And we have the first credit union failure of the year, the IBEW Local Union 712 Federal Credit Union of Beaver, Pennsylvania.
So, we have had 2 bank failures, and 1 credit failure so far this year.
I figure that we are going to be seeing a lot more over the next few weeks, as the pandemic recession continues to widen and deepen.
General Electric is selling off its light bulb business as it continues to slowly consume itself following decades of earnings and stock manipulation by Jack Welch.
This is what happens when you make massaging finance more important than actually making stuff:
General Electric has finally found a buyer for its lighting business and will be selling off its last consumer-facing business after more than 120 years of operation.
Boston-based GE said today it would divest the lighting business to Savant Systems, a smart home management company also based in Massachusetts. The companies did not disclose financial terms of the deal, but sources told The Wall Street Journal that the transaction was valued at about $250 million.
Savant specializes in full smart home systems for the luxury market. Acquiring a lighting business directly will allow it to take advantage of vertical integration and take more control over the physical equipment it installs in consumer’ homes. Savant will keep the business’s operations in Cleveland, where it is currently based, and will receive a long-term license to keep using the GE branding for its products.
The lighting business is GE’s oldest segment, dating all the way back to the company’s founding through a series of mergers with Thomas Edison’s companies in the late 1880s and early 1890s. The company became a conglomerate early, investing in a wide array of technology and communications businesses. It moved toward aviation and energy and away from consumer products through the 1980s and 1990s under CEO Jack Welch. That industrial mindset lasted into the 21st century, under CEO Jeff Immelt, from 2001 through 2017.
By 2017, though, GE was carrying a staggering amount of corporate debt—about $77 billion, analysts estimated—and GE’s stock price dropped heavily through Immelt’s term. In October 2017, the new CEO, John L. Flannery, promised to streamline the company’s operations and divest $20 billion worth of businesses.
Jack Welch has destroyed GE by eating its seed corn, and the Wall Street masters of the universe still think that he’s a genius for it.
This is everything that is wrong with your economy in one story.
J. Crew and Neiman Marcus were each facing a host of issues before the coronavirus pandemic forced them to close their stores and eventually file for bankruptcy, including trouble adjusting to the rise of e-commerce and a lack of connection with a new generation of shoppers.
But they also shared one increasingly common problem for retailers in dire straits: an enormous debt burden — roughly $1.7 billion for J. Crew and almost $5 billion for Neiman Marcus — from leveraged buyouts led by private equity firms. Like many other retailers, J. Crew and Neiman over the past decade paid hundreds of millions of dollars in interest and fees to their new owners, when they needed to spend money to adapt to a shifting retail environment. And when the pandemic wiped out much of their sales, neither had anywhere to go for relief except court.
“Much of the difficulty that the retail sector is experiencing has been aggravated by private equity involvement,” said Elisabeth de Fontenay, a professor at the Duke University School of Law who specializes in corporate finance. “To keep up with everybody’s switch to online purchasing, there really needed to be some big capital investments and changes made, and because these companies were so debt strapped when acquired by private equity firms, they didn’t have capital to make these big shifts.”
………
In July, a report from the Center for Popular Democracy, a progressive advocacy group in Brooklyn, said 10 of the 14 largest retail chain bankruptcies since 2012 involved companies that private equity firms had acquired.
………
Private equity firms have been involved with retailers for decades. But the collapse of Toys “R” Us in 2017 put a spotlight on how major buyouts by the firms could go sideways. The chain had been burdened with $5 billion in debt from a 2005 leveraged buyout by the private equity firms Bain Capital and Kohlberg Kravis Roberts and the real estate firm Vornado Realty Trust, and it did not have sufficient funds to invest in its stores and e-commerce business during a crucial period of growth for Amazon and Walmart.
………
Marble Ridge Capital, a hedge fund that holds some of Neiman’s bonds, wrote in a public letter to the owners last month that “you have left a carcass of a company for the remaining stakeholders and have put both Neiman’s storied franchise and thousands of jobs at risk.”
………
“One of the defenses of private equity right now is, they’re saying these are structurally declining businesses already, and, look, that is a part of it,” said Andrew Park, a senior policy analyst at Americans for Financial Reform. “But again, having to service that debt makes these businesses hard, and when you see these companies blatantly taking money away, that’s the element that has really led to criticism.”
