60 Minutes Exposes World Savings' Lending Practices That Ultimately Brought Down Wachovia
2/15/2009
posted by N. Sioris
Kudos to Scott Pelley and 60 Minutes for another great investigative report about the culprits that brought down the U.S. economy and some of the largest banks in America.
Stumble It!How did the mortgage industry destroy itself and set off an economic collapse that ruined the finances of millions of Americans? Executives tend to hold themselves blameless, saying that no one could have seen the disaster coming.
Well, judge for yourself after you hear the story of Paul Bishop, who worked at the nation's second largest savings and loan. World Savings Bank was among the industry's most admired mortgage lenders. But Bishop says the kind of lending practices he saw were leading to a world of trouble that would ultimately result in billions in losses and a federal investigation.
"Three years before the housing market crash, Paul Bishop says he warned his superiors at World Savings that many of the mortgages they were granting were misleading and predatory.
Labels: 60 Minutes, Reverse Mortgage Loans, reverse mortgages, Scott Pelley, Wachovia, World Savings
posted by N. Sioris @ 2/15/2009
3 Comments
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3 Comments:
A problem with this story is that World Savings really seemed like one of the good ones. Countrywide and its ilk simply made loans, packaged them, and sent them on their way. At least World was a portfolio lender that kept the stuff and watched delinquencies closely. When I was working there, I remember the quick qualifier term used for someone who brought in 25% or more down. The asian community was the target here. The risk, apparently, was minimal. I also am a supporter of ARM loans, in general, but, again, when I was there, there had been talk of loan payments for less than what was due, but they had not started them, to my knowledge. This must have been geared up in the late 90's, like when the guy on the program said that just about anyone who was breathing had a loan and/or had refinanced. World prided itself on the ability to outsell the competition. It always had the money to fund loans. So, now we are down to the quality issue. I don't think there was much resistance in the appraisals area. And the systems areas would only be of help if the data in were true (garbage in no help from computers). So, that leaves underwriting. If 60% of the loans were coming from mortgage brokers, that could be the underlying issue. There must have been great pressure to "take" what was offered. If good people let bad loans get funded, then that was a real shame. In it's best years, World was a quality place. It came through the S&L crisis as the top dog, making Lincoln Savings and all the rest look like chumps. A ton of ex-World people really have taken it in the pocketbook. The 2006 merger moved World stock to Wachovia at about $55, as I remember. And World was a stock that roared right through the dot com era. It was going up through all those years, right up to the merger. But in less than a year, the Wachovia stock was down to $4, and it has dropped since under Wells. Tons of people owned that stock as their primary holding. Those folks are victims, too. I think there will be many more that come forward to talk. Michael Moore is looking for "squeelers". He can do good stuff. Maybe Herb Sandler goes to jail. Would be interesting to find out how he and all the big boys and girls at World handled their stocks in the Wachovia decline. If they got out near the top, then that would be a big part of the story.
Not such a good job by 60 minutes after all.
http://www.bankstocks.com/ArticleViewer.aspx?ArticleID=5678&ArticleTypeID=2
This interview is so disturbing. I worked for World Savings for 4 years and I cannot believe this guy. . Somebody go fight for us and tell this guy to suck it.
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