Yesterday I asked Why Does Trump Want to Hide Who Took Small Business Loans?
In addition to members of Congress wanting to hide loans they received, Wall Street on Parade has uncovered more sleazy details.
Even though the loans are guaranteed against losses by the SBA, the Federal Reserve launched its own program, called the Paycheck Protection Program Liquidity Facility, to reimburse lenders who make these loans. So far, the Fed has reimbursed $57 billion of these loans as of June 10, out of total loans approved by the SBA of more than $500 billion.
The odd thing about those Fed reimbursements is that a stunning $5.3 billion in reimbursements, or 9 percent of the $57 reimbursed by the Fed, have gone to a tiny New Jersey bank, Cross River Bank. According to the SBA, as of May 30, there were 5,454 lenders that had made loans in the PPP program. Cross River Bank is just one of those 5,454 lenders and yet it received 9 percent of the Fed’s reimbursements. How does that make any sense?
According to the FDIC, Cross River Bank has only one branch office and has been around for just 12 years. The $5.3 billion that the Fed has reimbursed to Cross River Bank is more than twice its total assets of $2.5 billion as of March 30. Cross River Bank has made more than 50 percent of the dollar amount that Wells Fargo has made in PPP loans but it has only 250 employees rather than the 250,000 employees working for Wells Fargo to review and process these PPP loans.
The Secret Bank Behind The Fintech Boom
On December 31, a Forbes investigation revealed The Secret Bank Behind The Fintech Boom.
Cross River is not a typical community bank. There are no tellers here, or ATMs or safe deposit boxes. There are startup touches—a kitchenette stocked with LaCroix sparkling water, gourmet coffee and a game room.
Unlike in banks of yesteryear, virtually all Cross River’s lending officers aren’t human beings. They are apps. Cross River’s loans originate mostly from 15 or so buzzy venture-capital-backed financial technology startups, so-called fintechs, that go by names like Affirm, Best Egg, Upgrade, Upstart and LendingUSA. The fintechs provide the customers; Cross River provides the licenses and infrastructure. It holds 10% to 20% of each loan it issues, and the massive volume of fintech loans has propelled Cross River to $2 billion in assets, up from $100 million a decade ago.
Once you get beyond the slick iPhone apps and inflated tales of big-data mining and AI-generated lending decisions, you realize that many fintechs are nothing more than aggressive lending outfits for little-known FDIC-insured banks.
Dirty Details
Wall Street on Parade discusses more Dirty Details.
Despite originally promising transparency, U.S. Treasury Secretary Steve Mnuchin is now stonewalling Congress on releasing a list of the recipients.
Congress sold the plan to the public on the basis that the loans would go to small businesses with less than 500 employees. The funds were to be predominantly used to keep workers employed and allow the businesses to survive the coronavirus shutdowns.
Instead, our search of filings at the Securities and Exchange Commission reveals that dozens of debt zombie companies that trade on Nasdaq got the loans. Dozens of publicly-traded companies with large credit lines from banks got the loans. Dozens of companies with a lot more than 500 employees got the loans. It’s beginning to look like tens of billions of dollars in PPP loans were simply funneled out the door rapidly with little oversight into who was getting the loans.
Meanwhile, Back in Ohio
Meanwhile, back in Ohio, Nearly 24,000 Ohioans Told to Repay Unemployment Checks.
Marnie Behan got a surprising message last month from Ohio’s Department of Job and Family Services about her ongoing unemployment payments. Instead of sending her next unemployment payment, they said she needed to pay the state back.
The bill was almost $3,000. She had 45 days to repay the money, or the case would be sent to the Ohio Attorney General.
There are 24,000 accounts like that of Marnie Behan, just in the state of Ohio.
Transparency? Ha!
Taxpayers funded this $500 billion slush fund. We have a right to know how the money was spent.
Moreover, Treasury Secretary Steve Mnuchin and promised transparency.
Slush Fund Rules
There are rules for the small fry, determined in arrears, and rules for the big tuna also determined in arrears.
Whereas the new rules for the little guys demand repayment for $3,000, the new rules for the big tuna will hide who got hundreds of billion of dollars.
Now for obvious reasons, the Trump administration wants to sweep this all under the rug and hide it.
Mike “Mish” Shedlock
Really disturbing. So much corruption in this administration.
I highly doubt Trump knows the details of this issue. Maybe Mnuchin does. It’s a pretty petty thing to worry about considering the trillions in stimulus and billions in racist damage done by the BLM tantrum
Mish are you censoring comments or are they just getting lost in the ether?
I’m wondering that too KK. I posted yesterday on this thread and it has never appeared. Hmmmm?
That this was another boon for the banks was obvious from the start. Any prudent small business man would NOT keep employees on for an indeterminate period and rack up debt on the promise of maybe having them forgiven. Just a way to write another few hundred billion in loans that Uncle would guarantee. No different from the home loans 2005 through 2009. Makes me sick.
Many countries and central banks are doing this, in one form or another… “no lemming should walk alone”.
“That this was another boon for the banks was obvious from the start.”
…
1% interest … Zero risk … what is there NOT to like?
