Orix Financial Services---Gary Gussoff “Chief of Staff.”
by Christopher “Kit” Menkin
Looks like the” Teflon Don,” Gary Gussoff, formerly from CIT, is now saluted
as “chief of staff.” He’s not out, and the questions on the count, how many strikes, balls,
foul hits, is not known at this time. For the record, the “Teflon Don” remains as a “consultant” to help Gary Corr out in the transition. Corr, originally from Charter, met with all department heads to give them the news personally. According to our sources, he did a very good job at Charter, which was purchased by Orix. Where the company
is now headed, or what is going on, is not known---but there is no secret their sole stock holder has been painted into a $49 billion political corner. Indeed they have too much money invested to pull out...and it would also affect their other US relationships.
A memo was sent out last Thursday, Leasing News is told, and anyone who
sends us a copy may wind up in trouble. This is what received from one “insider”:
“ORIX is digging hard to find out who leaked the story to you.
if they can prove a connection (or even have a good suspicion.) they will terminate them.”
The Memo supposedly says:
“Jim Thompson is Chairman and CEO
Gary Corr is COO
Brad DeLong is CIO
Gary Gussoff is Chief of Staff”
It’s now “official” about Jay Holmes.
Jay Holmes was appointed president and chief executive officer on June 19,2000. He succeeded John Moss, who served in these positions on an interim basis after. Philip Cooper retired from ORIX CREDIT ALLIANCE in March 2000.
The press release at the time stated, "In his new role, Mr. Holmes will oversee all ORIX CREDIT ALLIANCE interests. Mr. Holmes joined ORIX CREDIT ALLIANCE after nearly two years as President & CEO of Transamerica Equipment Financial Services, a Chicago based provider of equipment financing and leasing for middle-market companies in the United States and selected foreign countries. He previously held senior positions in Heller Financial, Inc., Chrysler Capital Corporation, Citicorp Industrial Credit and Westinghouse Credit Corporation. He has 28 years of commercial finance
Jay Holmes told several at the Equipment Leasing Association San Diego Conference, that he was asked to leave on October 8th, with two days to clear out his office; but since, he had the travel, hotel, and registration for the ELA in San Diego, he went. He was not a happy camper. By the way, a similar occurrence happened when WiredCapital took over Capital Stream. Several of the WiredCapital people went, some did not, as the registration, travel, and hotel reservations were made.
Holmes reportedly did not like the Credit Alliance files, especially the avant
guarde transactions such as the ten year Greek diner leases in New Jersey.
Most of the diners were owned by Greeks, at this time, and they were
five year payouts written as ten year leases. Holmes reportedly put one man
on this to find out who was getting all the money, and when the
person spent over a year looking for problems and when he came up empty,
was let go.
A highly reliable source told Leasing News while he was never involved on a direct basis with that portfolio, his remembrance was that the deals were booked with ten year payouts, but the dealer was only for five years worth of payments. The excess was
maintained in a reserve and was used for delinquencies and defaults.
What probably took place is that the accounting records were not in
order and it was difficult to reconcile what money when where and when.
That was a shortcoming in the system that was used, particularly with the
An inside source, who does not want to divulge the information as it
will be “traced” back, originally told Leasing News, “You should do some digging into why Jay was cut loose this way...he didn't get the usual treatment...”
Known as the “Teflon Don,” Gary K. Gusoff was group president, serving on the OFS board of directors
The CIO and CAO were let go at the first of the year at about the same time they laid off 10% of their staff. The word is they were given a nice going away party and enough money to keep their mouths shut. It was also reported Holmes also lost half of his responsibilities to Gary Gusoff who was promoted to COO after failing to turn around the Equipment group. Word from insiders is that Gusoff is like a “Teflon don.” Everything he touches seems to fail but for some reason he never gets blamed. He just gets promoted. Now he is “Chief of Staff.”
More Orix Reaction:
Norden Capital was a very small producer for Orix, for a relatively short
period of time, but I was very sorry to see them go.
Steve Geller and all of his staff always treated me in a very professional
and fair manner, and bent over backwards to get deals completed.
Sometimes the documentation process might have gotten a bit excessive, but
you all know the "Golden Rule." These days, the brokerage community
needs more Orix's.
Having lived in and traveled in Asia extensively I would also like to say a
word about the parent company, in Japan. Orix has always been
considered one of the few, perhaps the only, really innovative financial
services firm in Japan, perhaps until recently when the former Long Term
Credit Bank was taken over by the Bank of Japan, bought by US interests and
re-named Shinsei Bank.
As a non-bank lender Orix was not under direct regulation by the Bank of Japan and the Japanese Finance Ministry. Apparently the BOJ and the Finance Ministry were always trying to pressure the large Japanese Banks, which they did regulate, to "reign in" Orix, which they did not regulate.
There is a saying in Japan that the nail that sticks out of the board must
be pounded down. To the Japanese Government., Orix was probably looked at as
one of those nails. I am sure that this attitude, plus the general problems being experienced by many of the biggest Japanese banks, were/are factors effecting Orix.
Bob Homans/Norden Capital
I first want to say that I do enjoy your newsletter which I
read almost daily. What I am contacting you about is to respond briefly to some
comments made recently by parties putting blame on the current situation at
Orix Financial Services with the previous management of Credit Alliance.
I don’t think it was far at all to even mention the Palitz brothers in the same
breath as OFS as they are both like night and day. The Palitz brothers were true
pioneers of this business and knew how to put together a secure deal and to make
money. From a lot of things I have heard about the company(OFS) since I left,
I am certain they aren’t able to do the same. I am a former employee of Credit
Alliance/Orix for almost 17 years so I think I do know what is going on. If
Orix Financial Services was doing such a great job in all aspects of their
business, then how can this situation happen?
I was sitting in the president's office of a large east coast construction dealer recently when they received a telephone call from one of OFS's collectors. They were calling to inform the dealer that OFS had picked up a customers machine due to non-payment and were now asking for the dealer to pay his limited liability amount. They then
proceeded to tell the dealer that at the time this happened, the customer was 336
days past due on the account!
Well, you can just imagine what the reaction was with the dealer, not good at all.
My point is if they cant collect money timely on their portfolio, then there are that and other problems ahead. I do know that this wouldn’t have happened in the old days. The Palitzs' certainly knew how to collect their portfolio.
My last comment also relates to OFS as well. Good luck in calling their office and getting someone to help you. Make sure that you get their name as there is a good chance you may not ever find them again without it. Its a black hole.
Any hint that the Palitz Brothers had any part in the slide of ORIX is based
on shear ignorance of the actual history. After First Interstate Bancorp
ended the management agreement with them they waited out the non compete
agreement and then started the new company in Texas with the former Credit
Alliance managers who understood what business they were in. The Palitz
brothers both said it would take less than 10 years for the new management
to run the company into the ground when they departed First Interstate
Credit Alliance. With the boom of the 90's it took 10 extra years but the
day of reckoning for ORIX has arrived.
The success of the new Palitz venture headquartered in Texas is proof
positive of the enlightened toughness that produced 30-40 years of
controlled growth and profitability in this business niche. It is not the
good times that determine greatness in this business, it is the lean times.
The Palitz's always expanded their business when times were tough as they
had conservatively positioned their businesses for long term success. While
not flashy, that is true brilliance and integrity amid the rancor of mere
mouthy mortals long departed.
(name with held)