'We just did not do them'
I wasn't expecting Gilbert's office to be within an earshot of other employees. On the walk to his office I feel like an awkward 5-foot-7 gump. Inside, there's a cut-out of his face leaning on one wall, there's a table where Gilbert directs me to have a seat. His 10th floor office, a small cluttered room inside the Compuware building, looms over Campus Martius. I feel welcomed, at ease.
To make things easier on the both of us, I decide to open with a soft set of questions. Favorite Michigan beer? Gilbert says he's not a beer guy, really, and settles on Stroh's. Gilbert's idol growing up? His grandpa, he says, who grew up in Detroit. They moved out to the suburbs eventually, but he maintains an intimate connection to the city for that reason. His father also owned a bar in the city.
Lastly, I ask him if he actually was a TV reporter earlier in his career. He laughs, "You really did your research," adding that he can't recall a reporter ever asking him about that time in his life. Gilbert had a sports show on a cable station at Michigan State University, where he graduated with a degree in telecommunications.
Eventually, he spent four months working for WKZO-TV in Kalamazoo, covering day-to-day news. He shared camera duties with a partner who would also read the news. He soon realized he didn't have the interest in pursuing a career as a reporter.
"I just realized, I don't know, it just probably wasn't my thing," he says.
He reflects on the answer, and adds that he hasn't seen any footage in about five years. "I have to figure out where it is," he says, with a light laugh.
There's a mantra Gilbert reiterates when asked about what the company is doing in Detroit: "Do well by doing good." What's that about?
"I think there's a belief, and maybe rightfully so, about how certain companies and corporations have behaved over the years," he says.
He uses that phrase to explain that, in fact, some companies are not just "profit-based." There are some that are also "mission-based."
"We also don't believe there's conflict in that," he says. "There are a lot of people who believe there's a conflict in that — if you make profit, it has to be bad."
That's the not the case with Quicken, he says. Since the company moved to Detroit, it boosts morale and makes employees feel like they're not solely coming to work for a profit-making business. There's more at stake here.
"So that's the general way we look at it," he says. "You can do both ... in our case, we obviously picked up a lot of property that was very low-priced, and I'm sure we wouldn't plan on selling it for years, not decades, if ever."
He continues: "And I'm sure there's a built-in gain there, but ... for us, it was, let's get in, let's help these buildings, and let's make it happen. And we just believe — one of our 'isms,' as hokey as it is, is 'money follows' — there's not necessarily a conflict in that." Gilbert occasionally hits the table to emphasize points. At 5-foot-6, he has a commanding presence in the room, answering questions with ease. He's wearing a brown-ish fleece and his hair is slicked-back, like it looks in every photo of him.
"Isms," for the uninitiated, are Gilbert's 19 corporate mantras that are defined in a thick book given to every employee, and seen throughout the workspaces of every company in the Quicken family. Examples: "There is no they." (Everyone is in this together.) "We eat our own dog food." (Employees should be the biggest fan of Quicken.)
Back to his point, Gilbert says, "There's clearly a conflict in people who do things they shouldn't be doing."That transitions nicely into my next question: Why does he maintain Quicken never slung rotten loans? The company avoided it, he maintains.
But asked if what really protected the company was that it was a loan originator more than a lender, he responds, "We're [still] collectible. We have reps and warranties on all these loans. They can come back to us. So we didn't do them. We just did not do them."
The issue at hand with the $6.5 million Federal Deposit Insurance Corp. (FDIC) settlement relates to the so-called representations and warranties Gilbert alludes to. That refers to reference language included in any sale of loans that allows the purchaser to find loans that don't meet standards, and then require the originator to buy them back. At the time, the FDIC worked out an agreement with Quicken to keep the settlement confidential, as the Los Angeles Times detailed it. The FDIC later declined to comment about the settlement, citing agency policy.
But there are those who insist that Quicken escaped the pitfalls of the mortgage meltdown because they immediately sold the rights to nearly 90 percent of the loans the company originated during the housing boom years, 2005 to 2007.
The lending model that became the name of the game during the mid-2000s was this: quantity over quality. At the turn of the century, it had become more typical for loans to be bundled into a pool, sold to another lender, and then eventually sold again as a mortgage-backed security on Wall Street.
Gilbert bristles, saying it's commonplace for loans to be sold into the secondary market.