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February 18, 2009 09:13 PM EST|
Truth about Third Federal Savings and Loan
February 7th 2009
By Jason Werner
CLEVELAND - The federal government's communist bailout of thug banks has led many people in the Cleveland area to be that much more thankful for Third Federal Savings and Loan.
It is true that Third Federal Savings and Loan did not access funds from the TARP, for which Americans can be very thankful. Many people in the Cleveland area, where Third Federal is headquartered, have been led to believe that the company is strong despite the depression that started in 2008.
Third Federal's stock is actually up since its initial public offering in 2007 and about flat year-over-year, which certainly puts them at the top among their peers. But why did the company, TFS Financial Corporation (TFSL) go public after being private for so many years if their company was so strong.
Furthermore, only one institution owns more than two percent of the company and 73 percent of the company is owned by insiders and 5% owners, which means that the company is owned by mostly people close to its founder, chairman, CEO, and president Mr. Marc Stefanski.
And if the company was so strong like it had been for 68 years, then where are the constant radio advertisements.
Fact is, Third Federal Savings and Loan is hurting just like all the other banks.
I've lauded Mr. Stefanski's style of no-fraud similar to Hudson City Bancorp (HCBK). These companies do not mess around. But here's the problem, they're doing business with fraudsters and they don't tell the whole truth.
Mr. Stefanski often boasts in his public advertisements that the company does not sell their loans. That's barely even halfway true. True, the name of Third Federal will stay on the loan for servicing purposes, but Mr. Stefanski sells most of the paper to the government-sponsored enterprises like Fannie Mae and Freddie Mac. FHA is nearly riskless for them.
In other words, the money that Third Federal sells to its customers is not actually their own money. Their loans obviously have their name on them, but their loans are typically under the guidelines of thugs in the federal government.
Regarding fraud, the company is probably second-to-none in detecting fraud, thwarting fraud, and not writing fraud. They do this by asking for identification every single time a customer wants to withdraw money whether the customer is known or not, which should arguably be the industry standard. And personally, reviewing thousands of credit reports and talking to Third Federal customers, I've never seen a problem except for the origination point that is charged for upfront-fee loans and title issues.
On the issue of the fraud, their style of loan approval should be evaluated by the feds to give the feds a little clue as to what clean business is like. None of their loan officers work on commission, whereas most of the industry pressures borrowers into loans by bribing loan officers with strong incentives and sometimes even 100-percent commission.
Also, Third Federal loan officers don't even seek business. The loan officers are like clerks. They take orders. The loan officers obtain information and obtain documents; that's about it. The loan package is sent to a processor, and then an underwriter evaluates the deal. The risk is very low for Third Federal because they're clean. Their lies are minimal if any.
But again, although they're not accessing TARP loot and they're clean (at least from what we hear publicly), they're still doing business with the thugs (GSEs and government), and owners of the company include the likes of Vanguard, Wellington, Barclays, State Street, and CRM, which are all ailing badly.
Truly, if so much of the company is going to be owned by insiders, then why not get away from being public. I'll tell you why; it's because they're hurting. More than 312 million shares are outstanding. And it's my opinion that the company's common stock price is nearly unaffected by the depression because the company's ownership hasn't had significant outside influence.
Although Third Federal Savings and Loan is not on the level of AmTrust's problems, I don't know how they will make it.
### Posted 2009-02-07 10:59 AM (#7060) By: jwerner
Copyright © by Werner Watch 2009
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Category: Jason's View on today's "hot" topics
Tags: Third Federal Fraud
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