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
President Trump revealed his stance on cryptocurrencies over twitter on Thursday, and he’s no advocate.
“I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity. Similarly, Facebook Libra’s “virtual currency” will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National and International. We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!”
I am not a fan of Bitcoin and other Cryptocurrencies, which are not money, and whose value is highly volatile and based on thin air. Unregulated Crypto Assets can facilitate unlawful behavior, including drug trade and other illegal activity….
— Donald J. Trump (@realDonaldTrump) July 12, 2019
….Similarly, Facebook Libra’s “virtual currency” will have little standing or dependability. If Facebook and other companies want to become a bank, they must seek a new Banking Charter and become subject to all Banking Regulations, just like other Banks, both National…
— Donald J. Trump (@realDonaldTrump) July 12, 2019
…and International. We have only one real currency in the USA, and it is stronger than ever, both dependable and reliable. It is by far the most dominant currency anywhere in the World, and it will always stay that way. It is called the United States Dollar!
— Donald J. Trump (@realDonaldTrump) July 12, 2019
Senator Mike Lee of Utah, who had been on the board of directors of Mazuma Capital, is now being considered by President Trump to replace Justice Kennedy on the Supreme Court.
Mazuma Capital is an equipment leasing company that finances businesses in the energy, construction, healthcare and fitness industries, among others. In its more than 12 years in operation, it has funded transactions from $250,000 to $50 million.
Mazuma was acquired by Onset Financial in 2014 and is based in the Salt Lake City area.
Chicago Mayor Rahm Emanuel cut the ceremonial ribbon at OppLoans’ new headquarters in Chicago this week. The APR of a typical installment loan is 160% APR in many states, according to the OppLoans website. In South Carolina, a typical loan is listed as 199% APR over 9-18 months.
— Mayor Rahm Emanuel (@ChicagosMayor) October 9, 2017
According to a press release, Emanuel said “While for a lot of people outside this room, this may be the first time they’ve heard of OppLoans. There is no doubt in my mind this will not be the last time they’ve heard of OppLoans. I look forward to being back as you scale more mountains, more heights, and continue to grow and to be successful, and to offer financing to a lot of families.”
While OppLoans offers consumer loans, Emanuel has previously attacked small business finance products with lower costs than OppLoans as predatory. Perhaps he has reevaluated his understanding of APR.
Chicago City Treasurer Kurt Summers has picked up where Rahm Emanuel left off a year ago. During a January 25th Illinois Senate Financial Institutions Committee hearing named, Small Businesses, lack of access to capital, and predatory lending practices, Summers called for new legislation to protect small business owners from misleading and dishonest predatory lenders.
OnDeck we mean you
Spencer M. Cowan, Senior Vice President for Research, Woodstock Institute, also testified during the hearing and referenced OnDeck specifically. “The terms do not, without calculations that few people can make, let the borrower know that the loan will take a full year to repay with an effective interest rate of just under 70 percent,” he said. Cowan’s position was that banks need to lend more so that small businesses don’t need such alternatives. “If businesses do not have access to loans from banks, then they are probably going to resort to the same types of strategies as consumers who can’t get small loans from banks,” he said.
Cowan cited a report he prepared 18 months ago that examined the relationship between banks and the racial makeup of the small business owners they lend to. The sources he cited about alternative lending were blog posts written by industry critic Ami Kassar.
Treasurer Summers meanwhile recommended the following measures be included in draft legislation to protect small business owners:
- Require loan terms to be clear and unequivocal. Loan terms should be clearly stated using straightforward language and the interest rate should be clearly disclosed as an annualized interest rate or an annual percentage rate (APR).
- Loans should be free from traps. Borrowers should not be hit with new fees on existing principal if they refinance or modify a loan. Borrowers should not be charged interest or periodic costs for the remaining period of the loan if they pay it off early.
