Sean Murray is the President and Chief Editor of deBanked and the founder of the Broker Fair Conference. Connect with me on LinkedIn or follow me on twitter. You can view all future deBanked events here.
Articles by Sean Murray
Bloomberg is Officially Running for President
November 25, 2019
Former NYC Mayor Michael Bloomberg is officially running for President. He announced it over the weekend.
His campaign’s website paints him as a self-made entrepreneur who at 39-years old founded a company in a one-room office with the idea of turning a computer that connects users to a vast network of information and data. Today, Bloomberg LP employs more than 20,000 people and Bloomberg the individual is the 9th richest person on Earth (Forbes).
His campaign’s website is light on the name Bloomberg and heavy on the name “Mike,” perhaps to cast him as the friendly hegemon next door. One page on his website refers to him as Mike 128 times while the word Bloomberg appears only 12 times and almost entirely in connection with things his businesses have done. Even his logo leads with a soft all-lowercase mike atop BLOOMBERG2020.
Baby apparel for sale on his website goes even further to understate his power by simply stating m 2020.
Democratic voters will now have to choose between frontrunners Joe Biden, Elizabeth Warren, Bernie Sanders, and this other dude named mike.
Sanders was quick to voice his displeasure with the new competition:
We do not believe that billionaires have the right to buy elections.
That is why multi-billionaires like Michael Bloomberg are not going to get very far in this election. pic.twitter.com/738Eg5ssLe
— Bernie Sanders (@BernieSanders) November 24, 2019
Canadian Lenders Summit Recap
November 23, 2019
The Canadian Lenders Association’s largest annual event brought together hundreds of executives from the fintech and lending industries. It was hosted at MaRS, a dedicated launchpad for startups in Downtown Toronto that occupies more than 1.5 million square feet and is home to more than 120 tenants, many of which are global tech companies.
After OnDeck Canada CEO Neil Wechsler was introduced as the new chairman of the association, the day kicked off with a presentation by Craig Alexander, the Chief Economist of Deloitte Canada. Alexander explained that after some major warning signs sounded off late last year and early this year, Canadian growth and positive economic indicators have returned. He opined that politics in Canada and the United States will play a strong role in the economic outcomes of both countries going forward.
Panels on a variety of topics dominated the rest of the day with an interlude keynote from author Alex Tapscott who spoke about the financial services revolution.
The sessions concluded with an award ceremony focused around the Top 25 Company Leaders in Lending and the Top 25 Executive Leaders in Lending. The Canadian Lenders Association will make videos of the sessions available online. deBanked was in attendance.
OCC Believes It’s Time To Fix Madden Issue Once And For All
November 18, 2019
If a bank makes a legal loan to a consumer and then later sells the debt to a third party, the terms of the loan are still legal right?
“Yes” should be the obvious answer, but in 2015 a federal appeals court said “no.” The case was Madden v. Midland Funding LLC, which started as a credit card debt owed by a consumer to Bank of America at 27% interest and ended as an allegedly illegal loan once the debt was sold to Midland Funding.
The ruling, which deBanked has covered extensively, shook the consumer and business loan markets in New York, Connecticut, and Vermont with its jurisdictional reach. Midland Funding appealed the ruling to the United States Supreme Court but the Court declined to hear the case.
Congress attempted to bring clarity to the lawfulness of the practice with a bill called the Protecting Consumers’ Access to Credit Act of 2017 but failed when the approved House bill never even came up for a vote in the Senate.
On Monday, the Office of the Comptroller of the Currency (OCC) proposed a rule to clarify the “Valid When Made” Doctrine that had been pierced in Madden. “This proposal will address confusion about the effect of a transfer on a loan’s valid interest rate, including confusion resulting from a recent decision from the U.S. Court of Appeals for the Second Circuit (Madden v. Midland Funding, LLC),” OCC wrote in a statement.
A 60-day public comment period will be open once the proposal is published in the Federal Register. To find out how to comment on the rule, click here.
“Predatory Lenders” Slammed as Bill to Ban Confessions of Judgment Nationwide Advances
November 14, 2019
(Bloomberg is majority owner of Bloomberg News parent Bloomberg LP)
Rep. Nydia Velázquez (D) celebrated the advancement of a bill on Thursday that aims to outlaw confessions of judgment (COJs) in commercial finance transactions nationwide. HR 3490, dubbed the Small Business Lending Fairness Act, made its way through the House Financial Services Committee on a vote of 31-23. The next step will be a floor vote.
