Failure: H&R Block Shuts Down Subprime Lending Operation
H&R Block has decided to admit defeat after a plan to sell its troubled subprime lending operation to Cerberus Capital Management LP finally unraveled.
From Bloomberg:
H&R Block will try to sell the portion of Option One that does billing and collections, the Kansas City, Missouri-based company said today in a statement. The decision may result in $200 million in pretax charges.H&R Block's subprime lending operation, Option One, was one of the first to go south, losing $676.8 million in the first quarter of 2007. Ultimately, the subprime lender lost too much money to remain salable. Option One was the 6th largest mortgage lender in the U.S until September 30th of this year.Chairman Richard Breeden is trying to salvage part of the sale of Option One begun by his predecessor Mark Ernst, who once predicted the entire company would fetch $1.3 billion. Ernst lost his job after markets for subprime mortgages collapsed, leading to more than $1 billion of losses at Option One. Breeden, who won a proxy fight to get on the board, had urged Ernst to ``stop the bleeding.''
H&R Block Shuts Option One, Will Sell Servicing Unit (Update5) [Bloomberg]
(Photo:Maulleigh)
PREVIOUSLY: H&R Block Subprime Lending Division Loses $676.8 Million
H&R Block Continues To Hemorrhage Money
Say Goodbye To Mark Ernst, CEO Of H&R Block
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Comments:
I have never liked them from the whole income tax refund loan fiasco they scammed the public with years ago. Oh.... and the family that owns/operates H & R Block spells their name "bloch".
HRB is 93% owned by institutional investors now. The Bloch family hasn't been in control for years.
I feel sorry for whoever winds up with the collections division because they are going to get screwed.
So if this is the sixth largest, and it's failed so spectacularly, what of #s 1-5? Who foolishly gobbled them up and are they making mewling sounds of how they've turned the corner?
With Cerberus Capital already now holding claim to Chrysler, obtaining a sub-prime lending outfit would just be too much FAIL for any single organization to manage.