It gets better and better - DPC CEO the fince industry may no longer exist
I thought CEO's were meant to support a company & industry. The bizarre board of DPC has picked the biggestclown I have heard of in a long time. Read the following response following a 16% reduction in the share price the preceding day. It would make me cry if I was a holder!
Mr Walker predicted the industry would shrink by half or more within two years or even virtually disappear.
He said finance companies needed to find alternative sources of funding from debentures.
He said in January that Dorchester's debenture reinvestment rate had fallen to around 40 per cent in December, which he said was "not bad".
Before the crisis, it had been 65-73 per cent across the industry.
"It's very simple mathematics. If it (the reinvestment rate) goes to zero and with average debentures 18 to 24 months, then in that time the industry won't exit.
"If the long-run reinvestment rate is 50 per cent, then the industry is going to halve."
He said banks were not really in a position to fill the void as "they have their own issues".
Many have lost billions in the US subprime mortgage market resulting in a credit crunch. In that environment they are loathe to lend and have lost their appetite for risk.
Raising money through equity markets is not an option, for similar reasons.
Mr Walker said he wouldn't be surprised to see more finance company collapses. Others will simply close shop.
Fire the clown please!