Mr. Dahiya, the Georgetown professor, said he expected more bankruptcies from retailers backed by private equity firms given the current environment and that he thought it could potentially become a political issue.
This is what took down the markets in 2008-09, and it’s not surprising that they are doing this again, since Barack Obama and Eric “Place” Holder, steadfastly refused to prosecute.
No consequences, so they went back to ripping of the rest of us:
Among the toxic contributors to the financial crisis of 2008, few caused as much havoc as mortgages with dodgy numbers and inflated values. Huge quantities of them were assembled into securities that crashed and burned, damaging homeowners and investors alike. Afterward, reforms were promised. Never again, regulators vowed, would real estate financiers be able to fudge numbers and threaten the entire economy.
Twelve years later, there’s evidence something similar is happening again.
Some of the world’s biggest banks — including Wells Fargo and Deutsche Bank — as well as other lenders have engaged in a systematic fraud that allowed them to award borrowers bigger loans than were supported by their true financials, according to a previously unreported whistleblower complaint submitted to the Securities and Exchange Commission last year.
Whereas the fraud during the last crisis was in residential mortgages, the complaint claims this time it’s happening in commercial properties like office buildings, apartment complexes and retail centers. The complaint focuses on the loans that are gathered into pools whose worth can exceed $1 billion and turned into bonds sold to investors, known as CMBS (for commercial mortgage-backed securities).
Lenders and securities issuers have regularly altered financial data for commercial properties “without justification,” the complaint asserts, in ways that make the properties appear more valuable, and borrowers more creditworthy, than they actually are. As a result, it alleges, borrowers have qualified for commercial loans they normally would not have, with the investors who bought securities birthed from those loans none the wiser.
ProPublica closely examined six loans that were part of CMBS in recent years to see if their data resembles the pattern described by the whistleblower. What we found matched the allegations: The historical profits reported for some buildings were listed as much as 30% higher than the profits previously reported for the same buildings and same years when the property was part of an earlier CMBS. As a rough analogy, imagine a homeowner having stated in a mortgage application that his 2017 income was $100,000 only to claim during a later refinancing that his 2017 income was $130,000 — without acknowledging or explaining the change.
It’s “highly questionable” to alter past profits with no apparent explanation, said John Coffee, a professor at Columbia Law School and an expert in securities regulation. “I don’t understand why you can do that.”
………
The complaint suggests widespread efforts to make adjustments. Some expenses were erased from the ledger, for example, when a new loan was issued. Most changes were small; but a minor increase in profits can lead to approval for a significantly higher mortgage.
The result: Many properties may have borrowed more than they could afford to pay back — even before the pandemic rocked their businesses — making a CMBS crash both more likely and more damaging. “It’s a higher cliff from which they are falling,” Flynn said. “So the loss severity is going to be greater and the probability of default is going to be greater.”
………
After lobbying by commercial real estate organizations and advocacy by real estate investor and Trump ally Tom Barrack — who warned of a looming commercial mortgage crash — the Federal Reserve pledged in early April to prop up CMBS by loaning money to investors and letting them use their CMBS as collateral. The goal is to stabilize the market at a time when investors may be tempted to dump their securities, and also to support banks in issuing new bonds. (Barrack’s company, Colony Capital, has since defaulted on $3.2 billion in debt backed by hotel and health care properties, according to the Financial Times.)
………
The notion that profit figures for some buildings are pumped up is surprising, said Kevin Riordan, a finance professor at Montclair State University. It raises questions about whether the proper disclosures are being made.
Investors don’t comb through financial statements, added Riordan, who used to manage the CMBS portfolio for retirement fund giant TIAA-CREF. Instead, he said, they rely on summaries from investment banks and the credit ratings agencies that analyze the securities. To make wise decisions, investors’ information “out of the gate has to be pretty close to being right,” he said. “Otherwise you’re dealing with garbage. Garbage in, garbage out.”
Once again, they are robbing us blind, and the response of the powers that be will be to bail them out.
To quote the late Paul Volker, “The only useful thing banks have invented in the last 20 years is the ATM.”
