Cry me a river

A reader sends along this link to the Wall Street Journal detailing the woes of the rich or, as the reader points out, people who acted as though they were rich.

Big borrowers are more likely to default than ordinary people, according to data from First American CoreLogic. Its loan database, reflecting more than 80% of the overall home-loan market, includes 1,700 loans with balances of $4 million or more. About 14.8% of those loans were 90 days or more overdue at the end of January, compared with 8.7% for all home loans tracked by First American. Sam Khater, a senior economist at First American, said the bigger borrowers may be more prone to stop making payments when they have lost all their home equity.

Mr. Fuscone, Merrill Lynch’s one-time head of Latin America, put his mansion up for sale in November, asking $13.9 million. But he couldn’t find a buyer.

In his bankruptcy filing, Mr. Fuscone provided a list of his debts, including ones to the Greenwich Country Day School, American Express, Mercedes-Benz, a local hardware store, a pet store, and Richards of Greenwich, a fine-clothing store.

“My background is in the financial-services industry and I have been personally devastated by the financial crisis which came to a head in March 2008,” Mr. Fuscone said in his bankruptcy declaration. “I have been sued by Patriot National Bank” as part of a foreclosure action. “I currently have no income for the 30-day period” following his bankruptcy petition.

C.W. Kelsey, owner of Greenwich Hardware, was among the local merchants owed money by Mr. Fuscone, though he wouldn’t say how much.

“Traditionally, the majority of our credit problems were contractors,” he said. “Now there are people you’d never expect two or three years ago to have problems, who live in multimillion dollar homes.”

26 Comments

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26 responses to “Cry me a river

  1. Cos Cobber

    how pathetic.

  2. Cos Cobber

    maybe Fuscone is our friend Mad Monkey…whatever happened to him?

  3. Where is Fuscone’s house? The article says Westchester, but all of his creditors are in Greenwich.

    • Googling the man, he retired from ML in 2000 at age 49, but most recently was running a company called Dover Management LLC with pffices on Greenwich Avenue, so he could have easily shopped here.
      Dover’s website is “temporarily unavailable”, so I guess Fuscone wasn’t the only one to go down.

  4. shoeless

    High-end foreclosures is supportive for house prices, right?

  5. anon

    Here’s an old story about Fuscone:

    NEW YORK–(BUSINESS WIRE)–Aug. 25, 2000–Merrill Lynch (NYSE:MER)
    today said that Richard M. Fuscone, Chief Operating Officer for the
    firm’s Corporate and Institutional Client Group and Executive Chairman
    for Latin America and Canada, has decided to retire so that he can
    more fully pursue a wide range of personal and family interests. He
    will continue as a Senior Advisor to the firm.
    “In his 21 years of dedicated service to Merrill Lynch, Rick has
    built an outstanding reputation for his business savvy, leadership
    skills, sound judgment and personal integrity,” said Merrill Lynch
    Chairman and CEO David H. Komansky and Thomas W. Davis, President of
    the Corporate and Institutional Client Group. “We are grateful for his
    many contributions to our firm and wish him the very best in his
    future endeavors.”

  6. Stanwich

    He lives in a monster house in Conyers Farm on Cowdray, the street starts off Hurlingham in CT then goes into Westchester. He was a co-chairman for Bush’s CT 2004 reelection. A big Republican party donor, he is married to Dick Cheney’s niece. Nice people, they opened their home and supported a bunch of local and national charities. Too bad they got caught up in financial troubles.

    • Thanks, Stan – that explains it. And I’m a little ashamed of my schadenfreude at their misfortune because, as you point out, nice people come in all income levels, and the loss of one’s wealth, big or small, is a terrible thing. I will point out, though, that Mr. Fuscone may, like so many of us (that includes me) may have delayed facing his financial troubles for too long. The article says he listed his house for sale last November and “it failed to sell”. The Westchester part of Conyers has always been a long, slow sell – two years is not at all unusual over there, so November ’07, not ’09 would have been the time to start. Of course, human nature also gives us confidence that things will improve, so I understand the delay, and sympathize.

  7. Backcountry

    He lives in the New York part of Conyers Farm

  8. Helsa Poppin

    So he is around 59 years old now. There should be some rule of thumb about how indebted you should allow yourself to be at various ages. Like when buying a new house your downpayment should be a percentage at least equal to your age. Something like that.

    Certainly by the time a person is 65 or 70 they really shouldn’t have any mortgage on their house unless it’s almost paid off or they have the funds to pay it off immediately should the need arise. This applies for all income levels. For people at Mr. Fuscone’s level, I would add that you shouldn’t buy a $13 million house unless you have at least that much in cash and marketable securities besides. I’m not judging him, I just think it’s amazing how many otherwise intelligent people, even in finance, don’t manage their affairs prudently.