“Once you get beyond the slick iPhone apps and inflated tales of big-data mining and AI-generated lending decisions, you realize that many fintechs are nothing more than aggressive lending outfits for little-known FDIC-insured banks. “
That’s the sole and only story of all, 100%, of everything passed off as “financial innovation” since the ATM.
The “financial industry” has never been an industry at all. Just a simple theft and welfare racket. A bunch of absolute mediocrities at everything, being handed other people’s money by the Fed and junta. In exchange for doing nothing whatsoever of value.
While uncritical idiots are being told, and many are seemingly stupid enough to fall for it even, that the utter mediocrities which is all every single Wall Street institution has ever employed, “make money” because they are somehow “smart.” And that “we” “need” money center banks to “allocate capital” blah, blah. As if handing welfare recipients “capital” stolen from productive people to “allocate,” can ever, even in theory and much less practice, result in it being efficiently allocated.
The entirety of “Investors” and the useless middle men feeding off them, make money 100% exactly the same way anyone else on public welfare does: They have it handed to them by the government. Who, in order to have something to hand the pure parasites, first have to tax/steal it from those sentient and competent enough to actually make any of it.
That’s all “finance” is. Absolutely all “finance” is. It’s all contemporary “investing” is. It’s all “the ownership society” is. Without even a single exception whatsoever.
“The “financial industry” has never been an industry at all. Just a simple theft and welfare racket.
…
I recall an interview Tim Geithner gave in 2010 (or so). On the topic of getting the US on the move again. Rather than say boosting exports or manufacturing (which might actually help J6P) he was positively frothy on …. expanding financial services …. across The Globe!
“It’s beginning to look like tens of billions of dollars in PPP loans were simply funneled out the door rapidly with little oversight into who was getting the loans.”
…
As was the plan.
The whole thing from start to finish took only a week. Bill several hundred pages. A lot of it written prior by lobbyists just waiting for an “emergency” bill that was going to be shoved thru with little / no debate.
As usual, the format:
A Lot For Us (Insiders) and A Little For You (Main Street).
America: Too Weak to Rein in Its Own Empire?
Donald Trump ‘withdrawing’ troops from Germany isn’t a crisis of national confidence; keeping them there is. https://www.theamericanconservative.com/articles/america-too-weak-to-rein-in-its-own-empire/
Has nothing to do with strategy and everything to do with trumpty getting his fee fees hurt and lashing out. Putin leads him around by his feelings.
The Spanish government is hiding ncov fatalities according to
Wouldn’t surprise me a bit. If China can do it, why not anyone else?
….well it is in full view for anyone who knows most basic math. That is what is surprising, and that no msm has even picked up on it. A recent tweet picks up on that the lancet is using these figures to give arguments that represent nearly only half the actual figure. I think it has been obvious that all the figures worldwide are not reliable, but to just post zero fatalities day after day when they are openly recorded is something else. I would say it was to give a good image to attract tourism this summer, but that doesn’t pass the test, so it is most likely just representative of how the existing government thinks – that the population are just a spreadsheet to use to paint whatever picture they choose with. I have met that attitude personally , it is surreal. Some Spanish really don’t like it
trump: Make Assholes Great Again!
And all this surprises you?
C’mon Mish!
This is big money the big fish…but don’t worry they have us distracted on other things that are so much more important than a few bucks here and there.
The reason this administration may be doing is they know their time is up this year. They are trying pay back as many of their donors as possible. Trump is going to have to flee the United States to a country with no extradition with anyone.
“Where are the indictments?” Sound familiar?
Taxpayers didn’t fund anything. This is money created out of thin air by treasury and the Fed. So this is more impetus for MMT for all. They should just start a fund named the Human Fund – Money For People.
You want to give money to the filthy poors? That’s unamerican!
“This is money created out of thin air by treasury and the Fed”
The cost of paying taxes, isn’t that some numbers in bank ledgers get debited and credited and “taxpayers” ‘s nominal numbers happen to get smaller as a result.
Instead, the cost imposed on taxpayers, is their effect on real purchasing power: The ability of taxpayers to purchase real goods and services, which has real economic value, is decreased as a result of the rejigging of ledger numbers. That’s the cost which matters: Reduced ability to purchase and consume real goods.
The EXACT same effect, is accomplished by printing money. Since printing beneficiaries can now afford to bid real goods, which printing creates no more of, away from those who worked to earn the ability to purchase them.
There is no real difference at all between formal taxation and taxation by debasement. No new value is created neither by printing money nor by formal taxation. No new wealth. Yet the beneficiaries of both, can as a result of them being undertaken, purchase a larger share of the total number of real goods. Hence leaving the rest with less. Both processes are pure redistribution, and differ in no way at all whatsoever. Just as neither of them differ in any way from simply burglary committed on a grand scale.
I think we both just said the same thing in different ways, I agree with you here but I am also passionate about it and a bit afraid because I am on a broken income. Oh they say it is fixed, but looks broken to me.