It’s an even bigger deal when they seize the phone of the Chairman of the Senate Intelligence Committee:
Federal agents seized a cellphone belonging to a prominent Republican senator on Wednesday night as part of the Justice Department’s investigation into controversial stock trades he made as the novel coronavirus first struck the U.S., a law enforcement official said.
Sen. Richard Burr of North Carolina, the chairman of the Senate Intelligence Committee, turned over his phone to agents after they served a search warrant on the lawmaker at his residence in the Washington area, the official said, speaking on condition of anonymity to discuss a law enforcement action.
It’s interesting, because authorization for this had to come from the most senior levels of the Department of Justice, meaning Attorney General William Barr, a man who has exhibited no interest whatsoever in pursuing this sort of corruption.
What’s more, there have been no similar serving of warrants to Senator Kelly Loeffler (R-Ga.), who is objectively in an even more egregiously compromised position:
In late February and early March, Sen. Kelly Loeffler (R-Ga.) sold stocks valued at between $1.25 million and $3.1 million in companies that later dropped significantly, including ExxonMobil. She also bought shares in Citrix, which makes telework software.
Loeffler, who was appointed to her seat to fill a vacancy and faces an election later this year, said after the sales became public that she and her husband would divest all individual stocks.
Why would William Barr do this when it is so out of character, and not go after the least senior member of the Senate?
Perhaps because Burr has temporarily stepped down as Chairman of the Intel Committee, and Burr has bee working to release a declassified version of his committee’s report of Russian involvement in the 2016 campaign:
………
The public evidence again Burr is quite damning, so there’s no question that this is a properly predicated investigation.
Still, coming from a DOJ that has gone to great lengths to protect other looting (and has not taken similar public steps against Kelly Loeffler), the move does raise questions.
Particularly given the focus that Richard Burr gave, during the John Ratcliffe confirmation hearing, to getting the final volume of the SSCI Report on 2016 declassified and released by August.
………
If Richard Burr is prepping to reverse his prior public comments about “collusion,” it might explain why the Bill Barr DOJ, which has stopped hiding that it is an instrument used to enforce political loyalty to Trump, would more aggressively investigate Burr than others.
Again, there’s no question that this is a properly predicated investigation. But in the Barr DOJ, properly predicated investigations about political allies of Trump all get quashed. This one has, instead, been aggressively and overtly pursued.
This is a political hit against a guilty man conducted by the most corrupt Attorney General in the history of the United States.
On the other hand, Burr is as guilty as hell.
¯_(ツ)_/¯
Education Secretary Betsy DeVos is continuing to garnish the wages of federal student loan borrowers who fall behind on payments even though Congress suspended the practice in the economic rescue package, according to a new lawsuit.
An upstate New York woman who works as a home health aide for less than $13 an hour claimed in the lawsuit, filed late Thursday, that the federal government seized more than $70 from her paycheck as recently as last week — nearly a full month after President Donald Trump signed the CARES Act into law. She is suing on behalf of about 285,000 borrowers whose wages are being garnished, according to the lawsuit.
DeVos first announced in March that she would take administrative action to automatically stop the Education Department from seizing the wages —and tax refunds — of defaulted student loan borrowers for at least two months. Congress then included that policy in the CARES Act and extended it, prohibiting the Education Department from garnishing wages or tax refunds through Sept. 30.
But the proposed class action lawsuit claims that the Education Department hasn’t actually halted the practice and is continuing to garnish wages in violation of the CARES Act. It cites a Washington Post story that said the department had not sent formal letters to tell employers to stop withholding money from borrowers’ paychecks on behalf of the government.
She is in the running for being the most contemptible member of the Trump administration, and this is against remarkably stiff competition.
The Internet Corporation for Assigned Names and Numbers, the non-profit organization that oversees the Internet’s domain name system, has rejected a controversial proposal to sell the .org domain to a private equity group for more than $1 billion. It’s a serious—quite possibly fatal—blow to a proposal that had few supporters besides the organizations that proposed it.
Currently, the .org domain registry is run by the Public Interest Registry, a non-profit subsidiary of another non-profit called the Internet Society. PIR was created in 2002 to run the .org domain and has been doing so ever since. But last fall, the Internet Society stunned the non-profit world by announcing it would sell the PIR—and, effectively, ownership of the .org domain—to a new and secretive private equity firm called Ethos Capital for more than $1 billion.
