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Meet Wesley Edens, The New "Subprime King"

Tyler Durden's picture




 

In early March, something terrible happened and almost no one noticed. 

Springleaf, the subprime lending unit of AIG (the poster child for misjudging credit risk via CDS) bought OneMain, another subprime lender that’s been relegated to Citi’s Citi Holdings trash bin for years. We called it a "match made in subprime hell." And we were right. 

Both Springleaf and OneMain are in the personal loan business, which means they lend relatively small amounts to borrowers who use the money for all manner of things. Some of these loans are then run through Wall Street’s securitization machine. The result: paper which generally falls into the always treacherous "other" or "esoteric" category of the consumer ABS space. So far, 2015 has seen about $10 billion in supply and total issuance of consumer ABS backed by "other" credits should come in at around $30 billion for the year - that’s up sharply from just $13.2 billion in 2014. As we discussed in detail when the deal first hit the wires, Springleaf and OneMain have together spearheaded the unlikely re-emergence of ABS backed by subprime personal loans. In 2013 for instance, Springleaf did a $604 million ABS deal backed by nearly 200,000 personal loans (average FICO 602) with maturities ranging from 2-4 years and carrying fixed rates as high as 35%. Springleaf was back at it not four months later, contemplating another $400 million ABS deal. In 2014, the company set up two VIEs for the purpose of selling almost $900 million in ABS backed by consumer loans, and in February, the company priced a $1.16 billion deal. For its part, OneMain did a $760 million deal in April of last year (backed by quite a few unsecured loans) followed by a $1.2 billion dollar deal around three months later. The company went on to do 2015’s first securitization backed by consumer loans, a January deal that was upsized to $1.2 billion. 

The important point here is that before Springleaf and OneMain’s efforts these deals were dead. As we said more than two years ago, "one thing that was hardly ever sold even in the peak days of the 2007 credit bubble were securitizations based on personal-loans, the reason being even back then everyone's memory was still fresh with the recollection that it was precisely personal-loan securitization that was at the core of the previous, and in some ways worse, credit bubble - that of the late 1990s, which resulted with the bankruptcy of Conseco Finance."

Earlier this month, Springleaf disclosed that the deal for OneMain may be delayed because unsurprisingly, the Justice Department has "expressed potential concerns." In what might very well be an effort to put a friendly face on what otherwise looks like an attempt to create a subprime lending powerhouse with some $14 billion in possibly-toxic receivables, Wesley Edens, chairman and co-founder of Fortress Investment Group, which has a majority stake in Springleaf took advantage of a profile piece in WSJ to remind the world that it’s “not a shameful thing helping people finance themselves” - even at 26%. Below are some notable excerpts from the piece. Consider Edens' comments along with what we've said above, and draw your own conclusions.

Wesley Edens still rues his decision not to bet against subprime mortgages before the financial crisis. That left Fortress Investment Group LLC, the private-equity and hedge-fund firm where he is co-founder and co-chairman, exposed to big losses that sank its stock price below $1.

 

On Wall Street, the best way to get over a losing trade is to bounce back with a winner. Mr. Edens is enjoying a surprising whopper: subprime loans.

 

A resurgence in loans to Americans with scuffed or limited credit is giving Fortress one of the largest financial windfalls in the history of the private-equity industry.

 

The New York company’s majority stake in subprime lender Springleaf Holdings Inc. has ballooned in value to $3.5 billion—putting the firm’s gain at more than 27 times Fortress’s original investment of $124 million in 2010. Buying the stake was Mr. Edens’s idea.

 

The giant gains have helped offset recent stumbles by Fortress in its “macro” hedge-fund business—and made Mr. Edens the new subprime king.

 

 

“It’s not how I want my epitaph to read,” he says of the label, “but it’s not a shameful thing helping people finance themselves. It’s not a bad thing.”

 

Today’s expanding subprime-loan market is different from the last one. This boom is fueled largely by auto loans, credit cards and personal loans, which appeal to borrowers straining under the limp economic recovery and puny wage gains.

 

More than one-third of all auto, credit-card and personal loans from the start of January to the end of April went to subprime borrowers, according to the latest available data from credit-reporting firm Equifax Inc. That is the highest percentage since 2007.

 

Lenders made 53.7 million auto, credit-card and personal loans in the first four months of 2015, up 46% from 2010. Originations of personal loans, like those made by Springleaf, are up 22% in the same period.

