The Perverse Ethics Of Wall St., Countrywide (CFC) Refugees Turn Vultures

"There are no second acts in American lives"–F. Scott Fitzgerald

Several former Countrywide (NYSE: CFC) executives are starting a new company, with the support of financial company Blackrock (NYSE: BLK) to buy troubled mortgages. These are, in all probability, the same managers who oversaw the subprime lending to people who could not afford their mortgages in the first place. It might appear to be irony, but it would be more appropriate to call it the kind of lapse in ethical behavior which so endears Wall St. to mainstream America.

Today the ex-Countrywide crowd will announce the launch of a new firm, Private National Mortgage Acceptance Company, "to raise more than $2 billion to buy distressed mortgages on the cheap, work with borrowers to restructure them, and then resell them as performing mortgages at a profit," according to The New York Times. Blackrock, the investment management firm run by Laurence Fink, helped put the entity together. Fink is a savvy fellow. It is odd that he put himself in a position to be pilloried by the press and ethics professors just to make a few hundred million dollars.

The brand new enterprise is not without risk. If it buys mortgages now and the market falls sharply later, Fink and his friends could be left holding paper without much value. William Gladstone said that "Justice delayed is justice denied". In the case of the former Countrywide group, a series of mistimed investments may make Gladstone eat those words. There is always that hope.

Douglas A. McIntyre