  9. Backcountry

    I have heard that there is bidding on it above the debt (about $12M), which is why they did the personal bankruptcy (to hold off the foreclosure which was imminent).

  10. Red

    I also recall that Mr. Fuscone was boss of the Merrill dept which sold loads of bad instruments to the fund managers for Orange County CA, helping precipitate its bankruptcy. I think it’s karma time for him.

  11. Backcountry

    Also, they have a major (read: multimillion dollar) house in Palm Beach, which is protected by the Florida homestead exemption in a bankruptcy.

  12. anon

    I suspect that he owned a ton of MER common stock, having worked there for 21 yrs. I’m sure he levered the crap out of that buy using it as collateral to get a loan to buy that huge mansion. So when MER common got gutted in 2008, he probably lost almost his entire net worth (because he probably was cocky and didn’t diversify). These are lessons they don’t teach you in those fancy private schools.

  13. Retired IB'er

    Best to remind oneself when considering situations like this that “but for the grace of God” applies to us all.

  14. Jane

    I agree with the “but for the grace of God” theory. But I would feel a bit more sorry for them if they had been nicer to the people who worked for them. They all sign “nondisclosure” agreements, but that doesn’t mean they won’t dish with their friends. Apparently quite awful to their household staff.

  15. Riverside Dog Walker

    I was thinking about this as I drove home in my 9 year old Jeep, and I think there have been some good posts on its topic and its offshoot post.

    I do not take pleasure in anyone’s misfortunes; life is brutal enough as it is. But my kids went and still go to Greenwich public schools. What little clothes shopping I do, I do at LL Bean, Lands End, and Macys.

    The last time I was in Richards was for a benefit for Greenwich Symphony, with great wine provided by Horseneck Liquors. I don’t think this guy is asking for sympathy, and frankly, he doesn’t deserve any. He rode the wave and made different choices than others.

    I think this is a hard time for our country and especially for people of our age. I am disappointed in our current circumstances, but I’m not ready to bet against this country. I think it was JP Morgan who said that the original mansions on Park Avenue were built by the bulls, not the bears.

    Believe in yourself, keep doing the right things, go out and fight tomorrow. That’s what I’ll be doing.

    BTW, my advisors tell me you can’t/shouldn’t homestead a home in Florida unless you can prove it is your primary residence. With the debts this guy lists, that is a stretch.

  16. gfc

    as owner of an upscale service business I spent a great deal of time in the Fuscone household.The fo
    llowing is true:

    Marjorie”s maiden name is Cheney but, as much as she would like to be, she is NO relation to VP
    Dick Cheney

    Their daughter (Boo-Boo) is the most spoiled and entitled child I have ever run across.Of course, this is due in large part to her parents desire to give her all the things they wish they had had——often a bad idea!

    ck Cheney.

  17. networthdeclining

    Anybody can be overlevered. At any age or at any level of wealth. Goodness even big corporations go bankrupt.

  18. bill

    Very nice charitable people. Always very nice to their staff…

  19. In response to gfc’s comment saying “Their daughter (Boo-Boo) is the most spoiled and entitled child I have ever run across,” you are extremely ignorant and obviously jealous. Boo Boo is one of the most lovely, sweet, and caring girls I know. This family has given so much to charity and always opened their home to others. Quite honestly, I think this blog is ridiculously pathetic. Everyone goes through rough times but it is people like all of you that make those times even worst. I know the Fuscones will bounce back from this because they are smart, charismatic, generous people and the world will reward families like that. I think that you all need to find something better to do with your time. Maybe try focusing on your own families, or your own problems. But gossiping about others in Greenwich is beyond pathetic. Get a life.

  20. legallypoor

    It is people like this jack ass that lead the country where it is. Their greed and lack of comon sense. So we need to be sorry for their missfortune right?? Suck it up time for a reality check!

  21. peter

    Rick was a successful executive at Merrill Lynch and a very nice person. I and anyone who knows him feels very sorry for what has happened. I and none of the other bloggers knows the full facts, but I wish him and his family the very best.

  22. tokenekebozo

    My God, what the hell happened? I have been away and just saw this. Don Ricardo was in love with himself and never saw a mirror he didn’t like, (as anyone who knew him from ML would attest), but for crissakes he went to Dartmouth and then Chicago B-school. I thought he was smarter than this. Guess the problem was he thought he was smarter too. Everyone knew his bogus little “investment management” shop was a joke and a sop to his inflated ego, but how could he risk everything like he did.