Will anyone listen to new controller?
What won what where
Both the CEO and chairman have stepped down as the struggling savings and loan reports a second-quarter loss of $218.9 million. That's the fourth consecutive quarterly loss and it raises more questions about the company's viability. Indeed, Newport Beach-based Downey Financial announced this morning that it would be looking for "strategic alternatives," which is usually code for putting a company on the block. The resignation of Maurice McAlister as chairman is especially significant because he has run the company since 1957 - often with an iron hand, his detractors say. As we've been reporting, Downey is considered in iffy financial shape because its percentage of non-performing loans is so high – and because many of those loans were given to borrowers with shaky credit histories. Earlier this month, Lehman Brothers said it would stop covering the stock because of the company's uncertain outlook. Shares are trading at just under $2 a share, down around 28 percent. Here's an early LAT story.
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*I was just on Patt Morrison's show on KPCC to discuss the Downey situation (bank analyst Bert Ely was also a guest). Also, Tom Petruno at Money & Co. discusses the role of short sellers in the collapse of Downey stock.