 

Mr. Edens and other Fortress executives are pushing hard to get even bigger in subprime lending. In March, Springleaf agreed to pay Citigroup Inc. about $4.25 billion in cash for the bank’s OneMain Financial unit.

 

If the deal is completed, Springleaf would become the largest lender focused on subprime in the U.S., with about 2.5 million customers and 2,000 branches.

 

Mr. Edens says Springleaf won’t contribute to a new subprime meltdown no matter how big it gets. The reason: Unlike lenders who sank during the financial crisis, Springleaf says it verifies each applicant’s income and won’t make the loan unless it is sure the borrower can pay it back.

 

“Lending to people without great credit wasn’t the problem,” he says. Instead, too many Americans got too much credit from lenders based on inflated real-estate values.

 

“A lot of people live paycheck to paycheck, and if they don’t have financing it’s not good for the country,” Mr. Edens adds. “This is a more humane way of people dealing with credit.”

 

Springleaf makes secured and unsecured personal and auto loans of as much as $25,000. All the loans have fixed interest rates. The average loan is about $4,300 and usually is repaid in 19 months. The company sees a potential market of 120 million Americans who need cash.

 

The average interest rate on Springleaf’s loans is 26%. Consumer advocates criticize the high rates on many subprime loans and say lenders often pile on additional fees with products such as credit insurance. Many borrowers have to get new loans to pay off old ones, consumer advocates argue.

 

Springleaf says high interest rates are needed because about 6% of its borrowers default each year. 

 

Springleaf has benefited from banks’ skittishness about subprime personal loans. At the end of the second quarter, the company had 958,000 customer accounts, up 11% from a year earlier.

 

Now the company is expanding in auto lending and other areas, though it has no current plans to make mortgage loans. Springleaf has told investors it will target customers with FICO scores of 500 to 750, especially those with scores of less than 699. 

 

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Thu, 08/13/2015 - 22:06 | 6424727 cossack55
cossack55's picture

What his epitaph reads is irrelevent.  That he has one soon is critical.

Thu, 08/13/2015 - 22:27 | 6424792 ZerOhead
ZerOhead's picture

FREE Angelo Mozilo

Thu, 08/13/2015 - 22:09 | 6424735 buzzsaw99
buzzsaw99's picture

salt of the earth. heartwarming really.

Thu, 08/13/2015 - 22:24 | 6424785 ZerOhead
ZerOhead's picture

Arsenic tribromide or mercury chloride?

Fri, 08/14/2015 - 00:19 | 6424985 Gaius Frakkin' ...
Gaius Frakkin' Baltar's picture

Yeah, like giving a suicidal person, a gun, some rope, and a bunch of pain killers. It's very philanthropic.

Thu, 08/13/2015 - 22:11 | 6424742 order66
order66's picture

If that isn't the American Dream I don't know what is.

Thu, 08/13/2015 - 23:39 | 6424938 I Eat Your Dingos
I Eat Your Dingos's picture

It's close but we could have Obama bailout subprime auto loans ....ObamaAUTOS for everyone. NOW THAT IS THE AMERICAN DREAM!

Fri, 08/14/2015 - 14:01 | 6426676 de3de8
de3de8's picture

I thought having a car was.a right

Thu, 08/13/2015 - 22:14 | 6424757 CHC
CHC's picture

I dunno - I don't see anything wrong with what he's doing.  Who really cares anymore anyways?

Thu, 08/13/2015 - 22:27 | 6424795 CheapBastard
CheapBastard's picture

My debt is solid AAA+; it's backed by the Full Faith that I'll pay it back. My word is the best mostest solid collateral you can have.

 

Right?

 

 

gafaw...gafaw...gafaw....

Thu, 08/13/2015 - 22:34 | 6424809 Seasmoke
Seasmoke's picture

Toss him in a ditch. He won't have any epitaph to worry about there. 

Thu, 08/13/2015 - 22:39 | 6424820 chunga
chunga's picture

Tyler I gotta take issue with AIG misjudging CDS credit risk. Hank Greenberg knew damn well they could never ever cover that risk, and didn't have to, because bailouts.

Greenberg got his bailout then Blankfein stole it from right under his pointy nose!

Fri, 08/14/2015 - 07:17 | 6425323 firstdivision
firstdivision's picture

Name me one insurance company that could survive if 50% of their customers filed total loss claims in the same week. 

