Conseco Hiding Bad Loans, Former Workers Charge

Conseco (CNC Quote) is employing lax lending practices to hide bad loans, according to three people who recently left Conseco's finance operations, as well as internal company documents obtained by TheStreet.com.

In an email, Conseco spokesman Mark Lubbers called this charge "tiresome and wrong" and ardently defended his company's lending policies. Asked about this article in an interview with CNBC Monday, Conseco CEO Gary Wendt said the company's loan deferral policy hadn't been changed to help reduce delinquent loan numbers.

Wendt, a former GE top executive, joined 14 months ago with the aim of repairing many of the problems attributed to the company's former management team, most importantly a burdensome debt level. Wendt's been telling investors that efforts to turn around Conseco Finance, the company's troubled lending arm, are progressing well. But the ex-employees' comments and the documents suggest that the credit quality of a portion of Conseco's $26 billion mobile-home loan portfolio is worse than the company publicly reports. ...