Velázquez made direct references to a Bloomberg News story series published last year about “predatory lending” and a NY Times article about Taxi medallion loans as her basis for supporting it. Velázquez said that New York had become a breeding ground for “con artists” that relied on COJs to prey on mom-and-pop businesses. The congresswoman singled out New York because of recent taxi medallion loan outrage and the state’s alleged reputation as a “clearing house” for obtaining fast easy judgments against debtors nationwide. New York took a major step to change that practice earlier this year through a new law that only allows COJs to be filed in the state against New York residents. HR 3490 seeks to prevent them from being filed in every state, including New York.
Ironically then, the bill is at odds with the new New York law in that Velázquez’s bill, if it became federal law, would go so far as to prevent New York’s own courts from entering a COJ against New York’s own residents, if it resulted from a commercial finance transaction.
While momentum in the House could be perceived as a partisan initiative unlikely to survive the Senate, the bill has in fact garnered a degree of Republican support, recently through Rep. Roger W. Marshall, a co-sponsor of the bill, and originally by Senator Marco Rubio who initially sparked the call to action in the Senate last year.
The Financial Svcs Committee approved my bill to end "Confessions of Judgment", contracts that allow for unfair, predatory small business loans & that have been linked to #taximedallion crisis in NYC.
On to the House floor!
Read More: https://t.co/xHaYnLKme4@NYTW @FSCDems
— Rep. Nydia Velazquez (@NydiaVelazquez) November 14, 2019
A co-author of the COJ-centric Bloomberg News stories was quick to take the credit for the advancement of Velázquez’s bill.
the bill was drafted in response to our series Sign Here to Lose Everythinghttps://t.co/lrfIW3P0yi
— Zeke Faux (@ZekeFaux) November 14, 2019
Brian Holloway, America’s #1 Most Requested Motivational Team Builder, to Speak at deBanked CONNECT Miami
November 13, 2019
Salespeople, are you ready for…
Total Market Domination?!?!
Stanford All-American, 5 time NFL All-Pro, and All-Star front line competitor Brian Holloway will be speaking at deBanked CONNECT Miami on January 16th, two weeks before the Super Bowl takes place just down the road. deBanked CONNECT is taking place at the Loews in South Beach. Last year’s event was completely SOLD OUT.
About Brian Holloway
The New England Patriots made a good decision in choosing Brian Holloway as a first-round draft pick, as he became the 6’7” powerhouse at the core of the 1985 New England Patriots Super Bowl team. In 1986, Brian Holloway was elected by his peers to forge a new direction in NFL policy, becoming the youngest Vice-President of the NFL Player’s Association at age 23. Brian Holloway retired from the NFL in 1992 after eight distinguished seasons with the Patriots and two with the Los Angeles Raiders.
Today, Brian Holloway is an international motivational speaker and renowned corporate trainer, mobilizing companies and organizations in search of peak productivity, helping them achieve new levels of excellence. He understands how to transform thinking within organizations and challenge the competitive spirit of diverse work teams. His Silicon Valley roots launched him beyond his Hall of Fame career in the NFL to become one of the most requested business intelligence consultants in America.
He has traveled over 10,000,000 miles and been hired by over 279 Fortune 500 Companies, and now entering his 15th year working with Apple. Other clients include; HP, Exxon, Harvard Business School, Wal-Mart, Nike, ESPN, Verizon, Bank of America, Ford, Sprint, Cisco Systems, Honeywell, State Farm, AIG, Reebok, Daimler Chrysler, Best Buy, Wachovia Bank, and more.
Brian Holloway’s stories and case studies are scenes from his own life. Entertaining, motivating and instructional, Brian Holloway uses multi-media technology along with actual NFL game footage to showcase critical points on competitive excellence. These powerful, high-impact presentations have immediate take-home value for everyone — athlete and non-athlete alike.
Register below or visit www.debankedmiami.com
Costs, Losses Soar At StreetShares
November 12, 2019
StreetShares increased revenue by nearly 40% year-over-year, according to the company’s latest fiscal year 2019 filing, but costs soared and increased by almost 90%.
