April 17, 2009

Rick Williamson, a Chicago banker turned junk-loan buyer, knew the name-calling would start again when he moved to foreclose on the Fayetteville Athletic Club, a sprawling, family-run gym and spa complex in this corner of northwest Arkansas.“Vulture, bottom feeder,” Mr. Williamson said, recalling insults thrown his way during his years hunting for bargains in distressed real estate.And just as he predicted, the insults are flying.“Trash-eating rat,” is how Robert Shoulders, the club’s owner for the last 13 years, described Mr. Williamson. “What he does is reprehensible. I am not sure how he can sleep at night.”

Mr. Williamson sees it differently. And the government agrees.As he points out, it isn’t his fault that Mr. Shoulders overextended himself by borrowing $10 million to add the spa, a preschool, tennis courts and other amenities to his once-modest health club. And by moving aggressively to collect on loans like these, Mr. Williamson says, he is playing a crucial role in helping clean up the bad debts that are clogging the economy.“If you want to fix what is ailing this country, you need to destroy the worthless debt out there,” he said, adding with characteristic candor, “You have to shut down the zombies, liquidate their assets.”