- Lenders should be required to display information about the results of their previous loans. This information could be anonymous and in the aggregate, but would give borrowers important data points as they determine whether or not to use a particular lender. If borrowers are able to see that a lender has a pattern of providing loans that are not paid back or have caused businesses to fail, they will be more likely to choose a more reputable lender.
- Conflicts of interest should be disclosed to borrowers. Borrowers should know what types of incentives are driving the lender and whether the broker will receive higher fees for using certain lenders or types of loans.
- Because many of these loans are made online, lenders must take substantial steps to protect the data privacy of loan applicants. Borrower data should not be allowed to be sent to third parties without the written consent of the borrower and lenders should be required to take steps to ensure that the data is encrypted and protected from breaches.
Unsurprisingly, the Illinois Bankers Association (IBA), who was not even invited to the hearing, felt compelled to issue a public statement. In a letter addressed to Chairperson Jacqueline Collins, the IBA was rather protective of their own interests. “We share the Committee’s concern with the proliferation of these under-regulated lenders, sometimes known as ‘fintech’ companies,” they stated. “This relatively new ‘shadow banking’ industry — unlike traditional financial institutions — is in many respects unregulated. Consequently, some bad actors are engaging in predatory lending practices with repayment terms that too often are forcing small business customers into cycles of debt.”
However they tapered down the rhetoric and made a technology-forward plea. “We do think it is important for lawmakers to preserve the benefits of lending innovations, and to ensure that mainstream financial institutions are not prevented from adopting technologies that result in better customer service,” they said. “For example, mobile lending interfaces and faster loan approvals, with appropriate safeguards, provide many potential benefits and match changing customer needs and expectations. We should seek to preserve these innovative solutions that benefit entrepreneurs and small businesses, while at the same time curbing abusive lending practices.”
A public digital transcript of the hearing is not currently available.
A former Bizfi manager is underwriting a new kind of 4-year deal. Thirty-two year old James Spadola, who lives in Wilmington, is bringing an impressive resumé to the Delaware state Senate contest for District 1.
The world knows him as #HugACop after an outreach campaign he spearheaded for the Newark, Delaware police department went viral and inspired a new era of positive policing. Spadola has served as an officer there for more than 7 years.
He attended the University of Delaware, an experience that was interrupted when he was called up by the U.S. Army Reserve to take a tour of duty. Deployed in March 2003 for a year, he served as a prison guard and as his battalion commander’s gunner and driver in Iraq. He received the Combat Action Badge when his convoy was hit with an IED.
After returning home and graduating, Spadola moved to New York City and got a job at a hot new fintech startup named Merchant Cash and Capital (MCC). That was in February 2007, making him one of the company’s first ten employees. MCC Changed their name to Bizfi in September of 2015.
As an underwriter, Spadola was tasked with evaluating working capital applications submitted by small businesses. He was quickly promoted to Team Leader and later to Underwriting Manager, a senior departmental position.
Spadola told deBanked of his time there, “I had a great experience at Bizfi and learned an enormous amount about the private sector and the troubles and challenges that small business owners deal with everyday.”
Bizfi General Manager Seth Broman, said of him, “having worked closely with James for several years, it was apparent to me and all those around him that James has a knack for helping those in need.”
After almost two years there, he moved to Delaware to join the Newark Police Department, where he’s been ever since. He still managed to find the time to get his MBA from Wilmington University in 2014.
Today, Spadola is underwriting a new kind of challenge, competing against incumbent state legislator Harris McDowell who has been in office since 1976. Running as a Republican in a blue state, Spadola thinks it’s time for new blood.
“I look forward to putting those business lessons, coupled with what I’ve learned through my other professional experiences, into practical application down at Legislative Hall,” he told deBanked.
Visit his campaign Facebook page.
E-mail email@example.com for further information.
Two loans: one with collateral, the other without any. All else being the same, which one do you think would have the higher interest rate?
Given his tweet, Socialist (Democrat) candidate Bernie Sanders might not understand the question.
You have families out there paying 6, 8, 10 percent on student debt but you can refinance your homes at 3 percent. What sense is that?
