Blair Nicholas Featured in New York Times Coverage of Former Countrywide Executive’s New Company Profiting from Bad Loans
March 4, 2009In The New York Times article “Ex-Leaders of Countrywide Profit From Bad Loans,” BLB&G partner Blair Nicholas comments on former Countrywide executives, including the company’s former president, Stanford Kurland, seeking to profit from the subprime mortgage crisis under the auspices of a new financial services company, the Private National Mortgage Acceptance Company (“PennyMac”). Kurland founded PennyMac with his own capital, backed by other corporate investors.
It is alleged that Countrywide, under Mr. Kurland’s leadership, aggressively pursued overtly risky lending practices, becoming “synonymous with the excesses of the housing bubble” blamed for exacerbating home foreclosure rates and contributing to the collapse of the subprime mortgage industry. Now, Mr. Kurland’s new company is taking advantage of the new bailout economy. In a deal contracted with the FDIC, PennyMac paid $43.2 million for $560 million worth of mostly delinquent residential loans remaining from the failure the First National Bank of Nevada. Its profit of 20 cents on the dollar will soon double under FDIC terms.
Mr. Nicholas, representing the Arkansas Teachers’ Retirement System and other institutional investors in BLB&G’s derivative suit against Countrywide’s former executives, characterizes PennyMac’s recent success as “ironic and tragic,” noting that Kurland is ‘”seeking to capitalize on a situation that was a product of his own creation…but then again, greed is a growth industry.”