Fri, 08/14/2015 - 07:45 | 6425363 Lumberjack
Lumberjack's picture

Remember the Allstate fiasco after Katrina? 

Thu, 08/13/2015 - 22:59 | 6424858 docinthehouse
docinthehouse's picture

This fucker is a loan shark.  I couldn't make it on a 26% loan and I have no debt!!!!   These people NEED the better interest ratet  to SURVIVE!  This guy and company suck the life out of the poor and

hardworking.    The default rate would be less than 1% if human beings were given a 4 percent rate and his fucking profits were 20% ROI.   This is a corporate LOAN SHARK WHO SHOULD BE EXECUTED!

 A financial pimp.  Scum.      on and on.....

Thu, 08/13/2015 - 23:52 | 6424950 Radical Marijuana
Radical Marijuana's picture

Loan sharks are nicer than banksters!

Fri, 08/14/2015 - 03:18 | 6425133 newworldorder
newworldorder's picture

 

True, - but they do not have the backing of the FED and the US banking system.

Thu, 08/13/2015 - 23:37 | 6424930 I Eat Your Dingos
I Eat Your Dingos's picture

“but it’s not a shameful thing helping people finance themselves. It’s not a bad thing.”

Mr. Edens says Springleaf won’t contribute to a new subprime meltdown no matter how big it gets. The reason: Unlike lenders who sank during the financial crisis, Springleaf says it verifies each applicant’s income and won’t make the loan unless it is sure the borrower can pay it back.

The average interest rate on Springleaf’s loans is 26%.

Springleaf says high interest rates are needed because about 6% of its borrowers default each year.

 

So somehow I was able to find 4 quotes that help discredit this MAFIA BOSS OF SUBPRIME. So to translate the 4 quotes in harmony we have:

It's not shameful to help people finance themselves with average loans of 26%. We won't contribute to a new suprime crisis because we verify borrowers, but 6% default and that is why we need higher interest rates.

 

 

I am 23 on my own and a ZHer...I have a subprime auto loan at 9% with no credit history. I had to take a subprime loan ugh. But seriously, paying 26% on average WTF people. 9% was a lot for me

Fri, 08/14/2015 - 01:12 | 6425050 Montani Semper ...
Montani Semper Liberi's picture

 The difference is that your lender has collateral in the form of an automobile that you are required to keep full coverage insurance on, while Geenleaf specializes in unsecured personal loans to usually desperate people (see my post below). Enjoy your twenties young man!

Fri, 08/14/2015 - 00:11 | 6424941 Radical Marijuana
Radical Marijuana's picture

ARE THEY MAKING THE "MONEY"

THAT THEY "LOAN" EX NIHILO?

Both Springleaf and OneMain are in the personal loan business, which means they lend relatively small amounts to borrowers who use the money for all manner of things. ... If the deal is completed, Springleaf would become the largest lender focused on subprime in the U.S., with about 2.5 million customers and 2,000 branches. ... Mr. Edens says“Lending to people without great credit wasn’t the problem ... This is a more humane way of people dealing with credit.”

Indeed, there would be a significant difference IF entities like Springleaf and OneMain were actually lending "money" which had already been created out of nothing by some other entity, and which Springleaf and OneMain had otherwise earned as their own "money," which then they lent to those who borrowed that "money." However, I suspect that Springleaf and OneMain must have access to the astonishing legalized counterfeiting privilege of making the "money" that they "lend" out of nothing, which "money" does not exist until the "borrowers" agree to take out their "loans."

Anyone know for sure the answer to my suspicions in that regard, which are based upon the hunch that a combined business of "2.5 million customers and 2,000 branches" could not exist without it having had access to that astounding privilege of being one of the privately controlled entities that are legally allowed to create the public "money" supply out of nothing as debts, whenever someone agrees to "borrow" that "money," thus enabling such magical mathematics to create that "money" ex nihilo.

If my hunch is correct, then deeper analysis of their situation, and their incentives, was not properly being presented in the article above, at least not in a clear enough way that I saw as being obvious. Of course, generally speaking, the majority of the content published on Zero Hedge tends to take for granted the background social facts that governments are ENFORCING FRAUDS by privately controlled banks. Hence, it would not be surprising if my suspicions were well-founded, regarding that entities like Springleaf and OneMain are "lending money" that did not exist until it was thereby "borrowed."

