Showing posts with label New Century Financial. Show all posts
Showing posts with label New Century Financial. Show all posts

Thursday, March 27, 2008

Subprime lender used "significant improper and imprudent financial practices."

According to a report described in the Washington Post, "New Century Financial, the subprime lender that was one of the first casualties of the housing crisis, had a 'brazen obsession' with risky home loans that spurred it to engage in 'significant improper and imprudent' financial practices, according to a report released yesterday.

The long-awaited report examines what went awry at New Century, the second-largest subprime lender before it raced into Chapter 11 bankruptcy protection in April 2007, and says shareholders could recover a small fraction of the billions of dollars they lost in the process by suing companies and individuals who may have exacerbated the debacle.

Michael J. Missal, the lead investigator, acting at the behest of the Justice Department, pointed the finger at audit firm KPMG, which he said contributed to New Century's problems in 'troubling and puzzling' ways. In some cases, KPMG may have recommended departures from accounting standards, overruled the judgments of in-house specialists and caved under pressure from corporate executives, the report says."