The Nation's Financial Condition

[Farfromgeneva]

"The borrowing just keeps marching along, reckless and unyielding," said Maya MacGuineas of the Committee for a Responsible Federal Budget, as the U.S. national debt crossed $35T for the first time. Recall that the deficit hit $34T earlier this year and passed $33T just three months before that. The tide of red ink is swelling at a much faster pace than expected amid increased interest costs and mandatory spending on federal programs. The Congressional Budget Office last month even projected that the national debt would rise to a record 122% of GDP in 2034.

Where does this end?

When boomers all die off

[Farfromgeneva]

Doesn’t everyone agree I have an obligation to throw this around given I don’t see boiling beer leading like a neophyte child on this print? (FUU the skiff in binds was positioning and not logical-many forecast well below 100k in jobs I saw left guys at 50k)

Lousy Jobs Report Forces Fed to Reckon With Hard Landing
Policymakers have been focused squarely on inflation. Now they need to worry about the labor market, too.

Aug. 3, 2024 at 12:01 am

But in the span of a week, punctuated by a surprisingly lackluster July hiring report on Friday that sent markets reeling, the labor market has become the locus of concern for economic policymakers in Washington.

Fed officials have spent the year trained on ensuring inflation moves down without causing unnecessary weakness, achieving a so-called soft landing. Given recent declines in inflation, “Now the question is whether we are settling at full employment, or whether we are blowing through full employment. That’s a critical question,” said Chicago Fed President Austan Goolsbee in an interview Friday.

A broader economic slowdown, if it materializes in coming months, could also upend an already volatile presidential race between former President Donald Trump and Vice President Kamala Harris.


Inflation has eased this year, though prices for many items are still higher than they were a few years ago. Photo: Spencer Platt/Getty Images
“It goes without saying that if the economy rolls over, the odds of Harris becoming president would dwindle,” said Marc Sumerlin, an economist who advised President George W. Bush.

Whether the latest data reflect an economic soft patch or a more ominous downturn could depend on how the Fed responds in the months ahead and whether lower interest rates shore up a slowing economy.

Fed Chair Jerome Powell this past week signaled a rate cut was likely at officials’ meeting next month. They voted Wednesday to hold their benchmark short-term rate steady at the highest level in two decades.

Inflation has fallen from a high of 7.1% two years ago to 2.5% in June, according to the Fed’s preferred gauge. The unemployment rate rose to 4.3% in July, up from 4.1% in June and 3.7% at the beginning of the year.

“Inflation is no longer the issue,” said Laurence Meyer, a former Fed governor, in an interview Friday. “The situation has just totally changed.”


Fed Chair Jerome Powell signaled Wednesday at a news conference that a rate cut was likely in September. Photo: Kevin Mohatt/Reuters
Investors are afraid the Fed is running late. Friday’s report shifts the debate from when officials will cut to how large their reduction next month should be: a traditional quarter-point cut or the larger half-point reduction, such as what occurred on the eve of recessions in 2001 and 2007.

‘They look offsides’

Many analysts expect the Fed will cut rates by a quarter-point at each of its three remaining meetings this year. That would lower the Fed’s rate to just above 4.5%, from its current 5.3%.

A handful of economists said Friday that the Fed will need to move faster to improve its odds of short-circuiting a downturn. That is because interest rates were raised last year to a level that aims to slow economic growth, as a driver presses down on the brake of a car.

If the economy is now slowing down more than the Fed anticipated, the central bank will need to set rates closer to a so-called neutral level, effectively taking its foot off the brake. While the neutral rate can’t be observed, many economists think it might be between 3% and 4%.

Some weakness in the jobs report might have been exaggerated, said Michael Feroli, chief U.S. economist at JPMorgan. The higher unemployment rate reflected a big jump in people who faced a temporary, as opposed to permanent, layoff. While hiring has slowed this year, the unemployment rate has crept up in large part because more people who weren’t previously looking for jobs have sought work.

Because Feroli thinks rates need to be closer to neutral relatively soon, he expects the Fed to cut rates by 1.25 percentage points this year, including by a half-point at each of its next two meetings in September and November.


The campaign of former President Donald Trump seized on Friday’s jobs report as evidence of a looming recession. Photo: Spencer Platt/Getty Images
“They look offsides,” Feroli said. “There is good reason to get back onsides here. I don’t see the rationale for going slow, even if the data don’t disappoint in a big way over the next six weeks.”

An underwater beach ball

Already, a bond-market rally has lowered borrowing costs in anticipation of Fed cuts. (Bond yields fall when prices rise.) That is good news for would-be home buyers. The average 30-year mortgage rate tumbled to 6.4% on Friday, down from 6.86% a week earlier, according to Mortgage News Daily. Any boost in demand for housing might boost spending that cushions softness elsewhere in the economy.

A sustained stock-market downturn, however, could be perilous. The postpandemic expansion has been fueled to an unusual degree by strong growth in incomes and asset prices, such as lofty stocks—as opposed to a more traditional boom in lending and credit growth.

Because a strong labor market and buoyant stock market have been critical growth engines, if both lose steam, the economy could sputter.

A related concern is that job-market weakness might be masked because companies that labored mightily to rehire workers after the pandemic are reluctant to let them go. A rapid shift in sentiment—triggered, for example, by a significant stock-market rout—could serve as a catalyst for firing workers and slashing investment plans.

Like a beach ball that shoots up after being held underwater, once sentiment flips and companies decide demand is too soft to keep those workers, joblessness would climb much faster than it has so far.

Facing somewhat weaker domestic growth, the European Central Bank and the Bank of Canada began cutting rates in June. The Bank of England joined them this past week.

