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|Monday, October 19, 2009|
It was 7:30 a.m. on a recent morning and my brain fog was still thick. I was invited to attend the Portland chapter meeting of the Entrepreneurs’ Organization, whose speaker that morning was Mark Moses, a CEO coach and motivational speaker from Irvine, Calif.
I sat next to an owner of a local roofing company, and as we ate, he told me that his very small business was about to go bankrupt. He had started it a few years ago when the housing boom was still surging. I asked him what he would do, and he shrugged and said he would just start looking for a job, any job, because keeping his family safe was the most important thing. The room was full of people from real estate-related companies, and everyone was feeling the pain.
Moses then got up to deliver his spiel. He started his first company, a painting service, when he was 19; sold it in 1992 and founded Platinum Capital Group, a mortgage company that despite its “ups and downs” was wildly successful. Then his son got cancer, but thankfully recovered, and he began competing in Ironman events to raise money for charity, eventually selling his business in 2006 and moving on to teach other CEOs how to be successful. Motivational tagline: “On your mark, get set, grow!”
Along the way, Moses flashed slides of his youth, the time he rode an elephant into a staff meeting, and then several newspapers stories about his business dealings in Southern California. At one point he showed a Wall Street Journal clip about the breakup between him and an early partner and remarked that basically reporters lie to get the story they want. A pretty sweeping remark that got my attention. Then the fog began lifting enough for some of this to sound familiar to me, and then Moses helped me out.
One of the news stories he flashed was from the daily newspaper The Orange County Register.
I was the senior editor in charge of business coverage at The Register from 1995 to 2003 and Platinum Capital was a company we wrote about several times, along with the subprime mortgage industry that was coming under fire. It took me a while to recognize the story Moses was telling because, well, the gloss on it was just a little different from how I remembered it.
Platinum until 1999 sold a type of controversial loan that gave homeowners 125 percent of the equity of their property. Homeowners often used these types of loans to pay off credit cards and other debts. But the loans also came with high interest rates and fees, and borrowers who found themselves behind in payments sometimes lost their homes.
Platinum at its peak in 1997 sold more than $200 million annually in loans. Inc. magazine in 1999 named it one of the nation’s fastest growing companies.
But eventually Wall Street stopped backing the loans, and Platinum in 1999 had to fire most of its staff and regroup, and moved into the subprime market. Orange County was a breeding ground for lenders in the subprime industry, which typically targeted the elderly and people with low incomes or bad credit histories.
Here’s what The Register wrote in April 2000: “Platinum Capital Group, a sometimes-flamboyant lender that served borrowers with blemished credit, shuttered its high-risk lending business Friday and fired about a fifth of its employees. The elimination of 38 jobs marks the end of the company's year-old experiment in subprime lending, which specializes in low-income and poor-credit borrowers.”
It went on to report that Platinum planned to channel its resources into traditional loans and to quote Moses as saying: “I had a vision to build a national call center for the home-equity subprime business. I’m deeply disappointed that it didn’t work.”
Moses sold out to his business partner in 2006. When Moses told that to the Portland group that morning, everyone in the room knew what lucky timing it was. They asked him about that, selling before the whole housing house of cards collapsed. He called it 10% intuition and 90% good timing. On Platinum Capital’s current website, Moses isn’t mentioned anywhere in the history of the company.
I wanted to ask my tablemate how it struck him that their motivational speaker was someone who got out of the housing-related industry just before the crash, while he and many others in the room were caught in the undertow and fighting to stay afloat. But I had to leave before I got the chance. Maybe I’m one of the few who’s up for irony so early in the morning.
As to that sweeping remark about the ethics of reporters, it’s not true, of course. I’ll agree that every industry has its bad apples, but no group should be painted with such a broad, inaccurate damning brush.
Just ask those who used to be in the mortgage industry.
Robin Doussard is the Editor of Oregon Business.
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