What financial crisis? Portrait of a Chinese millionaire

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One of China’s growing number of millionaires - for whom the financial crisis barely registers - Chen Yilong has just bought a private plane to add to his many luxury homes.

Lighting a cigarette in a teahouse in Xi’an, in northern Shaanxi province, the 49-year-old pauses when asked how much money he has, before saying in a conspiratorial voice: “You can safely say I’m a multi-millionaire (in yuan).”

Research by the Hurun Report, a magazine that tracks China’s wealthiest, revealed in April that 825,000 people had personal wealth of over 10 million yuan (US$1.5 million), or 0.06 percent of the population.

And at a time when the financial crisis has left 25 million migrant workers out of a job in China, the vast majority of these millionaires said the meltdown had not had any impact on their lifestyle, the research said.

Sipping his tea contentedly, Chen, a rotund, jovial man sporting a striped shirt with red braces, agreed.

The real estate company owner talked animatedly of the Cirrus SR22 private plane he was having shipped over from the United States to satisfy a childhood dream.

“This plane is essentially the BMW of the air,” he said smugly of the aircraft he paid five million yuan for, describing an elaborate parachute system that would bring him safely back to earth if there was a problem.

Chen says he is one of the first in this part of China to have bought a private plane - a luxury purchase that is still very rare in the country even among the group of multi-millionaires.

It is all a far cry from a decade ago, he said, his rags to riches story mirroring China’s own rapid economic growth over about the same period.

In the late 1990s, he had just delisted from the army, been given a demobilisation fee of 50,000 yuan and had decided to buy a second-hand truck to transport goods.

“I rented a driver and it went for more than a year, but it got into two road accidents, and it hit a person - I realised it was just too dangerous, and not profitable,” he said.

That is when Chen discovered real estate and decided to set up a company with some of his own funds and borrowed money.

A lawyer by training, he had spent most of his working life in the army but had gained some business experience in the late 1980s while in a tank division, where he oversaw a unit that produced and sold oxygen.

At the time, he said, the government allowed army personnel to do business on the side as a way to supplement their income.

“But then the government said we couldn’t do this anymore - the army had got messy, everyone was earning money, they weren’t training,” he said.

That experience helped his first foray into real estate, and soon he had built up Weinan Changlong Real Estate Development Company - a firm of over 20 staff members with a turnover of several million yuan a year.

He now has “many houses,” he says, without being drawn into the exact number, and proudly talks about his caravan - a rarity in China and a purchase that drew a questioning look from his wife, who co-owns the company. Laughing, Chen recalled her saying: “What are you going to get next, a plane?”

What financial crisis? Portrait of a Chinese millionaire - Taiwan News Online

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By Saying Yes, WaMu Built Empire on Shaky Loans

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SAN DIEGO — As a supervisor at a Washington Mutual mortgage processing center, John D. Parsons was accustomed to seeing baby sitters claiming salaries worthy of college presidents, and schoolteachers with incomes rivaling stockbrokers’. He rarely questioned them. A real estate frenzy was under way and WaMu, as his bank was known, was all about saying yes.

Yet even by WaMu’s relaxed standards, one mortgage four years ago raised eyebrows. The borrower was claiming a six-figure income and an unusual profession: mariachi singer.

Mr. Parsons could not verify the singer’s income, so he had him photographed in front of his home dressed in his mariachi outfit. The photo went into a WaMu file. Approved.

“I’d lie if I said every piece of documentation was properly signed and dated,” said Mr. Parsons, speaking through wire-reinforced glass at a California prison near here, where he is serving 16 months for theft after his fourth arrest — all involving drugs.

While Mr. Parsons, whose incarceration is not related to his work for WaMu, oversaw a team screening mortgage applications, he was snorting methamphetamine daily, he said.

“In our world, it was tolerated,” said Sherri Zaback, who worked for Mr. Parsons and recalls seeing drug paraphernalia on his desk. “Everybody said, ‘He gets the job done.’ ”

At WaMu, getting the job done meant lending money to nearly anyone who asked for it — the force behind the bank’s meteoric rise and its precipitous collapse this year in the biggest bank failure in American history.

On a financial landscape littered with wreckage, WaMu, a Seattle-based bank that opened branches at a clip worthy of a fast-food chain, stands out as a singularly brazen case of lax lending. By the first half of this year, the value of its bad loans had reached $11.5 billion, nearly tripling from $4.2 billion a year earlier.

Interviews with two dozen former employees, mortgage brokers, real estate agents and appraisers reveal the relentless pressure to churn out loans that produced such results. While that sample may not fully represent a bank with tens of thousands of people, it does reflect the views of employees in WaMu mortgage operations in California, Florida, Illinois and Texas.

Their accounts are consistent with those of 89 other former employees who are confidential witnesses in a class action filed against WaMu in federal court in Seattle by former shareholders.

According to these accounts, pressure to keep lending emanated from the top, where executives profited from the swift expansion — not least, Kerry K. Killinger, who was WaMu’s chief executive from 1990 until he was forced out in September.

Between 2001 and 2007, Mr. Killinger received compensation of $88 million, according to the Corporate Library, a research firm. He declined to respond to a list of questions, and his spokesman said he was unavailable for an interview.

During Mr. Killinger’s tenure, WaMu pressed sales agents to pump out loans while disregarding borrowers’ incomes and assets, according to former employees. The bank set up what insiders described as a system of dubious legality that enabled real estate agents to collect fees of more than $10,000 for bringing in borrowers, sometimes making the agents more beholden to WaMu than they were to their clients.

WaMu gave mortgage brokers handsome commissions for selling the riskiest loans, which carried higher fees, bolstering profits and ultimately the compensation of the bank’s executives. WaMu pressured appraisers to provide inflated property values that made loans appear less risky, enabling Wall Street to bundle them more easily for sale to investors.

“It was the Wild West,” said Steven M. Knobel, a founder of an appraisal company, Mitchell, Maxwell & Jackson, that did business with WaMu until 2007. “If you were alive, they would give you a loan. Actually, I think if you were dead, they would still give you a loan.”

The Reckoning - WaMu Built an Empire on Bad Loans - Series - NYTimes.com

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