 'yield spread premium' payments, the life blood of some loan brokers. There is, however, a bit of a loophole. YSPs can be paid if "the broker previously entered into a written agreement with the consumer disclosing the broker's total compensation and other facts." I would assume the National Association of Mortgage Brokers has already mobilized its lobbyists...
It's official: companies that did business with the now-bankrupt New Century Financial Corp. have submitted claims of $32 billion, which means common shareholders will get nothing when the once-giant subprime wholesaler is finally liquidated. At least, that's the opinion of Holly Etlin, CEO and chief restructuring officer of NCFC. "Based on a preliminary review of the claims against the company received by the claim bar date, the company currently believes that there will be no recovery in respect of the company’s outstanding common stock under the debtors’ plan of liquidation"...
MORTGAGE PEOPLE: The Mortgage Bankers Association named Harry Gardner vice president of industry technology.
DATA INFORMATION: With all the failures in the mortgage world over the past 12 months you need to know who's left and who to call. If so, order the eMortgage Industry Directory, an online book that tracks the nation's top 400 lenders, 300 servicers, top 85 subprime and much, much more. The ebook also provides a special news updates on every firm listed in the book. To order email:
A Merry Christmas and Happy Holidays from the staff of National Mortgage News, and NMNOnline!
