Britannia Radio

BY CHARLES LAURENCE

FIRST POSTED MARCH 9, 2009

Stanford L. Kurland was a name familiar to few outside the banking industry until he was nominated as 'Creep of the Week'. Now he stands to test the new media's powers to pillory people in the market place, not to mention the limits of tolerance of the beggared American consumer.

You could say he's brilliant. Anybody still holding a job on Wall Street probably does. But rarely has an obscure name aired in a news story set such a firestorm of rage. A week ago, a Google of his name came up with a few dry reports on the progress of the company of which he was President. Now it triggers an avalanche of blog-born outrage which has spread across the web.

This, in a nutshell, is Stanford Kurland's excellent adventure: as President of Countrywide Financial, until the meltdown of America's largest domestic mortgage lender, he invented and peddled the sub-prime mortgage; he bailed out in time to cash a personal $200 million-worth of shares; now he is buying back these same toxic mortgages for pennies on the dollar, and making millions all over again.

It’s like an arsonist buying the charred remains of a house and reselling it

Many argue that the match which lit the fuse for financial collapse was the 'teaser rate' mortgage. That's the one when you sell a part-time car mechanic a $500,000 mortgage against his $250,000 home with the spiel that by the time the starter interest of, say, 3.5 per cent balloons to eight, he'll be earning enough to meet the more-than-doubled payments, and the property will be worth $500K, easy. This idea was minted on Kurland's watch. It sold so many mortgages that Countrywide's 'portfolio' mushroomed from $62bn to $463bn in six years.

Kurland is now performing his new trick on taxpayers' money. It works like this: Washington bought the toxic assets left over from the bundling of all those 'predatory' mortgages; Kurland buys them back at their current, fractional value; and finally, he re-configures the loan to make it affordable, which he can do because the $500,000 owed is, to him, more like $50,000. If the punter still can't pay, Kurland gets the house.

Genius. The details from his biggest deal so far was reported by Eric Lipton in his scoop for the New York Times. Kurland paid the government's Federal Deposit Insurance Association $43.2m for $560m of defaulted mortgages left behind by the failed First National Bank of Nevada. If he can 'recover' even a minority of those mortgages, he earns millions.

"It is sort of like the arsonist who sets fire to the house," said Margot Saunders of the National Consumer Law Centre, "and then buys up the charred remains and resells it."

The Times' own columnist Gail Collins used a different simile: "It's like Jeffrey Dahmer (the cannibal homosexual serial killer) selling body