Election effects

Negative economic headlines, a pickup in layoffs and continued stock-market turmoil ​​would seriously set back Harris’s campaign to keep Democratic control of the White House. Voters tend to punish incumbent presidents—or their party—when economic sentiment is heading south.

While an unemployment rate anywhere below 5% is historically low, the recent trend could matter more than the overall level. President Barack Obama was re-elected in 2012 with an unemployment rate that had edged just below 8%—but had fallen from a high of 10% three years earlier.


A pickup in layoffs would pose a setback to Vice President Kamala Harris’s campaign. Photo: Edward m. Pio Roda/EPA/Shutterstock
And Democrats failed to maintain control of the White House in 2000 and 2016 despite an unemployment rate that had fallen to its lowest level in years.

The Trump campaign had already made the Biden administration’s stewardship of a high-inflation economy a centerpiece of its bid for the White House. Higher unemployment would allow Republicans to launch a double-barreled attack.

Trump’s campaign seized on Friday’s data as evidence of “a looming recession,” calling it “a five-alarm-fire jobs report.”

Still, the current labor market can’t reasonably be described as weak. Unfilled jobs outnumber unemployed workers, and layoffs have remained subdued. President Biden, in a statement after the jobs report, noted that nearly 16 million jobs had been created since he and Harris took office. The Harris campaign declined to comment further.

Write to Nick Timiraos at [email protected] and Paul Kiernan at [email protected]

Inflation and the Economy

Analysis from The Wall Street Journal, selected by the editors

[KI Dock Bar]

I am all in on .5 rate cuts in September & November, we can only hope Fed Chair Powell has the data he needs to support that.

What does this mean:
"Inflation has eased this year, though prices for many items are still higher than they were a few years ago."

Like prices are going to go down because inflation has eased??? They are not going UP as much as they were, right?

"Inflation has fallen from a high of 7.1% two years ago to 2.5% in June, according to the Fed’s preferred gauge. The unemployment rate rose to 4.3% in July, up from 4.1% in June and 3.7% at the beginning of the year."

This trend "could" be troubling, but how significant is it, really?

[Farfromgeneva]

I am all in on .5 rate cuts in September & November, we can only hope Fed Chair Powell has the data he needs to support that.

What does this mean:
"Inflation has eased this year, though prices for many items are still higher than they were a few years ago."

Like prices are going to go down because inflation has eased??? They are not going UP as much as they were, right?

"Inflation has fallen from a high of 7.1% two years ago to 2.5% in June, according to the Fed’s preferred gauge. The unemployment rate rose to 4.3% in July, up from 4.1% in June and 3.7% at the beginning of the year."

This trend "could" be troubling, but how significant is it, really?

By all in I hope you don’t mean financially positioned for two 50bps rate hikes.

Editorial weakness form newscorp acquisitin along with vernal industry decay.

[KI Dock Bar]

I am all in on .5 rate cuts in September & November, we can only hope Fed Chair Powell has the data he needs to support that.

What does this mean:
"Inflation has eased this year, though prices for many items are still higher than they were a few years ago."

Like prices are going to go down because inflation has eased??? They are not going UP as much as they were, right?

"Inflation has fallen from a high of 7.1% two years ago to 2.5% in June, according to the Fed’s preferred gauge. The unemployment rate rose to 4.3% in July, up from 4.1% in June and 3.7% at the beginning of the year."

This trend "could" be troubling, but how significant is it, really?

By all in I hope you don’t mean financially positioned for two 50bps rate hikes.

Editorial weakness form newscorp acquisitin along with vernal industry decay.

What does editorial weakness from newscorp aquisition along with vernal industry decay mean?

Please tell me the stock market that experiences seaon decline in August & September will accelerate in the 4th quarter.

[Farfromgeneva]

I am all in on .5 rate cuts in September & November, we can only hope Fed Chair Powell has the data he needs to support that.

What does this mean:
"Inflation has eased this year, though prices for many items are still higher than they were a few years ago."

Like prices are going to go down because inflation has eased??? They are not going UP as much as they were, right?

"Inflation has fallen from a high of 7.1% two years ago to 2.5% in June, according to the Fed’s preferred gauge. The unemployment rate rose to 4.3% in July, up from 4.1% in June and 3.7% at the beginning of the year."

This trend "could" be troubling, but how significant is it, really?

By all in I hope you don’t mean financially positioned for two 50bps rate hikes.

Editorial weakness form newscorp acquisitin along with vernal industry decay.

What does editorial weakness from newscorp aquisition along with vernal industry decay mean?

Please tell me the stock market that experiences seaon decline in August & September will accelerate in the 4th quarter.

Sorry general industry decay. News business has been cutting staff and editors for years now.

[cradleandshoot]

"The borrowing just keeps marching along, reckless and unyielding," said Maya MacGuineas of the Committee for a Responsible Federal Budget, as the U.S. national debt crossed $35T for the first time. Recall that the deficit hit $34T earlier this year and passed $33T just three months before that. The tide of red ink is swelling at a much faster pace than expected amid increased interest costs and mandatory spending on federal programs. The Congressional Budget Office last month even projected that the national debt would rise to a record 122% of GDP in 2034.

Where does this end?

When boomers all die off

Ya gots another 40 or 50 years until that happens.

[WaffleTwineFaceoff]

Everybody got your popcorn ready? Are ya buckled up?

https://www.cbsnews.com/news/stocks-rou ... bs-report/

Any of our resident economists want to weigh in?

In other news, Warren Buffet's has been cashing in - moving a ton of stocks to cash thus far in 2024. He currently has a 277 billion dollar war chest ready to roll. Which one of these is Warren this morning? https://tenor.com/search/licking-my-chops-gifs

[youthathletics]

Everybody got your popcorn ready? Are ya buckled up?

https://www.cbsnews.com/news/stocks-rou ... bs-report/

Any of our resident economists want to weigh in?