Generally speaking, our civilization is so totally used to being based upon established systems of legalized lies backed by legalized violence, that those tend to mostly be taken for granted. However, a deeper analysis of those ENFORCED FRAUDS demonstrates the ways that our civilization operates with attitudes that tend to deliberately ignore the principle of the conservation of energy, and misunderstands the concept of entropy in the most absurdly backward ways possible.

By and large, our civilization has become so totally based upon the long history our political economy being built upon governments ENFORCING FRAUDS by privately controlled banks, that almost nobody appears to notice and discuss the deeper issues regarding that, but instead, tends, at best, to focus only on some of the more superficial aspects of that basic situation that money is measurement backed by murder, because the debt controls are backed the death controls, inside the context where private property is based on backing up claims with coercions, and therefore, private property does not exist outside of some system of public violence.

Overall, it is almost impossible for most people to perceive the degree to which they are taking for granted living inside of a civilization based on fundamentally fraudulent financial accounting systems. The INTENSE PARADOXES that follow from those triumphantly ENFORCED FRAUDS tend to be too profound for most people to want to become aware of, especially since actionable intelligence mostly comes from taking advantage of the opportunities which exist INSIDE ENFORCED FRAUDS.

There is no apparent practical point that follows from recognizing the degree to which our civilization has become based on triumphant organized crime, manifesting in the forms of governments ENFORCING FRAUDS by privately controlled banks. Almost everyone is totally used to and inured to taking that so much for granted that they do not reflect upon how those systems are basically symbolic robberies, achieved through legalized counterfeiting. In turn, that then fits into the overall dominance of the biggest bullies' bullshit world view, which constitutes a Wonderland Matrix Bizarro World, whereby our civilization continues to be able to act in ways which are based on not seriously considering the principles of the conservation of energy and increasing entropy, but rather, based upon deliberately ignoring and disregarding those principles as much as possible, so that the established systems of organized lies operating robberies can continue unhampered by more awareness about that.

For those few that have a sufficient macabre sense of humour (which has not yet been worn out from overuse), I offer my comment here, as something to stimulate those few who may be interested to think about the BIG BACKGROUND ISSUES regarding the systems of incentives that exist for any entities that can legally make the public "money" supply out of nothing, when they can "lend" that, due to someone willing to "borrow" that, especially when those who thereby are able to get "borrowers" to agree to "borrow" that "money," which did not exist until it was thereby "borrowed," are most often people who get to take their slice of that "money" made out of nothing home with them, and keep that, regardless of whatever else later may happen to the original situation founded upon that MAD Money As Debt system.

I tend to believe that pretty well nobody can fully comprehend the meaning of the post-modernizing systems of ENFORCED FRAUDS becoming globalized electronic frauds backed by the threat of the force of atomic bombs. Those systems whereby governments ENFORCE FRAUDS by privately controlled banks have been so totally triumphant for so long that almost everyone takes them for granted, despite the degree to which those require deliberately misunderstanding the basic laws of nature as much as possible, in order to then be able to not think that there is anything wrong with political economy based upon such ENFORCED FRAUDS.

Moreover, it is my view that the few who do tend to become somewhat superficially aware of the degree that our civilization is operating through fundamentally fraudulent financial accounting systems, which make a mockery out of the basic laws of physics, in order to be socially accepted and triumphant systems, STILL then tend to promote superficial "solutions" to those profound political problems, which do not admit and address the deeper analysis of the nature of those political predicaments.

For generations, "money" made out of nothing as debts has been enabling almost everything that could be robbed already being robbed, through those frauds being forms of symbolic robberies, that the resulting situations have become so extremely unbalanced that it is almost impossible to perceive how extremely unbalanced that situation has actually become! In that context, it would be way too late, and too little, and too trivial to matter much anymore, to merely fix those problems that there exist systems of legalized lies, backed by legalized violence, through which governments ENFORCE FRAUDS by privately controlled banks.

If I am correct in my suspicious hunches above, then Springleaf and OneMain were entities that were allowed to grow their businesses on the basis of the background political economy of ENFORCING FRAUDS. If so, then, as typically the case, focusing upon their relatively superficial excesses, and the problematic consequences from doing that, tends to be presented without any more general admissions that address the BIG PICTURE of political economy based upon ENFORCED FRAUDS, in ways whereby that civilization is actually being dominated by runaway triumphant organized crime, which therefore means that civilization has become an expression of psychotic criminal insanity.