StreetShares reported a staggering $12.3M loss on only $4.4M in revenue. That loss was much wider than the previous year’s loss of $6.5M on $3.2M in revenue.
Whereas startups may spend heavily on sales and marketing as they prioritize growth and scale, StreetShares’ primary cost, as in prior years, continues to be payroll. The company spent approximately $7 million in payroll and payroll taxes in fiscal year 2019.
The margin by which payroll exceeds revenue is increasing (157% in FY ’19 vs 144% in FY ’18). For comparison purposes, payroll expense makes up less than 25% of revenue for StreetShares rival IOU Financial.
StreetShares’ source of funds has shifted away from institutional investors and professional investors to retail investors. Retail investors only provided 43.89% of funds in FY ’18 but provided 86.72% of funds in FY ’19.
Retail investors, permissible under Regulation A, do not invest in individual loans but rather they lend money to StreetShares for which the company can use for lending or for “general corporate purposes” or “other products at the discretion of the company.” In return retail investors receive a fixed 5% annual return.
As of May 2019, the company reported that 80% of funds they lend out go to US veteran small businesses. A veteran small business is defined as “a company that is at least 25% owned by a veteran or military spouse or has a veteran or military spouse as the co-guarantor.”
Who Exactly Got Paid In Knight Capital’s Sale… And How Much? ($27.8M)
November 6, 2019
Update 11/7/19 9:05 AM: Ready Capital Corporation confirmed this morning that Knight Capital’s total sale price was $27.8M. $10M was in stock.
When Ready Capital Corporation acquired Knight Capital last week for $10 million in stock and an undisclosed amount of cash, questions abounded over who directly benefitted from the sale and how much cash was actually exchanged.
Documents later submitted by Ready Capital revealed that Knight Capital was owned by a San Jose, CA-fund named Len Co, LLC. Len Co began lending to Knight Capital in 2014 and later converted a large principal balance into a major equity investment in Knight in early 2018.
Several months later, Len Co’s primary creditor forced Len Co into Chapter 7. Shares in Knight, being a major asset of Len Co, became a talking point of that proceeding, ultimately propelling Knight into the hands of an eager buyer, Ready Capital Corporation.
The stock in the sale was therefore almost entirely paid out to the Estate of Len Co, LLC (640,205 of the 658,771 Ready Capital Corporation shares to be precise). This being the case was a reflection of the predicament Len Co was in, not necessarily that there was anything adverse about Knight.
On May 31, the bankruptcy court presiding over Len Co approved a proposed sale of Knight Capital to a confidential buyer for a grand total of $25 million, via $10 million in stock and a whopping $15 million in cash to be completed by December 31, 2019.
The buyer was identified as a publicly traded company. Assuming no better bids were received by Mid-August, the company would be sold for the $25 million under the terms offered to the publicly traded buyer. The court reaffirmed it on August 15th.
In October, Ready Capital Corporation announced that they had acquired 100% of Knight Capital in a deal for $10 million in stock and an undisclosed amount of cash.
Update: After this story was posted, Ready Capital confirmed on a morning earnings call that the sales price was slightly more than $25M and was finalized at $27.8M.
GoDaddy Now Offers Kabbage Business Lines of Credit To Its Customers
November 4, 2019
A curious thing popped up in my Godaddy account dashboard on Monday. Underneath the section to manage my domains, a “Deals from GoDaddy Partners” box offered me $300 in Free Yelp Ads on one side and a business line of credit from Kabbage up to $250,000 on the other.
The Kabbage offer is brand new, according to a joint announcement that came out the same day publicizing a “strategic partnership” between the two companies.
By clicking on it, I found that GoDaddy customers can transmit their account information to Kabbage by clicking a button to begin the loan application process. If a loan is approved, GoDaddy customers save up to $100 on their first monthly loan fee, the website states.
While a simple web domain may only cost around $10 a year, Kabbage has suggested that funds be used for other purposes like staffing up for the busy holiday season, purchasing additional inventory or equipment, or applying it toward digital marketing initiatives.
Borrowers will be able to access the Kabbage dashboard from their Godaddy accounts, an FAQ says.
Below are some screenshots:
