New Century – Case In Point

Since the downfall of New Century is practically history I wasn’t going to write this article, but after reading the Companies History from their web site there were several things that need to be said.

New Century is a classic example of the ideal modern business. This is what everyone dreams of; making outrageous money moving other people’s money. Yes, they brought home ownership to difficult to finance individuals, but in the process they became one of the preferred vehicles for property speculation. They had to be so leveraged out that a relatively small dip in housing, not commercial real estate, brought the company down.

This was a young company that made its first loan in 1996 and went public in 1997.

From the Company History section of their web site:

“As the company has grown, so has recognition of its success. The company was named to FORTUNE Magazine’s list of “FORTUNE’s 100 Fastest Growing Companies” – ranking 12th in 2003 and third in 2004. In 2005, it ranked third on The Wall Street Journal’s “Top Guns” list of the best performing companies…”

“…New Century kicked off the “New Shade of Blue Chip” brand identity campaign in February 2005, with the message that the company wants to be seen as a modern blue chip company, while striving to become a world-class mortgage company. New Century’s goal is to become one of the top 10 U.S. mortgage companies for volume and one of the top five for revenue.”

“We’ve achieved a lot in our first 10 years,” says Brad Morrice, Vice Chairman, President and COO, New Century Financial Corporation, “but as I like to say, for New Century the best is yet to come!”

From the New Century web site the company peaked last year with 6,800 employees. And from a Los Angeles Business from bizjournals article they are currently laying off 2,000 more leaving only a 250 “corporate team” to finish burying the company.

Our systems award the “fast-buck” and puts up road blocks to the slow solid growth type businesses. One look at the current budget before Congress shows draconian cuts in the programs that aid small business while heaping on additional taxes and regulation. Common sense just isn’t popular in our financial and regulatory circles.