The announcement created a swift and powerful backlash. In its resolution formally rejecting the transaction, ICANN says it received its first letter opposing the deal just two days after it was announced. The group would eventually receive letters from at least 30 groups opposing the deal, as well as numerous negative comments during public hearings. Meanwhile, ICANN says, the deal has received “virtually no counterbalancing support except from the parties involved in the transaction and their advisors.”
Also, the California Attorney General strongly implied that there might be a criminal investigation to follow if they approved this.
This has had the effect of driving the costs of rentals up. (See here)
The pandemic lock-down is wiping out the people speculating on properties as pricey short term rentals:
For years, Cheryl Dopp considered the ding on her phone from a new Airbnb Inc. booking to be the sound of what she called “magical money.” A property she rented out in Jersey City, N.J., on Airbnb could gross more than $8,000 a month, she said, double what long-term tenants would pay.
Now, Ms. Dopp associates the dings with cancellations and financial misery. The 54-year-old information-technology contractor said she had about $10,000 in bookings evaporate overnight in March. She has $22,000 in monthly expenses for a largely Airbnb portfolio, she said, that included another Jersey City home and a house in Miami.
In her mind, the promise of more rental income offset the growing debt, she said. “I made a bargain with the devil.”
Ms. Dopp is part of an upper-crust dimension of the gig economy: property owners and speculators who bought or leased real estate in pursuit of Airbnb profits. Airbnb spawned a cottage industry of homeowners running their own property empires, turning the startup into a hotelier without any hotels.
………
In Nashville, Tenn., which grants permits to hosts, about a dozen of the city’s 3,600 nonowner-occupied listings—which include Airbnb properties—surfaced in the first days of April as advertisements for one-year leases on Zillow or Craigslist, according to Host Compliance LLC, a software provider tracking permits for the city. City leaders said they feared more would follow.
One of the apartments is in City View, a development with a swimming pool and rooftop views of downtown. When City View was completed in 2015, councilman Freddie O’Connell, who represents the district and has worked to rein in short-term rentals, hoped it would lure young professionals and families and help ease the city’s housing shortage. Instead, he said, it became a haven for short-term rentals.
Airbnb thought that they would help people rent out spare rooms or basement apartments, and instead it has become a vehicle for unproductive real estate arbitrage, because everything in the United States becomes a vehicle for unproductive arbitrage.
Hopefully, the pandemic, and the collapse of Airbnb, will result in a reduction in long term rents that have priced people out of housing.
Federal Reserve To Infuse Wall Street With $500 Billion Worth Of Cocaine
The full broadcast is below:
It turns out that Nancy Pelosi’s under qualified pick to monitor the Federal Reserve’s bailout programs, Donna Shalala, somehow or other managed to forget to report her stock transactions as required by federal law.
And this woman is supposed to supervise the most powerful central bank in the world?
Miami Democratic Rep. Donna Shalala, the lone House Democrat on the committee set up to oversee $500 billion in taxpayer money being used for coronavirus-related payouts to large businesses, violated federal law when she failed to disclose stock sales while serving in Congress.
Shalala told the Miami Herald on Monday she sold a variety of stocks throughout 2019 to eliminate any potential conflicts of interest after she was elected to Congress in November 2018. But the transactions were not publicly reported as required by the STOCK Act, a 2012 law that prohibits members of Congress and their employees from using private information gleaned from their official positions for personal benefit and requires them to report stock sales and purchases within 45 days.
Shalala’s office said the congresswoman and her financial adviser made a mistake.
Shalala, the former head of the Department of Health and Human Services under President Bill Clinton, is in the process of setting up a blind trust for her assets, and transactions made within a blind trust without a lawmaker’s knowledge are not required to be disclosed. But the blind trust isn’t finalized, meaning any transactions would need to be made public.
While acknowledge her political skills, on policy, there is literally nothing on policy that Pelosi won’t make a dog’s breakfast of.
I have come to the conclusion is not that Madam Speaker is not a fachidiot, someone whose expertise in one area is mirrored by incompetence in unrelated areas, but that this is intentional.
She wants no meaningful change nor any accountability as it applies to the rich and powerful.
