To give my previous letter and my reply some context, I would like to re-mind my critics that I am qualified to pass comment because I was the managing partner of one of the largest sub-prime originators in the market.
I led the firm successfully, culminating in its sale to a big US investment bank. My time at the helm allowed me to gain insights into the inner workings of the capital markets, areas that most brokers and packagers know nothing about.
I thought that the vitriol poured by the usual suspects was tediously predictable. I have read my letter again and don’t believe I accused the packaging community of any crime. I merely pointed out the circumstances in which it flourishes.
My point is that the days of the business-to-business packager are numbered – the middle man’s middle man cannot resist the force of margin compression. Something has to give and in my opinion it will be packagers.
I too have been part of the sub-prime market and its ‘pass the parcel’ game. I have had to deal with 3% proc fees, I’ve laid off half my staff and my firm’s volumes are down 60%.
And for the record, I was once a used car salesman. I tell the truth and the truth hurts, as evidenced by the angry responses my letter generated. Let’s wait and see who’s right.
National & Capital