Executives who lend to consumers with bruised credit were clearly unnerved Thursday by the sudden reversals at two big companies in the high- flying subprime business. But they insisted no accounting surprises await their investors.

One distinction that most subprime lenders made: They securitize the majority of their loans, which, they say, requires careful and accurate book keeping.

"When you have ratings agencies and bond insurers that significantly monitor performance, this can't happen," said Robert Grosser, chief executive of Cityscape Financial Corp., Elmsford, N.Y.

Mercury Finance, which disclosed it had overstated earnings by $90 million over the past four years, retains all its auto loans in portfolio. Jayhawk, which unexpectedly disclosed a $7.9 million loss in the fourth quarter, does securitize.

Securitization of loan pools amounts to a monthly audit, agreed a spokeswoman for Olympic Financial, a Minneapolis auto lender. She added that Olympic would also never release earnings figures that had not been audited, as Mercury did.

Chief executives of publicly traded companies were buzzing with theories about the problems at Mercury.

Hugh Miller, head of Delta Funding, Woodbury, N.Y., said he was "shocked."

"To misstate assets like that, you'd have to have your whole accounting department in on it," he said.

Many eyes turned to KPMG Peat Marwick, the New York-based firm which had audited Mercury. Engagement partner C. Ian Harrison was out of town, and engagement manager David Seiden did not return phone calls, but a spokesman for the company said that KPMG had alerted Mercury to problems with its books.

Subprime mortgage lenders were quick to distance themselves from auto lending. "It's as related to what we do as brain surgery is to selling shoes," said Gary Judis, chief executive of Aames Financial, Los Angeles, a leading home lender. "Most of the companies in our sector have absolutely no interest in making loans on things with wheels."

Analysts said the correction in such a hot sector might have been a healthy one. "This is a good lesson that the business is not there for the taking," said Luke Smith, a Chesapeake Securities analyst.

Analysts said the blow-up is bound to slow mergers in the subprime lending industry, as banks become wary of entering the market through acquisition.

Before Mercury Finance comptroller James Doyle resurfaced yesterday, others in the industry had time to come up with the inevitable round of jokes. "We're instituting a new Mercury Finance rule: All comptrollers of subprime companies have to check their passports with us," said one analyst.

More than one chief executive said that the most obvious distinction between their company and Mercury Finance: "I know where my comptroller is."

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