Subprime loans are merely superficial symptoms of the deeper diseases, which eventually become, upon deeper analysis, that our civilization is almost totally based upon the history of social successes through backing up lies with violence, resulting in the wide-spread dominance social attitudes based on evil deliberate ignorance and denial of the ways that our political economy operates through ways that disregarded and inverted the most basic laws of nature, in the most thoroughly systemic ways, in order that the social systems based upon ENFORCING FRAUDS could continue to operate, and grow at an exponential rate ... Given that our political economy is based upon ENFORCING FRAUDS, and that various people tended to become proportionately successful within those systems by operating as professional liars and immaculate hypocrites, that is the interpretation that I make of the statements above attributed to "Mr. Edens and other ... executives ... pushing hard to get even bigger in subprime lending."

The degree to which our political economy is based upon governments ENFORCING FRAUDS by privately controlled banks is the degree to which our civilization has become based upon MAD criminal insanity, which is roughly about 99% so at the present time. Moreover, in my view, almost all of those few to superficially notice those problems continue to mostly STILL stay within taking for granted the same banksters' bullshit frame of reference when they promote their favourite bogus "solutions" to those problems. However, those problems are far MORE PROFOUND & INTENSELY PARADOXICAL, due to the degree that the social successfulness of systems based upon ENFORCING FRAUDS, for generation after generation, after generation, have resulted in the overwhelming vast majority of people deliberately ignoring and misunderstanding the most basic laws of nature to the most extreme degrees possible.

While some of the leading edges of the runaway systems based upon ENFORCING FRAUDS are noticed and discussed in various Zero Hedge material, such as the apparent lunacy of the central banks, and the automated scamming done by HFT algos, and the peripheral threats of subprime loans, and similarly the threats from "subprime" sovereign debts, almost all of that continues to take too much for granted the basic ENFORCED FRAUD MADNESS.

Furthermore, those entrenched systems of ENFORCED FRAUDS becoming the foundation of the entire political economy, have achieved the levels of collective social psychosis that I have outlined above, regarding how those kinds of fundamentally fraudulent financial accounting systems must deliberately ignore and invert the basic laws of nature, in order for those ENFORCED FRAUDS to continue to grow more and more socially successful, as those are STILL doing at the present time, at least from the perspective of those who are inside of those systems, accumulating more of those social tokens we call "money."

The systems of legalized lies, backed by legalized violence, which we are living within, were made and maintained by the most psychopathic people, and their degree of social successfulness corresponds to the degree to which civilization as a whole has become psychopathic. Of course, human beings can NOT actually violate the laws of nature, but they can continue to deliberately ignore and invert their perceptions of those laws of nature, within the realm of politics. Since the only things that exist are the dynamic equilibria between different systems of organized lies operating robberies, the financial systems based upon ENFORCED FRAUDS are actually based upon those frauds enabling symbolic robberies. That is what entities like Springleaf and OneMain are actually doing, only in slightly more obvious ways than other similar entities are also doing.

The currently existing dynamic equilibria have become EXTREMELY UNBALANCED, due to the degree that the ENFORCED FRAUDS that those are based upon have become so socially successful, in the manner that I have outlined above, namely, almost everyone is living inside of a Wonderland Matrix Bizarro World, where the basic laws of nature are being deliberately ignored and/or misunderstood in the maximum possible ways, by the largest possible number of people, in order that our currently established political economy can continue to operate in the manner that it is accustomed to.

Fri, 08/14/2015 - 00:11 | 6424968 chunga
chunga's picture

The foolish desire/demand for constant growth just can't happen organically anymore, so it has bee replaced with fraud. I make a joke about it a lot but I believe it's true. How do you steal money from people that don't have any? Just give it to them.

It isn't really money though, it's ex nihilo or conjured like black magic from nothing. Doling out fake money and enforcing it's malicious use is now an industry. I believe it to be a sad statement about humanity and I see nothing bright on the horizon unless systemic rampant fraud is stamped out. That won't happen without a heavy duty uprising.

Fri, 08/14/2015 - 00:16 | 6424976 Radical Marijuana
Radical Marijuana's picture

chunga:

Ha! LOL!

"How do you steal money from people that don't have any?