In other news, Warren Buffet's has been cashing in - moving a ton of stocks to cash thus far in 2024. He currently has a 277 billion dollar war chest ready to roll. Which one of these is Warren this morning? https://tenor.com/search/licking-my-chops-gifs

Robinhood suspends trading: https://www.google.com/search?q=Robinho ... e&ie=UTF-8

[Farfromgeneva]

"The borrowing just keeps marching along, reckless and unyielding," said Maya MacGuineas of the Committee for a Responsible Federal Budget, as the U.S. national debt crossed $35T for the first time. Recall that the deficit hit $34T earlier this year and passed $33T just three months before that. The tide of red ink is swelling at a much faster pace than expected amid increased interest costs and mandatory spending on federal programs. The Congressional Budget Office last month even projected that the national debt would rise to a record 122% of GDP in 2034.

Where does this end?

When boomers all die off

Ya gots another 40 or 50 years until that happens.

Born by 1960? Or to new really earlier I think folks were done get their nut after coming back from WW2 by 1955 or so but maybe that generation with little entertainment just f**ked all the time.

[Farfromgeneva]

Everybody got your popcorn ready? Are ya buckled up?

https://www.cbsnews.com/news/stocks-rou ... bs-report/

Any of our resident economists want to weigh in?

In other news, Warren Buffet's has been cashing in - moving a ton of stocks to cash thus far in 2024. He currently has a 277 billion dollar war chest ready to roll. Which one of these is Warren this morning? https://tenor.com/search/licking-my-chops-gifs

Friedman is wrong economics is not a positive science it explains the allocations of resources in the world. Never ever listen to an economist on markets or forecasts. Ever.

I’m in an economics society today but have also hardwired and traded corporate loans bonds, asset backed debt, created derivatives for commodities and rates etc but mostly do advisory work now. I don’t draw on my Econ for this much at all other than a few axioms/princioes.

I’m sure you don’t see the different being outside so this isn’t a lecture it’s an explanation willnever understand why govt and politicians trot out so many economists. Even the anti academic ones. One of the worst-Jeremy Siegel. Reminds me of a perms bullish stock research analyst I used to work with who’d believe anything a coverage client would tell them.

Here’s an academic who’s practiced on the street you should listen to read.

https://www.reuters.com/article/world/b ... TRE68R2SK/

[Farfromgeneva]

Everybody got your popcorn ready? Are ya buckled up?

https://www.cbsnews.com/news/stocks-rou ... bs-report/

Any of our resident economists want to weigh in?

In other news, Warren Buffet's has been cashing in - moving a ton of stocks to cash thus far in 2024. He currently has a 277 billion dollar war chest ready to roll. Which one of these is Warren this morning? https://tenor.com/search/licking-my-chops-gifs

Robinhood suspends trading: https://www.google.com/search?q=Robinho ... e&ie=UTF-8

Fintech has all been a joke. Nobody minding children in these firms vc threw money at for 5-7yrs. Robinhood founders and mgt are a joke compared with Ricketts at America’s or Schwab.

a good example of a bank middleware business synapse:

Evolve Hires Ex-Con Former Synapse Compliance Chief To Aid Recon Efforts, Sources Say

In mid-July, an Evolve Bank & Trust spokesperson told the Wall Street Journal that reconciliation, necessary in order to return end users their funds, was on track to be completed in “a matter of weeks.”

But, more than two weeks later, little progress is evident, based on Evolve’s status report filed last week as part of the Synapse bankruptcy case.

According to its filings, the bank expects its reconciliation efforts to take approximately two months — once it has obtained the necessary account and transaction data, which the most recent report doesn’t indicate has yet been achieved.

Now, according to multiple sources with knowledge of the matter, Evolve has engaged a former Synapse employee to help it with its reconciliation efforts: Synapse cofounder and former Chief Compliance Officer Bryan Keltner.

Keltner, a Memphis-area native, met now-former CEO Sankaet Pathak and other early Synapse employees at the University of Memphis, which both men attended.


Left to right: Jereme Cavallo, Sankaet Pathak, and Bryan Keltner, profiled in the University of Memphis’ 2014 President’s Report. Image: The University of Memphis Magazine.
Keltner, from a prominent Memphis area family, was instrumental in securing Synapse’s initial $700,000 investment from Jeff Webb, founder of athletic apparel company Varsity Brands, and Doug Marchant, founder of payments firm Concord EFS, which was acquired by First Data in a deal valued at $7 billion.

Webb and Marchant helped facilitate introductions to Synapse’s first two bank partners: Triumph Bank and Independent Bank, according to former employees.

Keltner’s local Memphis connections and the trust of early investors helped secure him the title of “cofounder” at Synapse, but, according to early Synapse employees, at the time, it wasn’t clear what his day-to-day role at the company would be.

The SynapsePay team: Thomas Hipps, Jereme Cavallo, Stephen Black, Sankaet Pathak and Bryan Keltner.
Left to right: Thomas Hipps, Jereme Cavallo, Stephen Black, Sankaet Pathak, Bryan Keltner. Image: David Bunk/High Ground News.
Keltner ended up leading compliance for the company, at least occasionally using the title of “Chief Compliance Officer” in communications reviewed by Fintech Business Weekly.

One early Synapse employee described it as “psycho” that Keltner led compliance, as he had no relevant experience. According to Keltner’s LinkedIn profile, prior to Synapse, he worked as a club concierge and in security at Memphis institution The Peabody hotel.

In addition to his role leading compliance, Keltner also sat on Synapse’s board in the early years.

Keltner appears to have held these roles when Synapse’s relationship with what would become its most important bank partner, Evolve Bank & Trust, was first negotiated and operationalized.


What appears to be the first version of a Synapse/Evolve deposit agreement, dated September 7th, 2017.
That Evolve was comfortable onboarding Synapse as a partner, given the company had only been operating for about three years when they began working together and Synapse management’s lack not only of financial services experience, but any professional work experience, raises questions about what kind of due diligence Evolve conducted on Synapse.

An interagency due diligence guide for community banks considering partnering with fintechs lays out topics banks should consider and potential sources of information, including:

business experience and operational history
business strategies and plans, including key personnel and employment practices, such as background check procedures
qualifications and backgrounds of company directors and principals, including resource and succession planning
financial condition
market information, including on clients and competitors
organizational and business documents, such as licenses, charters, articles of incorporation, and so on
regulatory compliance, including a fintech’s risk and compliance processes and policies, procedures, training, and internal controls
risk management and control processes, including information on risk and compliance staffing
information security policies, procedures, and controls
business continuity planning and incident response
service level agreements
reliance on subcontractors
While the interagency guidance specifically addressing partnering with fintechs was released in 2023, it was primarily a repackaging of existing guidance and best practices for how community banks should evaluate selecting vendors and technology service providers.

Wrestling Matches, “Erratic Behavior,” And A “Total turd Show” Company Offsite

Early Synapse employees describe Keltner as a “drug addict,” but say that, during the period he was actively working at Synapse, he appeared to be sober.

That may have been a challenge, given what former employees and former Synapse clients describe as a rowdy and sometimes “violent” office environment.

One former client described a chaotic visit to Synapse’s office, a residential house in the tony Twin Peaks neighborhood of San Francisco, where employees would go silent when Synapse cofounder and then-CEO Sankaet Pathak entered the room, as they “were terrified to interact with him because of his erratic behavior.”

The owner of that Twin Peaks house later sued Pathak, Keltner, and Synapse for breach of contract, fraud, and damage to the house, saying that the lease did not permit the property to be used as a commercial office. The suit, filed in 2021, seeks nearly $1 million for unpaid rent and damage to the property; the case remained unresolved at the time Synapse filed for bankruptcy in April 2024.

Pathak’s “erratic behavior” was profiled in a 2020 Forbes piece and led to a harassment and discrimination lawsuit against the company and Pathak personally. The suit was eventually settled.

During that same office visit, the former client described Pathak as “[getting] a bunch of employees drunk” and “[holding] a wrestling match,” resulting in several employees sustaining injuries.

It wouldn’t be the only ill-fated “wrestling match” at the company.

During an early 2017 offsite in Yosemite, which one attendee described as a “total turd show,” Keltner and Synapse’s general counsel at the time, Lawson Baker, also wrestled each other, which resulted in both men getting a black eye and Baker sustaining a broken ankle, according to sources with first-hand knowledge of the incident.

Sometime after the Yosemite offsite and in advance of raising its $17 million Series A in late 2017, Keltner was removed from Synapse’s board and another early employee, operations lead Hillary Quirk, was given the title of “cofounder” and joined the board, according to sources with knowledge of the matter.

Quirk remained at the company until August 2022, according to her LinkedIn profile.

Keltner stepped back from day to day employment at Synapse sometime in late 2017 or early 2018, and the company bought back shares from Kelter for a sum in the millions of dollars, according to sources familiar with the transaction.

Keltner, reached by phone last week, confirmed the approximate timing of when he ceased regular work at the company.

Keltner’s Legal Troubles: DUIs, A Marijuana Business/Ponzi Scheme, And A Real-Estate Dispute

Around the time he stepped back from day-to-day work at Synapse, Kelter faced the first of several legal issues, pleading no contest to a DUI charge in San Francisco in January 2018.

The limited court information immediately available suggests Keltner may have served about 20 days in jail, paid a fine and restitution of about $1,632, and was prohibited from operating a vehicle with any measurable amount of alcohol in his system.

A couple of years later, Keltner pled no contest to misdemeanor DUI and hit-and-run charges stemming from an incident in Placer county, near Sacramento, in May 2020.

According to the charging information available, Keltner had a blood alcohol level around twice the legal limit. Per the case summary, it appears Keltner served a 20 day jail sentence beginning on July 14, 2021.

Around the same time, Keltner faced a criminal charge in Sacramento county, most likely also a DUI. A bench warrant was issued for Keltner’s arrest when he failed to appear for a February 2021 progress report.

The arrest warrant was ultimately recalled, and it appears Keltner served another brief jail sentence.

The criminal cases aren’t the only legal challenges Keltner has faced, however.

In 2021, Keltner sued a former business partner, Gleb Tabachnik, and his business entities, Legends of Healing and Dragon’s Lair Enterprises.

The suit says Keltner believed he was investing $250,000 in Tabachnik’s marijuana businesses, but that, in fact, Tabachnik was operating a sort of Ponzi scheme.

Keltner’s attorneys withdrew from representing him in the case, writing that they hadn’t been able to contact Keltner for about a year and that he had failed to meet the terms of their retainer. Keltner ultimately dropped the suit.

Reached for comment, Keltner said that Tabachnik was “broke,” and, with little hope of recovering any funds, there was no point in pursuing the suit.

And about one month ago, in late June 2024, Keltner was sued for fraud and intentional misrepresentation, with the plaintiff alleging that after paying Keltner $370,000 to purchase a property, Keltner reneged on the sale agreement but kept the money.

Asked for comment, Keltner described the suit as frivolous, saying that he was evicting the tenant and the suit was an attempt to drag out the process.