One of the 3 members is appointed by the Democrats, and Pelosi ignored knowledgeable people who wanted the job and appointed freshmen Congresswoman, corporate stooge, and strike breaker Donna Shalala (D-Fla.), because bailing out rich people and f%$#ing the American worker is a core value of Speaker Pelosi:
For the past week, we’ve watched this absurd spectacle where money is flying out the door of the Federal Reserve bailout programs, and the only person in a position to conduct oversight has nothing more than a Twitter feed. Bharat Ramamurti, the former Elizabeth Warren staffer who I interviewed last week, was until yesterday the only member of the Congressional Oversight Commission, a five-member panel outside of the executive branch (so Donald Trump can’t fire anyone associated with it) charged with monitoring the bailout.
Ramamurti and his tweets have been unusually effective, getting the Fed to agree to publish all transactions that use public funds, and some detailed information. But it’s clear that he needs some help: a staff, an office, and maybe the other four members on the panel to cover what could reach $4.5 trillion in corporate lending.
He got three of them yesterday. Republican leaders in the House and Senate chose nondescript Congressman French Hill (R-AR) and Chamber of Commerce mole Sen. Pat Toomey (R-PA). The pick to watch was the House Democratic seat. There was no obligation to choose a sitting member of Congress, but Katie Porter (D-CA) was actively seeking the job, and really was the only member actively seeking the job. With deep experience in financial services and demonstrated aptitude with oversight, there was really no better person for the job.
House Speaker Nancy Pelosi chose her friend, freshman Congresswoman Donna Shalala (D-FL).
This is a stunning selection. Shalala, according to sources, had no interest in the job. She has no expertise in the financial industry or the Fed. The two committees that would prepare you for this position are Financial Services and Oversight (Porter sits on both). Shalala sits on Education and Labor and Rules. She’s on the early childhood education subcommittee, so if that ever comes up in discussing the Fed’s corporate bond or high-yield ETF purchases we’re in good shape.
Yes, Shalala was Health and Human Services Secretary. In her public statement, Pelosi highlights that, saying Shalala will “ensure that this historic coronavirus relief package is being used wisely and efficiently to protect the lives and livelihoods of the American people, and not be exploited by profiteers and price-gougers.”
But the oversight panel has nothing to do with public health or the pandemic. It’s supposed to examine Federal Reserve lending programs and whether they are assisting the public in economic stabilization and job recovery. These are deliberately complex programs that require for oversight someone with a passing familiarity with the financial system and corporate America. The only expertise Shalala has in all that comes from all the stocks she owns.
I know that Pelosi does a good job of keeping the House Democratic Caucus in line, but she has spent her entire career working for rich people at the expense of the ordinary working people.
Her career needs to end.
Oil prices, specifically the price of WTI crude, just fell to almost NEGATIVE $40 a barrel today.
Part of this was an artifact of the calendar, futures contracts were coming due, so stockbrokers were facing the possibilities of thousands of gallons of crude oil being pumped into their swimming pools, but this is f%$#ed-up and sh%$.
When you consider the fact that fracking is a particularly expensive way to extract oil, and that the best evidence is that it has never been profitable, there are going to be a whole bunch of eager investors left holding the bag:
Of all the wild, unprecedented swings in financial markets since the coronavirus pandemic broke out, none has been more jaw-dropping than Monday’s collapse in a key segment of U.S. oil trading.
The price on the futures contract for West Texas crude that is due to expire Tuesday fell into negative territory — minus $37.63 a barrel. The reason: with the pandemic bringing the economy to a standstill, there is so much unused oil sloshing around that American energy companies have run out of room to store it. And if there’s no place to put the oil, no one wants a crude contract that is about to come due.
Underscoring just how acute the concern is over the lack of immediate storage space, the price on the futures contract due a month later settled at $20.43 per barrel. That gap between the two contracts is by far the biggest ever.
“The May crude oil contract is going out not with a whimper, but a primal scream,” said Daniel Yergin, a Pulitzer Prize-winning oil historian and vice chairman of IHS Markit Ltd.
There is a whole bunch of money from a whole the “smartest people in the world” that just got lit on fire.
We have had the 2nd bank failure of the year, The First State Bank, of BarboursvilleWV.
