First Magnus - The Effects of Recession

When the mortgage lending company First Magnus closed its doors, it didn't just affect the company itself, it affected a lot of people and businesses that were associated with the company. Most people know about the trickle-down theory, but what a lot of people don't realize is that this can be a good thing or a bad thing. In the case of First Magnus Financial Corporation, it was negative. In the good way, the trickle-down theory is where businesses do well and therefore hire more people who subsequently have enough money to shop more, go out more, and make more investments. The trickle-down theory works the other way when a large company like First Magnus goes broke and files bankruptcy, and people not only lose their jobs, but other companies that worked with it suddenly lose business and money as well.

When First Magnus branches closed their doors, a lot of employees were laid off and suddenly out of work. Often the blow of losing a job suddenly is softened by some severance pay, but this wasn't the case with Magnus. Employees were told not to come back to work, nor would they immediately receive any pay that was owed to them. Though former employees hoped to eventually get the pay that was owed to them by Magnus, they knew that even in the best case scenario it would probably take a long time.

Eventually First Magnus was given the go-ahead to pay back the creditors to whom they owed money, but for most it was only going to be pennies on the dollar. Former employees were also viewed as creditors, and there was a limit to what Magnus would have to pay them what they were owed. Employees who were owed less than $10,000 would be alright, but $10,000 was the limit, so those who were owed more than that would have to settle.

First Magnus was simply another casualty in the housing market crisis, and the communities around the closed branches felt the bite as well. Liquidation of the company helped to raise funds to pay back creditors and former employees, but there was still a ripple effect that could be felt. This is happening with mortgage companies in many areas, and communities can only hope that other area businesses will fare better. Magnus was only one of many mortgage companies that could not survive what was happening to the credit industry.

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Title:	First Magnus - The Effects of Recession
Author:	Joy Stoyle
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First Magnus - The Effects of Recession