Evolve Is Engaging Keltner To Assist With Reconciliation Efforts, Sources Say

Despite Keltner’s substance-related and civil legal problems, Synapse continued to periodically engage his services.

Internal Synapse records indicate that Keltner was classified as a 1099 employee, reporting to Sankaet Pathak, from November 2018 to July 2021, and again from January 2023 to April 2023, reporting to then-CFO Mike Rasic.

Now, multiple sources confirm that Evolve is engaging Keltner in some capacity to aid with the Synapse reconciliation efforts.

Reached by phone last week, Keltner neither confirmed nor denied that he is working for Evolve, saying only that he is working on his own “trading business.”

For its part, Evolve did not respond to multiple requests for comment about its relationship with Keltner — though the bank’s willingness to engage a contractor with Keltner’s history suggests that Evolve has learned little from its previous due diligence failures or its recent wide-ranging enforcement action.

[Farfromgeneva]

Btw I’ve seen a. Ton of talented Wall Street guys execute just fine in booze and drugs don’t let that red herring fool you.

[Farfromgeneva]

Freebie for the a anti semites because the reason this is happening is a lot of fraud in gas multifamily lending over the years but specifically a very Hasidic shop out in nYC that are just terrible folks I’ve dealt with personally enough called meridian capital-they lie like crazy and have zero repast for rules or anything and just get their money. Was a matter of time.

Why correspondent license holders for agencies need to rely on brokers is another question (layering fees) but that’s a market issue broadly in CRE finance.

(Obviously true and there aren’t a cohort specific but this shop meridian I’m pretty sure downs have a single gentile working there and hires kids and makes them bang phones straight out of their barmitsvahs basically)

Someone who doesn’t know all of this will surely tell me I’m being prejudicial to something but there’s at least one cat who’s got a family member in CRE institutionally who can check and I get will confirm My comments on this shop.

Move comes as federal regulators and prosecutors step up efforts to root out commercial mortgage fraud
Gina HeebAug. 5, 2024 at 5:30 am

Additionally, lenders could face tougher requirements for confirming whether a property borrower has adequate cash and verifying their source of funds.

The new rules might also require lenders to complete due diligence on the appraised value of a property, by evaluating its financial performance, for example, these people said.

Under the current system, lenders are able to take a more hands-off approach when it comes to borrower and property financials. They face incentives to trust the figures they are sent, rather than pursuing expensive audits or risking losing clients to too much red tape.

Fannie and Freddie declined to comment. The Federal Housing Finance Agency, which regulates the two entities, also declined to comment.

SHARE YOUR THOUGHTS

What steps should regulators take to address mortgage fraud in the commercial-property market? Join the conversation below.

Fannie and Freddie, which are backed by the government, purchase and securitize a huge portion of loans in the U.S. residential and commercial mortgage market. The two entities together owned or guaranteed roughly 40% of the $2.2 trillion in multifamily mortgage debt as of September 2023, according to estimates from their latest annual filings.

The new multifamily rules, which could be rolled out as early as this summer, are in early stages and could still change, these people said. If they are enacted, they would represent some of the biggest recent changes in the way Fannie and Freddie monitor these loans.

Apartment-building and other commercial-property prices surged to new highs in the years before the Federal Reserve started to raise interest rates, leading to a flurry of loans based on doctored financials and valuations, federal investigators and real-estate brokers say.

More of these fraudulent mortgage schemes have been exposed since 2022, when sharply higher interest rates led to significant declines in commercial-property prices.

Now, federal prosecutors are increasing their efforts to root out fraud, often working together with investigators at the FHFA’s Office of Inspector General, according to court records and people familiar with the matter.

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The crackdown is already rippling through the multifamily industry. Freddie has started to require borrowers to submit rent receipts, while Fannie has begun to go through loans to look for doctored financials, The Wall Street Journal previously reported.

Tighter lending rules could slow deal activity. To be effective, according to industry participants and investigators, rules would have to cover a number of different avenues of the market where fraud can occur. The real-estate schemes that recently came to light involved everything from fudged income statements to faked property sales at inflated prices.

Fannie and Freddie effectively blacklisted Meridian Capital Group, along with other brokerage firms, after allegations that its brokers falsified client financials to get bigger loans.

Meridian has since sought to build and implement a risk and control framework, largely from scratch, that could require periodic backtests and board approval for deals of a certain size.

One major commercial-property lender, Berkadia, recently pulled back on new deals with brokers, people familiar with the matter said.

In a statement, Berkadia said it would “continue to focus on direct business” and use “reputable brokers for loans on a case-by-case basis.”

Write to Gina Heeb at [email protected]

Crisis in Commercial Real Estate

The pandemic emptied out office buildings. Here is how the WSJ is covering the ripple effects.

[PizzaSnake]

Freebie for the a anti semites because the reason this is happening is a lot of fraud in gas multifamily lending over the years but specifically a very Hasidic shop out in nYC that are just terrible folks I’ve dealt with personally enough called meridian capital-they lie like crazy and have zero repast for rules or anything and just get their money. Was a matter of time.

Why correspondent license holders for agencies need to rely on brokers is another question (layering fees) but that’s a market issue broadly in CRE finance.

(Obviously true and there aren’t a cohort specific but this shop meridian I’m pretty sure downs have a single gentile working there and hires kids and makes them bang phones straight out of their barmitsvahs basically)

Someone who doesn’t know all of this will surely tell me I’m being prejudicial to something but there’s at least one cat who’s got a family member in CRE institutionally who can check and I get will confirm My comments on this shop.

Move comes as federal regulators and prosecutors step up efforts to root out commercial mortgage fraud
Gina HeebAug. 5, 2024 at 5:30 am

Additionally, lenders could face tougher requirements for confirming whether a property borrower has adequate cash and verifying their source of funds.

