Keith Johnson, who provided some of the most provocative testimony before the Financial Crisis Inquiry Commission, has taken the reins at a firm trying to clean up the crisis' wreckage.
Helios AMC, a servicer of defaulted commercial real estate loans and other troubled assets, announced Tuesday that Johnson had joined as its chief executive. He has reunited with his old boss, Helios Chairman Lewis R. Ranieri, whom Johnson worked with for more than 12 years during the savings and loan crisis. The company, which has offices in San Francisco and Blue Bell, Pa., actively managed about $2 billion of distressed assets as of Oct. 31, according to a Standard & Poor's Corp. report.
Johnson brings a wealth of experience in handling troubled loans and distressed real estate to his new job. From 2000 to 2006 he was an executive vice president at Washington Mutual Inc., where his duties included trying to put out fires at the thrift company's subprime lender Long Beach Mortgage Co.
Most recently, he was the CEO of Clayton Holdings, a due diligence firm whose work for investment banks was scrutinized in last year's FCIC hearings and is also one of the main exhibits in a fraud lawsuit brought against JPMorgan Chase & Co. by the bond insurer Ambac Assurance Corp.
Johnson has not pulled punches when discussing the business practices of his former employers.
"I think that the third-party broker model is a fine model, if it can be managed and controlled," he told FCIC investigators who interviewed him about Long Beach. That was a big "if": "In hindsight I would say that nobody's third-party broker model could be managed, because the incentives for fraud were too great."
The more incendiary part of his testimony involved his tenure at Clayton. Johnson told the FCIC that Clayton shared its due diligence information that it prepared for investment banks with Moody's Investors Service, Standard & Poor's and Fitch Inc. In the Ambac case it is alleged that despite the due diligence that Clayton provided, Bear Stearns & Co. knowingly bought mortgages that did not meet its own underwriting guidelines. (Like Washington Mutual, Bear Stearns is now a part of JPMorgan Chase.) Johnson's revelations could give ammunition to similar charges against the ratings agencies.
His recollections are not endearing him to his former employer Clayton, which sent a four-page
