The Contagious Canary

In numerous prior posts -- "He Was Only Kidding, Right?" "Dangerous Delusions," "More Fallout from the Subprime Debacle," "Is the Subprime Finance Meltdown Growing Contagious?" "Tip of the Iceberg," "It's All About the Incentives"
-- I repeatedly challenged the self-serving and often delusional claims of economists, regulators, analysts, commentators, politicians, and others that the debacle in the subprime mortgage finance sector would somehow remain "contained." My view was -- and is -- that the meltdown that occurred was like the canary in the coal mine, signaling the start of a confidence-sapping contagion that would eventually escalate into a full-blown credit crunch. So far, events seem to be bearing this out. A post at the OCRegister Mortgage Insider blog on recent layoffs at LendingTree, the leading online lending and realty services exchange, suggests things continue to move in an ominous direction.

LendingTree of Charlotte, N.C., which has a major presence in Orange County, laid off 20 percent of its 2,200 workers nationwide today, the company said.

Rebecca Anderson, a spokeswoman for the company, said that although a majority of the workers are in Irvine, the layoffs are evenly distributed across Irvine, Charlotte and Jacksonville, Fla. That would equate to 440 layoffs, including 147 or so in Irvine.

She declined to say which divisions are being impacted the most.

Anderson said the company is getting more consumer interest, but less of that is being translated into loans funded. She said the subprime correction has now spread to all credit categories of loans.

"Our margins have been squeezed across all loan types and all products," Anderson said.

Anthony Hsieh, who founded Home Loan Center before it was sold to LendingTree, is leaving his post of chief executive of LendingTree Loans in June. The division funds loans.

"He is actually going to build and pursue full-time a marine business ...to distribute certain brands of yachts on the West Coast," she said.

Kind of makes me think of that cynical old Wall Street query: Where are the customers' yachts?

Comments

[Brian]

You know what this reminds me of.... Back in early 2000 when the likes of Frank Quattrone were wheeling and dealing and creating all kinds of insane renumiration form themselves saying "Dont worry, join the party, all is well"..pumping ridicilous .CON (yes that's CON) stocks with PE's of 200+ that were losing millions internally right before the burst.

And then I saw an interview way after the fact when the dust settled by an analyst who was being grilled by some anchor who said the following.
"When we told the person giving the interview (and their huge TV audience) that we believe in about 3-5 years this would be a great stock to own it was actually a code for Sell this piece of crap as fast as you can and dont look back".

Like I said before folks, Hucksters, con artists and scammers, they are all playing a roll. And the stupid lumpen will never learn because he is a fool and will always get bamboozled, because thats his roll, to be stupid.