Just give it to them."

I laughed out loud at that excellent summary of Bizarro World!

Fri, 08/14/2015 - 00:18 | 6424984 chunga
chunga's picture

Here's the enforcement piece.

SEC mulled national security status for AIG details

http://www.reuters.com/article/2010/01/25/us-aig-coverup-exclusive-idUST...

Fri, 08/14/2015 - 12:53 | 6425203 Radical Marijuana
Radical Marijuana's picture

Yeah, chunga, I remember back then watching the news stories unfold how the psychotic notions regarding "national security" became extrapolated to become alleged necessities to both bail out the biggest banks, while simultaneously keeping the details secret.

Not too long afterwards, Holder was bolder, and stated it as a doctrine that the big banks were too big to jail. Step by step, the banksters have become the Fraud Kings, the new royalty, which are effectively above the rule of law.

From the beginning in 1947, it appears to me that the concept of "national security" was transformed into being that the best organized gangs of criminals, the worst psychopaths, were going to be able to operate from behind the veil of "national security." Of course, we are living in times when the cliches about exponential growth become increasingly blatant truisms (although the projected issues with respect to overshoot have not yet been significantly seen.) But nevertheless, the patterns are mainly that each new level of ENFORCED FRAUDS are more flabbergasting than the previous.

I regard the combined money/murder systems as being like state religions, with the two most significant forms of those being the monetary system and national security. Of course, when those two multiply each other, they become orders of magnitude bigger. Hence, the trends towards "national security" being more and more applied to justify the treatment of the big banks' roles in the monetary system appear to be running amok, towards being amplified to astronomical sizes, which can no longer be fully comprehended.

One of the ways that I express it are that the trends towards effective privatization of the public "money" supply, which are already about 99% achieved, are being followed by the effective privatization of the public "murder" systems, which I would guess has been about 75% realized.

For all practical purposes, the democratic republic's rule of law is already dead, while there appear to be no reasonably realistic ways to fix those problems. The debt slavery systems have already generated numbers which have become debt insanities, which are repeating in fractal patterns, cascading from the top down. The rise of payday loans, and so forth, can be seen as the penetration of the patterns of debt insanities through the lower layers of the social pyramid systems.

My basic view continues to be that those debt insanities must necessarily continue to get worse, faster, until they provoke death insanities. I do not think that is going to be any kind of a "good thing." Rather, I would recommend that the only better things would require enough people better understanding the problems, in order to radically change the ways that they perceive those problems. Of course, that seems to be politically impossible at the present time ...

P.S.

Between the time that I posted my previous reply, and this reply, by coincidence, I just watched this portrayal of "death insanities:"

https://youtu.be/bkcC36NySVA

A movie presentation of reactionary revolution for mainstream morons, that typically follows through from relatively correct, but superficial, analysis of the political problems, to then present superficial "solutions," which would necessarily make things get even worse, faster ... Nothing presented in that movie was remotely close the kinds of intellectual scientific revolutions which would be necessary to cope with the existence of globalized electronic monkey money frauds, backed by the threat of force from apes with atomic bombs.

Rather that movie was merely a dramatization of extreme death insanities, which were entangled in their own apparent smugness, as a kind of flip side of the more typical Hollywood propaganda movies.

Fri, 08/14/2015 - 03:55 | 6425154 22winmag
22winmag's picture

The American Revolution was a heavy-duty uprising and when the broke farmers who fought in it returned home we all know what happened.

 

https://en.wikipedia.org/wiki/Shays%27_Rebellion

Fri, 08/14/2015 - 04:47 | 6425205 Radical Marijuana
Radical Marijuana's picture

Actually, 22winmag, I knew much less about those events before I read through that Wiki article that you kindly linked.

Fri, 08/14/2015 - 07:52 | 6425381 SSRI Junkie
SSRI Junkie's picture

same here, good reading

Thu, 08/13/2015 - 23:50 | 6424946 Richard Head
Richard Head's picture

Wesley Edens looks like a serious creeper.

Fri, 08/14/2015 - 01:26 | 6424979 Montani Semper ...
Montani Semper Liberi's picture

 Back in my bad old days around 15 years ago, I took out a $3500 personal loan with greenleaf to make ends meet after a divorce and college expenses for my daughter. My ex filed for bankruptcy soon after the divorce and one of the joint credit cards she agreed to pay off (I had the other, much larger one) became included in that and I found myself suddenly in a sub-prime situation. After working all the OT the company would give me for a few years (becoming a wage slave), I was able to pay it off 6 months early (much to their chagrin, I'm sure). I will say that that money did tide me over, as I was too ashamed to go to my mom or brother for a loan. Too prideful, I suppose. Pride cost me a lot of money.