This would suggest 7-8 bank failures for the year, as versus 4 in 2019, and 0 in 2081, but the Covid-19 economic downturn would suggest that the eventual numbers could be significantly higher.
If you want to play with numbers, or look at trends, you could use the Full FDIC list.
All too often it seems to be an excuse for saying or doing something contemptible:
Debt collectors, facing growing demands to freeze the collection of debt across the country amid the economic hardship caused by the coronavirus pandemic, are mobilizing their lobbyists to push back.
………
All of this has the industry deeply concerned. The Association of Credit and Collection Professionals, also known as ACA International, a lobby group for debt collectors, has fired off letters to Brown and federal officials, sharply criticizing the push to suspend debt collection.
………
Mark Neeb, the chief executive of ACA International, wrote that he is concerned that “certain lawmakers have suggested that eliminating the work of the ARM Industry is a prudent action that should be taken in response to the coronavirus,” a reference to the accounts receivable management industry, a term of art for debt collectors. Women, Neeb wrote, “make up 70 percent of the total debt collection workforce and 40 percent is ethnically diverse.” Shutting down debt collection during the crisis, Neeb argued, would negatively “impact the diverse workforce that makes up the collection industry” and “many of these employees and businesses would face extreme hardship.”
This is completely beneath contempt.
Hoocoodanode?
When President Trump signed the $2 trillion economic stabilization package on Friday to respond to the coronavirus pandemic, he undercut a crucial safeguard that Democrats insisted upon as a condition of agreeing to include a $500 billion corporate bailout fund.
In a signing statement released hours after Mr. Trump signed the bill in a televised ceremony in the Oval Office, the president suggested he had the power to decide what information a newly created inspector general intended to monitor the fund could share with Congress.
Under the law, the inspector general, when auditing loans and investments made through the fund, has the power to demand information from the Treasury Department and other executive branch agencies. The law requires reporting to Congress “without delay” if any agency balks and its refusal is unreasonable “in the judgment of the special inspector general.”
Democrats blocked a final agreement on the package this week as they insisted on stronger oversight provisions to ensure that the president and Treasury Secretary Steven Mnuchin could not abuse the bailout fund. They feared that Mr. Trump, who has previously stonewalled congressional oversight, would do the same when it came to the corporate aid program.
But in his statement, which the White House made public about two hours after the president signed the bill, Mr. Trump suggested that under his own understanding of his constitutional powers as president, he can gag the special inspector general for pandemic recovery, known by the acronym S.I.G.P.R., and keep information from Congress.
………
The signing statement also challenged several other provisions in the bill, including one requiring consultation with Congress about who should be the staff leaders of a newly formed executive branch committee charged with conducting oversight of the government’s response to the pandemic.
No one should be surprised by this happening.
In fact, it would be a shock if this were NOT the case.
Schumer and Pelosi are showing the political acumen of Little Orphan Annie.
Late last week, Republican Senator Richard Burr of North Carolina briefly became the most detestable politician in America, at a time when public outrage toward politicians was at an all-time high.Burr dumped hundreds of thousands (if not millions) worth of stocks after non-public briefings about the extent of the coronavirus crisis in the Senate Intelligence Committee.
………
On February 7th, days after being briefed by intelligence officials on response by foreign powers to the outbreak, he co-wrote an editorial on “steps the U.S. government is taking to protect you.” In it, he declared:
The United States today is better prepared than ever before to face emerging public health threats… in large part due to the work of the Senate Health Committee, Congress, and the Trump Administration.
Six days later, Burr sold off 33 stock holdings. Later that month, on the same day Donald Trump was saying coronavirus will “disappear” like “a miracle,” Burr spoke at a private luncheon for heavy financial hitters at the Tar Heel Club. “[Coronavirus] is much more aggressive in its transmission than anything that we have seen in recent history,” he said.
………
Recapping: the Senate’s Intelligence Committee chief was briefed by intel officials, actively reassured the public, dumped stock, whispered the real dope to rich connected folk, got busted by media, then feebly claimed he made financial decisions watching CNBC, before a seething public bracing for years of agony due to financial collapse. If there’s such a thing as a grand slam of political assholedom, Burr hit it.
………
The Burr scandal shows how difficult it is to effect meaningful reform in Washington. If not just one but many members of congress feel sufficiently bulletproof that they’re not scared of trading against a pandemic, how will the government ever deal with less obviously grotesque issues?