The new rules might also require lenders to complete due diligence on the appraised value of a property, by evaluating its financial performance, for example, these people said.

Under the current system, lenders are able to take a more hands-off approach when it comes to borrower and property financials. They face incentives to trust the figures they are sent, rather than pursuing expensive audits or risking losing clients to too much red tape.

Fannie and Freddie declined to comment. The Federal Housing Finance Agency, which regulates the two entities, also declined to comment.

SHARE YOUR THOUGHTS

What steps should regulators take to address mortgage fraud in the commercial-property market? Join the conversation below.

Fannie and Freddie, which are backed by the government, purchase and securitize a huge portion of loans in the U.S. residential and commercial mortgage market. The two entities together owned or guaranteed roughly 40% of the $2.2 trillion in multifamily mortgage debt as of September 2023, according to estimates from their latest annual filings.

The new multifamily rules, which could be rolled out as early as this summer, are in early stages and could still change, these people said. If they are enacted, they would represent some of the biggest recent changes in the way Fannie and Freddie monitor these loans.

Apartment-building and other commercial-property prices surged to new highs in the years before the Federal Reserve started to raise interest rates, leading to a flurry of loans based on doctored financials and valuations, federal investigators and real-estate brokers say.

More of these fraudulent mortgage schemes have been exposed since 2022, when sharply higher interest rates led to significant declines in commercial-property prices.

Now, federal prosecutors are increasing their efforts to root out fraud, often working together with investigators at the FHFA’s Office of Inspector General, according to court records and people familiar with the matter.

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Real Estate

A weekly briefing of the biggest commercial deals, news, analysis and trends in office, multifamily, retail and other commercial sectors.

The crackdown is already rippling through the multifamily industry. Freddie has started to require borrowers to submit rent receipts, while Fannie has begun to go through loans to look for doctored financials, The Wall Street Journal previously reported.

Tighter lending rules could slow deal activity. To be effective, according to industry participants and investigators, rules would have to cover a number of different avenues of the market where fraud can occur. The real-estate schemes that recently came to light involved everything from fudged income statements to faked property sales at inflated prices.

Fannie and Freddie effectively blacklisted Meridian Capital Group, along with other brokerage firms, after allegations that its brokers falsified client financials to get bigger loans.

Meridian has since sought to build and implement a risk and control framework, largely from scratch, that could require periodic backtests and board approval for deals of a certain size.

One major commercial-property lender, Berkadia, recently pulled back on new deals with brokers, people familiar with the matter said.

In a statement, Berkadia said it would “continue to focus on direct business” and use “reputable brokers for loans on a case-by-case basis.”

Write to Gina Heeb at [email protected]

Crisis in Commercial Real Estate

The pandemic emptied out office buildings. Here is how the WSJ is covering the ripple effects.

To borrow a phrase, “the sugar high” of easy money is wearing off, resulting in some issues, some of which you’e noted in this post and others: fintech, commercial real estate, and, my favorite: service on the national debt.

Apart from just “turning the tap” back on like a fresh keg at a frat party, what could/should be done? Like the intractable Gordian knot of the Israel/Palestine conflict, this is NOT a new situation.

So, let’s start at the top:

Boost money supply? (Continue business as usual.)

Preside over the disruption that is beginning to reverberate through the economy and society? A new, “world-class” Argentina?

Given the history of the past 44-odd years, my money is on our “leaders” choosing door number 1.

Dragons await behind door 2.

[a fan]

Everybody got your popcorn ready? Are ya buckled up?

https://www.cbsnews.com/news/stocks-rou ... bs-report/

Any of our resident economists want to weigh in?

In other news, Warren Buffet's has been cashing in - moving a ton of stocks to cash thus far in 2024. He currently has a 277 billion dollar war chest ready to roll. Which one of these is Warren this morning? https://tenor.com/search/licking-my-chops-gifs

Robinhood suspends trading: https://www.google.com/search?q=Robinho ... e&ie=UTF-8

Meh.

Here's what's coming: Fed will drop rates in the Sep meeting. Election comes in November, where idiotic CEO's and finance bros. sit still during an election year thinking that some massive change is coming.

The massive change (spoiler alert) doesn't happen, and TrumpCongress breaks out the checkbook for even more deficit spending...pumping more money into the economy. Making government bigger than ever, while the usual suspect will pretend that's not what happened.

Republicans will show up if Trump wins as expected and will take credit for the booming economy...when it reality is all because of an increase in Federal spending, coupled with record low taxation.

Same thing we've seen for 20 years, folks.

[PizzaSnake]

Everybody got your popcorn ready? Are ya buckled up?

https://www.cbsnews.com/news/stocks-rou ... bs-report/

Any of our resident economists want to weigh in?

In other news, Warren Buffet's has been cashing in - moving a ton of stocks to cash thus far in 2024. He currently has a 277 billion dollar war chest ready to roll. Which one of these is Warren this morning? https://tenor.com/search/licking-my-chops-gifs

Robinhood suspends trading: https://www.google.com/search?q=Robinho ... e&ie=UTF-8

Meh.

Here's what's coming: Fed will drop rates in the Sep meeting. Election comes in November, where idiotic CEO's and finance bros. sit still during an election year thinking that some massive change is coming.

The massive change (spoiler alert) doesn't happen, and TrumpCongress breaks out the checkbook for even more deficit spending...pumping more money into the economy. Making government bigger than ever, while the usual suspect will pretend that's not what happened.

Republicans will show up if Trump wins as expected and will take credit for the booming economy...when it reality is all because of an increase in Federal spending, coupled with record low taxation.

Same thing we've seen for 20 years, folks.

20? How about 44? St. Ronnie presided over the beginning. Or possibly Nixon and the abandonment of the “gold standard.” Was said abandonment inevitable given the need for fiat currency in the face of the US energy conundrum?

[a fan]

Everybody got your popcorn ready? Are ya buckled up?

https://www.cbsnews.com/news/stocks-rou ... bs-report/

Any of our resident economists want to weigh in?

In other news, Warren Buffet's has been cashing in - moving a ton of stocks to cash thus far in 2024. He currently has a 277 billion dollar war chest ready to roll. Which one of these is Warren this morning? https://tenor.com/search/licking-my-chops-gifs

Robinhood suspends trading: https://www.google.com/search?q=Robinho ... e&ie=UTF-8

Meh.

Here's what's coming: Fed will drop rates in the Sep meeting. Election comes in November, where idiotic CEO's and finance bros. sit still during an election year thinking that some massive change is coming.

The massive change (spoiler alert) doesn't happen, and TrumpCongress breaks out the checkbook for even more deficit spending...pumping more money into the economy. Making government bigger than ever, while the usual suspect will pretend that's not what happened.

Republicans will show up if Trump wins as expected and will take credit for the booming economy...when it reality is all because of an increase in Federal spending, coupled with record low taxation.

Same thing we've seen for 20 years, folks.

20? How about 44? St. Ronnie presided over the beginning. Or possibly Nixon and the abandonment of the “gold standard.” Was said abandonment inevitable given the need for fiat currency in the face of the US energy conundrum?

Oh, I agree that Ronnie got it all started. The difference is that Ronnie, Bush and Clinton ALL raised taxes multiple times while in office.

You know, like adults who sit at the big boy table do when they buy more stuff. These adults have totally disappeared from the Republican party, and have been replaced by delusional idiots who swear that they hate government...yet keep making it bigger.

And when the bill comes due, they and their voters scream "but Mommy, I don't WANT to pay for what I get from the government".

[Farfromgeneva]

Freebie for the a anti semites because the reason this is happening is a lot of fraud in gas multifamily lending over the years but specifically a very Hasidic shop out in nYC that are just terrible folks I’ve dealt with personally enough called meridian capital-they lie like crazy and have zero repast for rules or anything and just get their money. Was a matter of time.

Why correspondent license holders for agencies need to rely on brokers is another question (layering fees) but that’s a market issue broadly in CRE finance.

(Obviously true and there aren’t a cohort specific but this shop meridian I’m pretty sure downs have a single gentile working there and hires kids and makes them bang phones straight out of their barmitsvahs basically)

Someone who doesn’t know all of this will surely tell me I’m being prejudicial to something but there’s at least one cat who’s got a family member in CRE institutionally who can check and I get will confirm My comments on this shop.

Move comes as federal regulators and prosecutors step up efforts to root out commercial mortgage fraud
Gina HeebAug. 5, 2024 at 5:30 am

Additionally, lenders could face tougher requirements for confirming whether a property borrower has adequate cash and verifying their source of funds.

The new rules might also require lenders to complete due diligence on the appraised value of a property, by evaluating its financial performance, for example, these people said.

Under the current system, lenders are able to take a more hands-off approach when it comes to borrower and property financials. They face incentives to trust the figures they are sent, rather than pursuing expensive audits or risking losing clients to too much red tape.

Fannie and Freddie declined to comment. The Federal Housing Finance Agency, which regulates the two entities, also declined to comment.

SHARE YOUR THOUGHTS

What steps should regulators take to address mortgage fraud in the commercial-property market? Join the conversation below.

Fannie and Freddie, which are backed by the government, purchase and securitize a huge portion of loans in the U.S. residential and commercial mortgage market. The two entities together owned or guaranteed roughly 40% of the $2.2 trillion in multifamily mortgage debt as of September 2023, according to estimates from their latest annual filings.

The new multifamily rules, which could be rolled out as early as this summer, are in early stages and could still change, these people said. If they are enacted, they would represent some of the biggest recent changes in the way Fannie and Freddie monitor these loans.

Apartment-building and other commercial-property prices surged to new highs in the years before the Federal Reserve started to raise interest rates, leading to a flurry of loans based on doctored financials and valuations, federal investigators and real-estate brokers say.

More of these fraudulent mortgage schemes have been exposed since 2022, when sharply higher interest rates led to significant declines in commercial-property prices.

Now, federal prosecutors are increasing their efforts to root out fraud, often working together with investigators at the FHFA’s Office of Inspector General, according to court records and people familiar with the matter.

Newsletter Sign-up

Real Estate

A weekly briefing of the biggest commercial deals, news, analysis and trends in office, multifamily, retail and other commercial sectors.

The crackdown is already rippling through the multifamily industry. Freddie has started to require borrowers to submit rent receipts, while Fannie has begun to go through loans to look for doctored financials, The Wall Street Journal previously reported.

Tighter lending rules could slow deal activity. To be effective, according to industry participants and investigators, rules would have to cover a number of different avenues of the market where fraud can occur. The real-estate schemes that recently came to light involved everything from fudged income statements to faked property sales at inflated prices.

Fannie and Freddie effectively blacklisted Meridian Capital Group, along with other brokerage firms, after allegations that its brokers falsified client financials to get bigger loans.

Meridian has since sought to build and implement a risk and control framework, largely from scratch, that could require periodic backtests and board approval for deals of a certain size.

One major commercial-property lender, Berkadia, recently pulled back on new deals with brokers, people familiar with the matter said.

In a statement, Berkadia said it would “continue to focus on direct business” and use “reputable brokers for loans on a case-by-case basis.”

