Phew! After reading the Seattle Times news article on Clayton Homes and Vanderbilt Mortgage, I am reminded of a scene in the movie, “No Country for Old Men.” In it, the deputy after viewing a horrific scene, says to the sheriff, “That’s quite a mess ain’t it, sheriff?” And he replies, “If it ain’t, it’ll do till the mess gets here.“
I also read Clayton’s response to the article and that sheds some light on the matter.
As an example, anyone with rudimentary loan knowledge knows well that just because a person who is of color makes $100,000 per year and pays a greater interest rate than a white making $35,000 per year, that of itself is not racist per se. Lenders look at demonstrated ability and desire to meet loan commitments, which are not locked to income. The better the payment record, the lower the rate. That is what drives the interest rate once loan qualification is determined.
The article surely knows this as it is hinted upon, but it destroys the tenor of the piece about racism and unethical and unlawful behavior by Clayton, if revealed.
I do not know Warren Buffett other than what I learn in the media. I have generally been very positive on Buffett, though I am taken aback by his support for a president with obviously anti-capitalist actions and leanings. But then I am reminded Berkshire-Hathaway has many companies that could be brought to their knees by IRS probes, EPA investigations, and the like by an unfriendly president. Further, government can do things to you and for you. Above all, I think Buffett has not only been smart, successful, and ethical, he is also a pragmatic soul. You can’t do what he has done without being highly pragmatic, so I give him a pass on Obama support.
Now as to Kevin Clayton, I personally know him, like him and hold him in high regard.
I have a very hard time seeing the Kevin I know supporting some of the racist actions described in the account. While there are too many incidents to overlook, I do not believe the people I know at Clayton/Vanderbilt would initiate or condone the racist behavior alleged in the article.
If for no other reason, the folks at leadership there are flinty-eyed businessmen, and they know that in today’s world a southern US company building and selling low-cost housing to many minorities and low income individuals will be rigorously regulated by government and the all-powerful non-profits. This is especially true when you are building and financing that old bugaboo, manufactured housing.
I do not sit in the Clayton/Vanderbilt board room. I have no “insider” take on this situation. My opinions hinge mostly on accounts in the media.
But I would offer this takeaway, were I to be asked. A company as large and important in its disliked industry as Clayton is, will be a target for strict compliance with every law and rule and if destruction can be brought about of the entity, so much the better. The rules being written by the CFPB and others are not only meant to regulate with ever moving targets, if it leads to business emasculation of the companies and the industry itself, few tears would be shed in DC and elsewhere.
Some of the animus held against MH is deserved, and incidents as reported in the Seattle News story build on that animus. That is much of the tale here and the news account is prepared to report without revealing any details harmful to its tenor.
It does, however, leave unanswered the steps Clayton could take to create positive change in the organization. No matter how exaggerated the racist incidents regarding employees are in the news account, there certainly seems something is going on internally at Clayton/Vanderbilt. I’m not sure a mere denial is sufficient.
The employee to employee incidents of the type alleged must be ruthlessly quashed, little leeway given upon employee complaint, a quick internal investigation by experts at first complaint, and a quick decision based on the best information as to fault. Any superior allowing or contributing to such prohibited behavior gets one warning and fired upon the next, no matter who it is. This starts at the top and such behavior not only is illegal and wrong, it is poor business to allow it to happen, creating internal disharmony. It also leads to formal regulatory complaints no one wants to face.
Racist disrespect of customers or borrowers is even worse than employee to employee incidents. An employee has the option to leave a disrespectful business environment. A customer with a 20 year loan behind on their payments, struggling to meet them, needs to be handled firmly, but strictly within the law. Any collection supervisor allowing or suggesting disrespectful collection calls can not continue to allow such behavior from agents, and should it continue, warning and firing is the answer. Assuming Clayton is recording all calls with consumers, a sample listen-to of some calls daily will quickly reveal whether these allegations bear any truth.
