OUCH! Nearly half their staff- 3200 individuals loosing their jobs.
Was this necessary? And who is to blame?
There is enough blame to go around the room. Obviously, the senior management over at New Century under investigation bears a lot of responsibility. Evidently, their Wall Street partners became alarmed when they were informed how little cash New Century had on hand on a recent call- as per a WSJ article.
Was it over reaction? Yes, but its understandable with the losses that have surfaced. As one Wall Street mortgage professional said:"I wouldn't say we are exactly bullish on this market right now. "
However, had their Wall Street partners not over reacted, perhaps things wouldn't have deterioriated so quickly or so badly.
Here is the problem with publically traded companies- managment tends to want to say only good things. They're incented to do so. Who is going to give management a bonus or kudos for alerting them to a problem?
Well- I hope New Century is able to navigate through bankruptacy and emerge as a viable entity. Subprime lending isn't evil, although clearly there have been abuses. But the fact is competition is good and healthy and New Century is perhaps a victim of its own competitive activities.
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