Bear Stearns Collapse, JP Morgan to Bail Them Out
Posted on March 30, 2008
Filed Under Subprime Mortgage |
Another big one bites the dust. Amazing. Bear Stearns joins the ranks of the fallen Goliaths. Shocking as it may seem, however, I can’t say that I am shocked. The reason is that I have had firsthand insight into their internal operations - primarily through a stint I did at their subsidiary, EMC Mortgage.
EMC Mortgage was (still is, I suppose) a mortgage trading company that buys mortgages originated by lenders and brokers and then services them. EMC was largely managed directly by Bear. That means it was subject to Bear’s policies and procedures, and was tightly controlled by Bear.
During my time there, I basically came to see and feel that Bear was not necessarily a company that cared a whole lot about its people - at least, and especially about the EMC worker bees. As stated by the president of EMC mortgage, John Vella, the company’s mission statement was to service loans better than anyone else - or something to that effect. Whereas many companies have a stated and communicated vision such as being a great place to work, there was nothing like that stated in the EMC or Bear written corporate policies that could be found by someone working there. In fact, it would be easy to believe that their executive mission might be to be the worst place to work in America. And I am not kidding either! In fact, when I see Catbert, the evil HR director, I see the EMC marionette and the Bear Stearns hand pulling the strings.
The question I am positing is this, could a company’s human resources practices be tied to their failure or their success? I have heard that Southwest Airlines is a great place to work. I have also heard that they are viewed as extremely successful. What do you think?
In my personal experience with EMC, I was treated unfairly, and was misled by my boss who hired me. My position had about a 100% turnover rate in the 5 slots of my role for a rolling 12 month period. And, within one month of my leaving, half of my team vacated. (Hint: there was a reason for this, folks).
It was political, and ugly - corporate conspiracy in motion. I personally did not witness anything illegal, but I did see good people getting treated like… well, dirt…
In my case, I was lied to by top executives and set up to fail. Don’t worry, I have retained incontrovertible evidence and have my ducks in a row. Upon leaving, I contacted the top people in Bear Stearns’ HR department in New York. Though I was basically shafted out of my performance bonus during their touted financial banner year of 2006, my goal was to at least share with HR about some problems that could be addressed to help make EMC a better company. Instead of dealing with me in good faith, they got their legal department in the loop immediately to determine that they had no legal liability to me. I reiterated that I was not pursuing legal recourse, but just wanted them to listen.
However, they came back and rendered their judgement that basically I was the one in the wrong - not them. But, now they are the ones going out of business.
Let’s take a quick look at another legacy mortgage company with which I also have had firsthand experience - Countrywide Mortgage. Countrywide was also very political, and things they did didn’t make sense to me. I know a lot of people from there also who suffered and thought it was a bad working experience. And, considering the 2007 bailout of Countrywide, it looks like there might be some correlation between being known as a bad place to work and being a financially failing company.
So, to my point. With mortgage companies, as with any financial institution or any other type of company (Arthur Andersons, Enrons, World Con), there are good ones and there are bad ones. And just because they are big, does not necessarily mean they are good. What you hear about people’s experience working for a company has a lot to do with the soul of the company. In fact, the attitude of the person you talk to on the other end of the phone might be a very good indicator of who you are dealing with.
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