When I used to ask some in the industry who was the best business journo in Australia they almost uniformly used to reply “Trevor Sykes”; Mr Pierpont was a legendary probe into the malfeasance of big boardrooms.
Alas, today, he has been transformed. We’ve probably given him a hard enough time for his ill-timed investment advice last year (which repeatedly said “buy banks”) but it seems to go further. Today he is champion of boardrooms of questionable quality rather than interlocutor, from today:
Given the pervasive influence of American media and money, combined with instant global communications, it was probably inevitable that one day we would see a run on the Australian sharemarket sparked by Hollywood.
That’s pretty much what happened in late February. A London-based hedge fund manager named Jonathan Tepper came here and, together with John Hempton of Bronte Capital, conducted a brief survey of the real estate market in western Sydney. Pretending to be a gay couple, they said they had $125,000 and wanted to buy a home.
Tepper reported finding a glut of unsold properties in the western suburbs. He said banks were being deluded by unscrupulous mortgage brokers into financing homes to borrowers who weren’t creditworthy and he predicted the housing bubble would burst, leading to a 50 per cent collapse in Melbourne and Sydney house prices, with Australian banks hurt so badly they’d have to stop paying dividends….But whether the banks and mortgage insurers could be deluded is a more vexed question.
One person who should know is Mark Bouris, chairman of financier Yellow Brick Road, which has perhaps 10 per cent of its portfolio in western Sydney. Bouris points out: “Brokers don’t have any control over credit. They just fill out forms and hand them in. If a broker sends something in, the bank doesn’t just say OK. The credit process is harder than I have ever seen it.”
I can’t tell you if the Variant Perception report is right or not though I can vouch for the brains of Mssrs Tepper and Hempton. What I can tell you is that the last person an inquiring journalist would ask to find out whether or not the report is accurate is the CEO of a major mortgage broker.