This is why we can NEVER trust any sort of Republican bailout package, there is literally no limit to their capacity for corruption.
SoftBank Group Corp. is backing away from part of its planned bailout of WeWork, people familiar with the matter said, privately citing several regulatory investigations of the office-sharing company.
A notice sent to WeWork shareholders Tuesday said that SoftBank believes regulatory probes into the startup’s business, including from the Securities and Exchange Commission and Justice Department, give it an out under the deal struck last fall to purchase $3 billion of WeWork shares from existing investors.
That would include Adam Neumann, former chief executive of WeWork parent We Co., who had the right to sell up to $970 million in stock as part of the October deal that led to his ouster from the company’s board.
The development won’t affect the $5 billion lifeline SoftBank agreed to give WeWork directly—cash the startup badly needed then as it ran out of runway, and which it is likely to continue to need as the worsening coronavirus outbreak empties out its desks.
Here’s hoping that Neumann walks away without his billion dollar bailout.
Here’s also hoping that he spends a fair amount of time in jail, as a warning to others. (Same goes for Elizabeth Holmes)
This has been over the past 2 weeks.
This is a collapse that is unprecedented since at least the end of World War II:
As fallout from the coronavirus pandemic hits the economy, it’s slamming the American workforce: Some 18% of adults reported that they had been laid off or that their work hours had been cut, a new poll found.
The proportion affected grew for lower-income households, with 25% of those making less than $50,000 a year reporting that they had been let go or had their hours reduced, according to a survey released Tuesday by NPR, PBS NewsHour and Marist of 835 working adults in the contiguous United States.
It’s no surprise that the NYSE triggered the circuit breakers again, for the 3rd time in less than 2 weeks.
The Federal reserve is bailing out the commercial paper market.
Maybe, if they hadn’t allowed these short term debt markets to grow into a largely unregulated sh%$ show of other $1 trillion, they would not have to be bailing them out now:
The Federal Reserve said it would start making loans to American corporations, relaunching a crisis-era tool to help calm short-term debt markets that have faced intensifying strains in recent days.
The Fed trained its sights Tuesday on dysfunction in the $1.1 trillion market for short-term corporate IOUs called commercial paper. Companies use commercial paper to finance their day-to-day business operations such as payroll expenses.
While the Fed can’t buy corporate debt or lend directly to households and businesses, it can invoke emergency powers to establish lending facilities that, in turn, extend credit.………
In launching the Commercial Paper Funding Facility, the Fed is trying to encourage investors to return to that market to ensure that eligible issuers can roll over maturing obligations. The central bank’s facility will purchase three-month debt from firms with high credit ratings. The Fed deployed a version of the tool between 2008 and 2010, during and after the financial crisis.
This sort of “Dark Web” financial bullsh%$ will destroy our economy, and when times are good they should be aggressively regulated so that they do not represent systemic risk.
Of course, this never happened, because when this all went pear-shaped in 2008 and 2009, the powers that be were dedicated to ensuring that there would be no meaningful reforms.
Needless to say, this is not the the action of people who are keeping their sh%$ together:
The Federal Reserve announced on Sunday it would drop interest rates to zero and buy at least $700 billion in government and mortgage-related bonds as part of a wide-ranging emergency action to protect the economy from the impact of the coronavirus outbreak.
The moves, the most dramatic by the U.S. central bank since the 2008 financial crisis, are aimed at keeping financial markets stable and making borrowing costs as low as possible as businesses around the country close and the U.S. economy hurtles toward recession.
The Fed, led by Chair Jerome H. Powell, effectively cut its benchmark by a full percentage point to zero. The benchmark U.S. interest rate is now in a range of 0 to 0.25 percent, down from a range of 1 to 1.25 percent.
In addition to rate cuts, the Fed announced it is restarting the crisis-era program of bond purchases known as “quantitative easing,” in which the central bank buys hundreds of billions of dollars in bonds to further push down rates and keep markets flowing freely. The Fed is also giving more-generous loans to banks around the country so they can turn around and offer loans to small businesses and families in need of a lifeline.
I’m not sure why the fact that the Fed is panicking is supposed to reassure markets.