— Bernie Sanders (@SenSanders) December 26, 2015
The twitterverse was quick to pounce on him for it:
@SenSanders I like you but you have to understand collateralized debt
— Greg Wissinger (@gwiss) December 26, 2015
@SenSanders A bank can repossess a house. They can't repossess your brain if you quit paying student loans. Though, you make me wonder.
— Smittie (@smittie61984) December 26, 2015
@SenSanders Collateralized vs non collateralized loan. But you knew that already.
— enargins (Neil) (@enargins) December 26, 2015
— All-American Male (@chrisbraly) December 26, 2015
@SenSanders astonishing how you can run president and not understand this basic understanding of collateral.
— Wittorical (@Wittorical) December 26, 2015
@SenSanders I'm generally on your side, but mortgages are secured debt whereas student loans are unsecured and don't always increase income.
— Don Edwards (@DMEdwards) December 26, 2015
@SenSanders wow, big display of stupidity here. The house has resale value. Can we sell people now if they don't pay?
— Ms. Parker (@CaseyParksIt) December 26, 2015
To be fair, student loans might be unsecured debt but they can’t be discharged in bankruptcy. There’s also ways for debt collectors to garnish a paycheck to pay them back. That’s entirely dependent on the borrower generating income though and likely means a substantially longer repayment period. In a famous op-ed by Lee Siegel in the NY Times titled, Why I Defaulted on My Student Loans however, it is apparently possible to just avoid the debt altogether (and apparently feel okay about it).
With stories like that it’s easy to understand why a loan secured by a home would cost less than a loan secured by someone’s willingness and ability to pay. And in the case of Bernie Sanders, a candidate who believes college should be free for everyone, it’s tough to say if his question was really just rhetoric meant to stir up his base or a serious one in which he really doesn’t understand how the underwriting of loans work.
Either way, many people are worried:
.@SenSanders doesn't understand why having collateral would account for a lower interest rate. And people want to make him president?
— Caleb Cassel (@CalebCassel) December 27, 2015
Some interesting legislation was introduced last Tuesday by Senator Marco Rubio. The bill entitled “Investing in Student Success Act of 2015” would allow individuals to enter into Income Share Agreements that bear some of the characteristics of merchant cash advances. The bill defines an Income Share Agreement as,
[A]n agreement between an individual and any other person under which the individual commits to pay a specified percentage of the individual’s future income…in exchange for payments to or on behalf of such individual for postsecondary education, workforce development, or other purposes.
The bill goes on to state other aspects of a Income Share Agreement: “the agreement is not a debt instrument, and…the amount the individual will be required to pay under the agreement…may be more or less than the amount provided to the individual; and…will vary in proportion to the individual’s future income…” That last part differs from merchant cash advances in that there is no cap on the total amount an individual could be required to pay pursuant to an Income Share Agreement.
There are, however, a number of restrictions contained in the bill. The total percentage of income a person may be required to pay under an agreement—the split—may not exceed 15%. If a person’s income dips below $15,000 in any year, that person would not be required to pay any portion of their income. Also, the agreement may not exceed a term of 30 years, though the agreement may be extended for a term equal to the number of years the person was not required to pay because their income did not exceed $15,000.
Many states have enacted bans on income assignment agreements that would seem to prohibit the type of agreement proposed by the legislation. To address these laws, the bill contains a preemption provision: “Any income share agreement that complies with the requirements of [the bill] shall be a valid, binding, and enforceable contract notwithstanding any State law limiting or otherwise regulating assignments of future wages or other income.”
Additionally, because there is potential that a funder could receive an amount from an individual in a time period that would translate to a rate that exceeds state usury laws (as some merchant cash advances do, depending on the business’ performance) the bill also provides for preemption of state usury laws: “Income share agreements shall not be subject to State usury laws.”
So will Student Cash Advances be the next big thing in educational finance? Maybe, maybe not. For now, the bill has been referred to the Senate Finance Committee for further review.
You can read the full text of the bill here.