Clayton is the wonder of the industry, wonderfully profitable in an industry little accustomed to such success. My 35 year familiarity with the organization has seen them as highly motivated, perhaps in the extreme, Kinda peeking out of the news account are people in an organization prepared to push the envelope to meet business goals or the keep their job, or even to avoid ridicule or censure.
Don’t get me wrong, I am a strong believer in firm performance requirements for associates, with rewards for successful performance, dislike of failure, with training and guidance to correct poor performance, ended by firing for continued lack of success or effort. But one senses the pressure to succeed seems to be driving some people to violate company procedures to reach their goals, even though the associate probably knows it is acting improperly. That’s too much pressure.
With the animus directed at manufactured housing by the media, government, the non-profits and regulatory statutory edicts, its dangerous to tread too close to news accounts like this. This can lead to the drip-drip-drip of continued news accounts, more regulation, more charges and the severe impairment of a company. Who wants to get to work with a rabble of protestors marching in front of the Maryville office with “Clayton Loans Matter” signs?
Now that the media is chasing Buffett for answers, my fear has been that he would be so hounded defending Clayton, that at some point the $500 million in annual profits might seem like insufficient returns. I’m not sure that will happen or that it would have negative consequences for the manufactured housing industry, but I fear it could. ##
MARTIN V (Marty) LAVIN
350 Main Street
BURLINGTON, VT 05401
att’y, consultant, & expert witness
only in factory built housing
(Editor’s Notes: The above was first submitted in late December, and excerpts were quoted in the MHLivingNews report, linked below.
Some of the commentary by Marty Lavin that was not originally used – notably the notion that Warren Buffett might find the headache of manufactured housing too much to stomach, and then he may be inclined to spin them off from the Berkshire-Hathaway family of firms – was deemed in the editor’s judgment not necessary for the critique of Mike Baker and Daniel Wagner’s slanted report.
That said, since The Motley Fool has recently published an analysis that may be problematic in places, nevertheless it comes to a similar conclusion that Marty Lavin did days before. Namely, that $577 million in profits from Clayton Homes may not seem enough for Warren Buffett to want to retain MH firms in Berkshire-Hathaway.
MH Industry insiders may recall that Buffett spun off the MHC components of Clayton Homes after they purchased the vertically integrated company.
The Masthead Blog on MHProNews has drawn attention to MHI’s lack of response to the PBS NewsHour report, and to the Clayton Homes drama too. This was done after a source connected with MHI suggested to MHProNews that ‘five figures’ was spent by the association in the direct costs associated with the PBS NewsHour interview.
Note that top MHI staff, when asked by MHProNews about the amount of money spent on the reputation and media management consultants and the related PBS interview costs, declined to answer.
MHProNews again wishes to encourage MHI to speak out publicly on at least the PBS related negative media.
It should be noted that while many in the industry – from firms of all sizes and from state associations – are reluctant to speak out on these issues publicly, there has been a steady stream of private ‘thank you’ messages and calls to MHProNews and MHLivingNews for our leadership in presenting a more accurate and balanced view of The Seattle Times and PBS NewsHour takedown reports.
It should also be noted that Isbhel Dickens/NMHOA declined a public debate on the issues raised from the PBS NewsHour, and that Dickens linked the PBS and Seattle Times/BuzzFeed reports. The download of Dicken’s message, is found on the article linked here. It is insightful reading for a serious researcher on these issues, as it clearly suggests that this bad media blitz is all about the politics of HR 650/S 682.
Given that some Democrats are now calling on an investigation of Clayton Homes and their related lenders in the wake of this,
it seemed timely to revisit Marty’s original replies, posted above. Marty Lavin agreed.
Thoughtful industry comments on this topic or others, is welcome.) FYI, the full-sized version of the recent photo with Marty – is at the right. Updated with these pics at Marty’s request, so others can see just how terrific he looks wrapped inside that grand ship he and his bride Pat/Ava share, berthed at upscale Miama Beach. ###