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Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds

propublica.org

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Re: Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds

#71

Post by jiveturkey »

spking wrote: post #56
nickpinkston wrote: post #54

Earlier quoted context omitted.

Disagree - every job has bad work that doesn't appear so until later. The mechanic who just uses a cheap fix to get you out of there, the plumber whose work results in a frozen pipe that leaks behind a wall, etc. Finance is no different. The only issue is that in a capitalist society, bankers hold a lot of political/economic influence, and this results in bad incentives for the rest of us.

*crony capitalist society There is a difference.

there's no other kind, in practice

Re: Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds

#73

Post by jiveturkey »

wnmurphy wrote: post #42
code4tee wrote: post #14

This makes complete sense and there’s no question commercial restate is turning into a bit of a house of cards. In some big cities you have many large buildings where their primary tenant was WeWork, which appears to be imploding, and now adding onto that the whole covid WFM shift where companies are starting to cancel and downsize future leases. When you start to dig into the revenue streams behind these buildings a…

Commercial real estate is going to be really interesting to watch. For a lot of mid-size companies, the building lease is 15% of your total operating expenses.

Especially in CA, where it's propped up by umm prop 13!

Every default should trigger a re-assessment when the property changes hands. CA recently put into place a rule (law?) where a change of control of the ownership entity also triggers re-assessment, thereby ending the long running scheme of selling the LLC owner rather than the property itself.

If enough of these bad (metric-wise) loans default, there could be a very far reaching negative valuation impact, ie well beyond just the defaulted properties. I expect rents will go up, even as property values go down.

Re: Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds

#74

Post by cm2187 »

css wrote: post #46
PEJOE wrote: post #24

Wait until Propublica learns that lenders are underwriting based on pro-forma forward Adjusted EBITDA net leverage, not past EBITDA leverage. The whole idea of Adjusted EBITDA is insane to me. We add back "one-time," expenses and other items, but the underlying business ends up seeing similar "one-time," costs every year. The result is that companies often borrow at a leverage ratio that looks 30% smaller than it act…

There is nothing wrong with that if the banks are allowed to fail when the loans don’t pan out. Underwriting is supposed to be about managing risk, not completely avoiding it. The problem isn’t the analysis, rather it is not letting banks absorb the consequences of being wrong. > The whole idea of Adjusted EBITDA is insane to me. The straitjacket bank regulators have placed around the ability of banks to go outside o…

If the bank wants to exclude an exceptional item, it can always waive the breach of a covenant for a few reporting periods. I am perplex as of why the covenant would allow the borrower to make any adjustment.

Re: Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds

#75

Post by eli_gottlieb »

lotsofpulp wrote: post #43
eli_gottlieb wrote: post #41

Earlier quoted context omitted.

Voter here. It's not just that I'm willing to subsist on dog kibble in 35 years to see most of Wall Street go to jail. It's that I'm willing to make that trade this year. If you founded a political party whose platform was "fuck Wall Street in every way possible, and damn the consequences", I think most of my generation would vote for that.

It would be nice if people who thought that came out and voted (skewing towards younger population). Obviously, a larger portion of the older population who do have their wealth tied up are not going to be a fan, and they tend to be the ones with the funds and votes to dictate political discourse.

I took a post-deadline low-workload day to vote early in my state's primaries. You can guess who I voted for.

Re: Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds

#76

Post by JoeAltmaier »

huac wrote: post #45
JoeAltmaier wrote: post #39

This will continue as long as human beings are in the loop. If it were automated, code-reviewed and made secure we might have a system that could follow the rules.

I agree. We need real estate that is only inhabited by data centers or automated pizza machines, no humans in the loop at all, not even paying rent.

Huh? I meant of course, the issuing of loans and bonds could be codified and enforced. Instead of this house-of-cards involving fallible humans.

Re: Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds

#77

Post by koheripbal »

PEJOE wrote: post #24

Wait until Propublica learns that lenders are underwriting based on pro-forma forward Adjusted EBITDA net leverage, not past EBITDA leverage. The whole idea of Adjusted EBITDA is insane to me. We add back "one-time," expenses and other items, but the underlying business ends up seeing similar "one-time," costs every year. The result is that companies often borrow at a leverage ratio that looks 30% smaller than it act…

If covid-19 is really a one-time hit, then actually that makes perfect sense since debt ratios are based on long-term revenue projections.

Re: Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds

#78

Post by wpietri »

Ididntdothis wrote: post #69
wpietri wrote: post #66

Earlier quoted context omitted.

I agree totally, but want to draw one distinction. I think big companies are fine in big, competitive markets. They're generally terrible at innovation, of course (although not always; 3M is a counterexample, as is Apple). But as long as there is room for upstarts to make a good living, that doesn't worry me.

I still would argue that compare to its size Apple’s innovation is lacking. They did a lot between 2000 and maybe 2010 but now they are just iterating on the same things with only a few innovative things sprinkled in. Like all big companies their main strength is efficient execution and optimization of systems.

Yeah, they're definitely lacking in innovative products lately. But they're still spending a fair bit on incremental innovation. The iPhone is still the phone to beat in terms of camera quality, and they're making other improvements like whatever their face-radar thing is. This means that the other phone players have to keep innovating too, and can't just settle down and hoover up cash, so I'm ok with it.

Re: Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds

#79

Post by zentiggr »

marcus_holmes wrote: post #35
zentiggr wrote: post #26

Earlier quoted context omitted.

How about greed? How many decades of repeated patterns of cooking figures, "losing" paperwork, and outright fraud does it take to see that a sizeable percentage of people running the largest financial companies just want to rake in whatever they can. Since so many products are so arcane and/or never disclosed in detail, there's ample opportunity to mess with and profit from just about anything that isn't prima facie…

Well, one thing we could do to rein in the seemingly endless stream of schemers is let them face the consequences of their actions. Stop bailing out Wall St and the Square Mile, and let them go bankrupt. The pain would be considerable. But we're used to that now, and it's like ripping a band-aid off: it hurts a lot more for a lot shorter time.

We just have to get their cronies in the SEC and DOJ to step up and chastize their former / future coworkers. Q.E.D.

Re: Whistleblower: Wall Street Has Engaged in Widespread Tampering of Mortgage Funds

#80

Post by zirpderp »

hhs wrote: post #15

> 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.…

Investors are not given access.
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