Write to Gina Heeb at [email protected]

Crisis in Commercial Real Estate

The pandemic emptied out office buildings. Here is how the WSJ is covering the ripple effects.

To borrow a phrase, “the sugar high” of easy money is wearing off, resulting in some issues, some of which you’e noted in this post and others: fintech, commercial real estate, and, my favorite: service on the national debt.

Apart from just “turning the tap” back on like a fresh keg at a frat party, what could/should be done? Like the intractable Gordian knot of the Israel/Palestine conflict, this is NOT a new situation.

So, let’s start at the top:

Boost money supply? (Continue business as usual.)

Preside over the disruption that is beginning to reverberate through the economy and society? A new, “world-class” Argentina?

Given the history of the past 44-odd years, my money is on our “leaders” choosing door number 1.

Dragons await behind door 2.

We can’t we have to reduce money supply as it got way too high up to $3.3Tn in Covid and working it down. We need to take our medicine liek the wild tough guys we pretend to be here

[PizzaSnake]

Freebie for the a anti semites because the reason this is happening is a lot of fraud in gas multifamily lending over the years but specifically a very Hasidic shop out in nYC that are just terrible folks I’ve dealt with personally enough called meridian capital-they lie like crazy and have zero repast for rules or anything and just get their money. Was a matter of time.

Why correspondent license holders for agencies need to rely on brokers is another question (layering fees) but that’s a market issue broadly in CRE finance.

(Obviously true and there aren’t a cohort specific but this shop meridian I’m pretty sure downs have a single gentile working there and hires kids and makes them bang phones straight out of their barmitsvahs basically)

Someone who doesn’t know all of this will surely tell me I’m being prejudicial to something but there’s at least one cat who’s got a family member in CRE institutionally who can check and I get will confirm My comments on this shop.

Move comes as federal regulators and prosecutors step up efforts to root out commercial mortgage fraud
Gina HeebAug. 5, 2024 at 5:30 am

Additionally, lenders could face tougher requirements for confirming whether a property borrower has adequate cash and verifying their source of funds.

The new rules might also require lenders to complete due diligence on the appraised value of a property, by evaluating its financial performance, for example, these people said.

Under the current system, lenders are able to take a more hands-off approach when it comes to borrower and property financials. They face incentives to trust the figures they are sent, rather than pursuing expensive audits or risking losing clients to too much red tape.

Fannie and Freddie declined to comment. The Federal Housing Finance Agency, which regulates the two entities, also declined to comment.

SHARE YOUR THOUGHTS

What steps should regulators take to address mortgage fraud in the commercial-property market? Join the conversation below.

Fannie and Freddie, which are backed by the government, purchase and securitize a huge portion of loans in the U.S. residential and commercial mortgage market. The two entities together owned or guaranteed roughly 40% of the $2.2 trillion in multifamily mortgage debt as of September 2023, according to estimates from their latest annual filings.

The new multifamily rules, which could be rolled out as early as this summer, are in early stages and could still change, these people said. If they are enacted, they would represent some of the biggest recent changes in the way Fannie and Freddie monitor these loans.

Apartment-building and other commercial-property prices surged to new highs in the years before the Federal Reserve started to raise interest rates, leading to a flurry of loans based on doctored financials and valuations, federal investigators and real-estate brokers say.

More of these fraudulent mortgage schemes have been exposed since 2022, when sharply higher interest rates led to significant declines in commercial-property prices.

Now, federal prosecutors are increasing their efforts to root out fraud, often working together with investigators at the FHFA’s Office of Inspector General, according to court records and people familiar with the matter.

Newsletter Sign-up

Real Estate

A weekly briefing of the biggest commercial deals, news, analysis and trends in office, multifamily, retail and other commercial sectors.

The crackdown is already rippling through the multifamily industry. Freddie has started to require borrowers to submit rent receipts, while Fannie has begun to go through loans to look for doctored financials, The Wall Street Journal previously reported.

Tighter lending rules could slow deal activity. To be effective, according to industry participants and investigators, rules would have to cover a number of different avenues of the market where fraud can occur. The real-estate schemes that recently came to light involved everything from fudged income statements to faked property sales at inflated prices.

Fannie and Freddie effectively blacklisted Meridian Capital Group, along with other brokerage firms, after allegations that its brokers falsified client financials to get bigger loans.

Meridian has since sought to build and implement a risk and control framework, largely from scratch, that could require periodic backtests and board approval for deals of a certain size.

One major commercial-property lender, Berkadia, recently pulled back on new deals with brokers, people familiar with the matter said.

In a statement, Berkadia said it would “continue to focus on direct business” and use “reputable brokers for loans on a case-by-case basis.”

Write to Gina Heeb at [email protected]

Crisis in Commercial Real Estate

The pandemic emptied out office buildings. Here is how the WSJ is covering the ripple effects.

To borrow a phrase, “the sugar high” of easy money is wearing off, resulting in some issues, some of which you’e noted in this post and others: fintech, commercial real estate, and, my favorite: service on the national debt.

Apart from just “turning the tap” back on like a fresh keg at a frat party, what could/should be done? Like the intractable Gordian knot of the Israel/Palestine conflict, this is NOT a new situation.

So, let’s start at the top:

Boost money supply? (Continue business as usual.)

Preside over the disruption that is beginning to reverberate through the economy and society? A new, “world-class” Argentina?

Given the history of the past 44-odd years, my money is on our “leaders” choosing door number 1.

Dragons await behind door 2.

We can’t we have to reduce money supply as it got way too high up to $3.3Tn in Covid and working it down. We need to take our medicine liek the wild tough guys we pretend to be here

We? All of "us" going to take our medicine?