 I would always stop by OneMain in person to pay my installments. I recall the "loan officers" were always on the phone asking some poor sclub about their past-due payments, while there were hard luck looking customers in the chairs waiting to be sheared. Ahh, Good times!

 Now, after more than ten years, I am constantly receiving letters from Springleaf and OneMain with "checks" inside for various amounts with the literature telling me all I have to do is sign my name and I'll have that money right away for bills, vacation, home repairs, etc. One of these letters arrived yesterday offering me $3750 at 27% APR. The 27% APR was in bold letters as if it was some kind fantastic deal!

 

Fri, 08/14/2015 - 00:30 | 6424995 natxlaw
natxlaw's picture

There is no freakin way that the default rate on those loans is 6%. No way. The default rate on folks with great credit is would be higher than that in the present environment. I am calling B.S. on those numbers. I am betting you those default numbers are based on the number of loans defaulted on as opposed to the percentage of dollars lent that wind up defaulted on.

Fri, 08/14/2015 - 08:34 | 6425459 deadelephant
deadelephant's picture

Either that or they are using the student loan definition of "default".  As long as you are paying something, you can't say that's default.  Right?

 

Fri, 08/14/2015 - 00:30 | 6424996 natxlaw
natxlaw's picture

There is no freakin way that the default rate on those loans is 6%. No way. The default rate on folks with great credit is would be higher than that in the present environment. I am calling B.S. on those numbers. I am betting you those default numbers are based on the number of loans defaulted on as opposed to the percentage of dollars lent that wind up defaulted on.

Fri, 08/14/2015 - 00:44 | 6425016 dogismycopilot
dogismycopilot's picture

Poverty Pimp. He just needs a BMW with a fur dashboard and a purple robe and fuzzy cowboy hat.

Fri, 08/14/2015 - 03:50 | 6425152 22winmag
22winmag's picture

At least he is pimping something people want (a nice car, and yes, ultimately to live in poverty).

 

Surely the guy pimping pharmaceutical drugs to your local hospital and the guy pimping weapons systems to the gov't are worse?

Fri, 08/14/2015 - 04:55 | 6425214 cossack55
cossack55's picture

With the Pharmapimp and Weaponpimp at least the mark gets to die.  Hard to make a corpse a slave (barring voodoo, of course)

Fri, 08/14/2015 - 05:23 | 6425237 22winmag
22winmag's picture

Can I borrow some of your insights, or at least rent a few?

Fri, 08/14/2015 - 08:10 | 6425412 Downtoolong
Downtoolong's picture

 

it’s “not a shameful thing helping people finance themselves” - even at 26%.

 

Every pimp, prostitute, drug pusher, cigarette seller, etc. has a similar mantra. This one works for all of them and Wesley too:

 

it’s “not a shameful thing helping people fuck themselves”.

   

Fri, 08/14/2015 - 08:55 | 6425510 SMC
SMC's picture

+1E99 Well said.

Fri, 08/14/2015 - 08:16 | 6425427 GMadScientist
GMadScientist's picture

Sorry, I cannot trust a man with a face like Larry fucking Bird. Nopenopenope.

Fri, 08/14/2015 - 08:58 | 6425519 besnook
besnook's picture

i actually know of a person collecting 600 dollars /month social security who was extended a loan by one main. what can possibly go wrong? she was also extended a 2000 cedit card by home depot.

is there a way to short this fucker. there is nothing shameful about shorting a scumbag loan shark. it is a good thing to make money from dirtbags.

Fri, 08/14/2015 - 09:46 | 6425650 Dawgeatdog
Dawgeatdog's picture

He inherited the subprime mantle from herb and marion sandler.  They're all beyond the law, so as long as they're making money, its alll good. 

Sat, 08/15/2015 - 07:45 | 6428592 theprofromdover
theprofromdover's picture

27% APR? Bargain.

-half the country must be paying nearly that on credit cards or exceeding overdraft limits.

Real short term desperate loans across the civilised are usually more than 1000% APR

 

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