How subprime lending all started in O.C. (Ameriquest - Roland Arnall)

Orange County Register ^ | 30 Dec 2007 | JOHN GITTELSOHN

[VxH]

Godfathers of subprime

Established in 1979 by Roland Arnall, Long Beach Savings grew rapidly after Wall Street opened the credit tap. It moved to Orange in 1991 and gave up its banking license in 1994, converting to a pure mortgage company.

In 1997, Long Beach Savings split into privately-held Ameriquest and a publicly traded subsidiary, which sold for $350 million in 1999 to become the subprime arm of Washington Mutual Inc.

Other companies were started by executives who learned the ropes at Long Beach Savings: ResMae Mortgage Corp. in Brea in 2001 and Encore Credit Corp. in Irvine in 2002. 

Godfathers of subprime

Established in 1979 by Roland Arnall, Long Beach Savings grew rapidly after Wall Street opened the credit tap. It moved to Orange in 1991 and gave up its banking license in 1994, converting to a pure mortgage company.

In 1997, Long Beach Savings split into privately-held Ameriquest and a publicly traded subsidiary, which sold for $350 million in 1999 to become the subprime arm of Washington Mutual Inc.

Other companies were started by executives who learned the ropes at Long Beach Savings: ResMae Mortgage Corp. in Brea in 2001 and Encore Credit Corp. in Irvine in 2002.

[VxH]

Second excerpted paragraph should be:

 

"You also had the Godfathers of subprime."

 

Daurio said the Godfathers were Arnall, Brian Chisick of Irvine-based First Alliance Mortgage Co., Russell and Rebecca Jedinak of Guardian Savings & Loan in Huntington Beach, and John T. French, founder of Santa Ana-based Plaza Savings & Loan.

 

[SoConPubbie]

Also, 2 or more of the founders and/or senior executives of New Century Mortgage, which actually started the collapse of the Sub-Prime market, came from Long Beach Savings.

[tired1]

save for later

[superfluousdude]

As a former NC employee I can say that the mortgage implosion was in full swing before we went BK. Ownit Mortgage went BK at the end of 06. They were part owned by Merrill Lynch.

[SoConPubbie]

True, however, we ( I am also a former employee ), really kicked it into high gear with our problems.

The markets around the world started tanking on every dose of bad news that NC brought to the table.

[CPT Clay]

Very interesting

[VxH]

[Also, 2 or more of the founders and/or senior executives of New Century Mortgage, which actually started the collapse of the Sub-Prime market, came from Long Beach Savings.]

 

 

Yep, Roland Arnal and those who followed his example are directly responsible for the subprime fiasco.  

 

He belongs in jail, not in the Netherlands representing the American People.

[hripka]

subprime lending was started (allowed) first in D.C. as in Washington, not O.C.

[VxH]

[subprime lending was started (allowed) first in D.C. as in Washington, not O.C.]

What company?

[hripka]

By the ‘company’ called the US Congress, the Federal Reserve and the OFHEO, and their combined lack of oversight, and the enabling that went with it.

[VOA]

bump

[VxH]

It's kind of a chicken and the egg thing.

 

What came first, the lobbyists or the policy that enabled them to become rich enough to manipulate policy?

 

Did congress empower Roland Arnall to create Long Beach Savings?  Did they force him to give up his banking license and create  ACC - whose sole mission was originate mortgages?   Nope.

 

Technically, the article title is incorrect - the Subprime pirate armada was built in Long Beach before it sailed to OC with Admiral Arnall at the helm.

 

Sorry, though I'm certainly not going to argue that Congress doesn't have corruption problems; the whole "but but but, the big bad government maaade us do it" excuse just does not fly.

[VxH]

[and their combined lack of oversight,]

 

I'm with you on that.  Maybe Barney Fife was busy tapping his toes in a bathroom stall at the Long Beach airport, or something, instead of doing his job.

 

------------------------------------------------------

 

During the House Financial Services Full Committee Hearing on "Recent Events in the Credit and Mortgage Markets and Possible Implications for U.S. Consumers and the Global Economy",  Chairman Barney Frank left the hearing in order to attend a meeting in support of legislation that would force American employers to hire homosexuals.   That says a lot about Barney's priorities.  

 

Barney "Fife" Frank.

Financial Services Watchdog

 

This watchdog only has one tooth.

Barney's boyfriend makes him keep it in his pocket

[hripka]

Notice that I said allowed and enabled.

Through deregulation, subsidies, lower interest rates, etc.

Nobody could start anything in Long Beach without someone out east (or maybe also Sacramento) giving the go ahead.

[VxH]

[Through deregulation, subsidies, lower interest rates, etc.]

 

Washington D.C. does not operate in a vacuum.  It's sad,  but apparently lobbyi$t$ have more influence there than the American people do.  Not surprising though,  especially given that a majority of the American people don't even bother to participate in the system.

 

Arnall and his merry band of thieving immitators scoped out weaknesses in the system and then systematically gamed the heck out of that system until the investors got wise to the fact they were being sold junk and pulled the plug.

 

Furthermore, the predatory industry lobbied hard to remove legislative obstacles that states had put in place. 

 

You seem to be suggesting "well gee, the whole system is corrupt... we can't punish anybody".  

 

I say we punish those who deliberately corrupted the system for their own benefit.  It should be done as a warning to anybody else who has a head filled with "Enron MBA" inspired notions.    Notions like, the creation of a corporate machine that systematically falsified data used to rate the securitized instruments produced by that machine.   Notions like deliberately and consistantly ignoring your own lending guidelines and funding loans before red flagged appraisals were reviewed by your outside contracted reviewers.

 

Congress didn't come up with those bright ideas... the corporate employers of the lobbyists did.  

 

I don't have a lot of confidence that anything at all will happen.   I think we're somewhere past democracy and sliding towards tyranny in the cycle described by Plato in his Republic.    Oligarchy over anarchy, throttled by the tyranny of the appetite.

 

[Nobody could start anything in Long Beach without someone out east (or maybe also Sacramento) giving the go ahead.]

You sure about that? 

Daniel Sadek played Orange County's subprime lending boom like a card shark dealt the ace and jack of spades.

Just five years ago he was selling cars.

Then, in January 2002, he anted up $250 for a state lender license and started selling home loans through his company, Quick Loan Funding.