I get what you are trying to say C_O but it is actually off by a little bit because when money is invented out of thin air and trillions and TRILLIONS have been lately, all of us will be on the hook for it via dollar devaluation. If a company like IBM or Ford have a billion shares out there and they issue another billion without saying much of anything to anyone about it then what happens to the holders of the now diluted shares? You could think of the total stock of money as shares in the American economy. By the time the economy digests just how much has been, is being created, a loaf of bread will be $20 and a house will cost a million or more not just in the Bay Area but everywhere. The wealthy will be fine especially considering that most of the new money bolsters assets prices and thus the top 10% who own 84% of all assets. But the rest of us will have fallen farther and deeper behind. In Oregon I estimated that a middle class equivalent life would cost a single guy like me at minimum $80k per year, yet even though most years I would get zero or less than a 2% raise I was still at $36k for my veteran disability. Here in Florida I would estimate now that my income is actually low income and at least $30k short of middle class. I am making do for now, but I find my grocery store expense has already risen by about $100 per month just since the year started. By Xmas we will either be aware of a very stiff inflation or we will have seen the economy fall into a deflationary depression. Though assets on Wall Street will still be protected with all this new money. When house prices start to drop that will be the end of the middle class in the US and a LOT of people have borrowed against equity to get through this period, if their loans are called because of falling house equity they are going to be dead as doornails, homeless.
I believe we will see bailouts for all once the Dems win the senate and White House. It will be fair.
Why would anyone be shocked or even mildly surprised by this?
All politicians make their money by graft and corruption (including their salaries). Check the net worth of nearly all of the bigwigs and you will find individuals who have either never had a real job or at best worked at a job that can’t even come close to explaining the amounts of money and valuable properties and holdings they possess.
Do you think it’s magic? Does money and property just fall into their laps while they are sitting there innocently?
They’re thieves; no better than common criminals.
And before anyone says anything about voting them out – please! Voting is a fool’s errand. I want to throw up every time there’s an election and everyone walks around showing off their “I Voted” stickers. Voting legitimizes a rotting corpse of a system – cloaking it in a fake silk blanket of freedom and democratic values.
The best statement our society could make as a whole would be for them to hold an election and have less than 2% of the people show up to vote.
If 2% of registered voters showed up Trump would still claim victory if he won the electoral college by a single vote, he would call it a landslide. I happen to agree with you here but it is not enough to bemoan the situation, where are the suggestions for a solution? I always thought it was my civic duty to vote, but if the choice is between Trump and Biden with a socialist black woman as VP then I doubt I will bother because either and both would just be the end of America as we know it. I need not support this.
The way I see it, because voting/complaining/protesting no longer work, there are only two solutions left:
Having seen combat with my own eyes and not really wanting to ride in that goat-rodeo again, I am currently working to make Option 2 a reality for myself as quickly as possible.
I have no idea how to do it and remain in the country however. Then again, given the direction things are going, staying here is probably a bad idea anyway.
“All politicians make their money by graft and corruption (including their salaries).” What an ignorant statement…of course this is backed by extensive research. Stay off the internet …you are embarrassing yourself !
Mish is hiding his support for Google that is actively crushing Zerohedge. In his anti union philosophy he forgot that people are free to organize against a monopolistic threat but he’d rather be quietly paid off in the short term. Mish always sides with Google and China over his colleagues. When the Street is asked to close down this blog for wrong think nobody is going to care because you sat on the side lines for some payola.
That $5 billion is DC’s cut,the politicians divi the cash up between them.Trump clears 50-60 million,Nancy a cool 12-13 mil.Obama did the same thing.DC always skims 10% off the top,that automatically goes to the House (of Representatives)Edge!
President Trump’s Watergate?
(He may not have had a hand in distributing public funds to companies that should not have received them, but as head of the executive branch he will be held responsible if there is an intentional cover-up). If there is anything to this, the Democratic Party will have wall-to-wall coverage of it come September.
We Can Protect the Economy From Pandemics. Why Didn’t We?
A virologist helped crack an impossible problem: how to insure against the economic fallout from devastating viral outbreaks. The plan was ingenious. Yet we’re still in this mess. https://www.wired.com/story/nathan-wolfe-global-economic-fallout-pandemic-insurance/
Rubbish. Admittedly I only read half, but this sounds similar to the CDS debacle, the portfolio insurance debacle, and many other insurance schemes that failed in the past.
At the end of the day, it requires “someone” or multiple someones to pay for the event. First of all, smart people will never write these kinds of insurances so what ends up happening is what we had earlier with AIG having to be bailed out by the government i.e. only suckers would enter into such agreements and being suckers, you can probably guess what’s going to happen to them.
There is NO way to protect the economy, etc from certain events, full stop.
This is where the real looting is happening… under cover of police brutality protests and riots and covid, oh my!
“Cross River”? Which river? Across the Hudson River from Trump Tower?
Those paying attention saw through the Trump when he made Mnuchin his first (and probably worst) cabinet selection. Despite all the turmoil in the administration, Mnuchin has never been in danger and operates with impunity.
I hope people are starting to realize that the path to riches is no longer hard work and ingenuity, but access to Fed largesse.
Goldman Sachs has no doubt been angling for that cabinet placement for years. Mnuchin is the realization of that dream. Who do you think sponsored Larry Kudlow?
Goldman Sachs supported Hillary for president.