Last night I wrote:
"Again I say WRT to New Century, this whole issue of them having to correct errors relating to how it incorrectly applied Statement of Financial Accounting Standards No. 140 - Accounting for Transfers and Servicing of Financial AssetsI and Extinguishment of Liabilities - stinks to high heaven. After scandals like Enron, how is that New Century and its accountants could fail to include the expected discount upon disposition of loans when estimating its allowance for loan repurchase losses?!? Coincident with the delayed annual report, these accounting issues don't engender a great deal of confidence in NEW's situation."
Tonight the U.S. Attorney is launching a criminal probe of New Century. My May 12-1/2 puts should do quite well Monday since the stock is down 30% this evening.
So, in additonal to waving a variety of red flags ahead of the market pullback earlier this week, this blog is two for two on subprime - having warned a day before about NFI and now NEW. It's not hard to figure out - not rocket science. You just need to follow the money and read the fine print. (shameless self horn tooting over.)