Implode-Explode Heavy Industries news feed http://implode-explode.com/ Tracking the many faces of the global credit implosion. en-us iehi-feed-65201 Mon, 24 Feb 2020 22:27:06 GMT Wells Fargo Forced To Pay $3 Billion For Fake Account Scandal http://implode-explode.com/viewnews/2020-02-24_WellsFargoForcedToPay3BillionForFakeAccountScandal.html Wells Fargo, the fourth largest bank in the United States, agreed on Friday to pay $3 billion to settle its long-running civil and criminal probes into the heinous accusations of rampant fraudulent sales practices.

The San Francisco-based bank announced that it will pay the substantial financial penalty to both the U.S. Department of Justice (DOJ) and the Securities and Exchange Commission (SEC). Roughly $500 million of the fine will be allocated to the SEC. The regulator will use the funds from the settlement to offer some restitution to the the defrauded customers. 

The problems began when Wells Fargo executives pressured rank-and-file bank personnel to aggressively cross-sell products to enhance sales and revenue to meet certain quotas. Deception reared its ugly head when Wells Fargo employees then created millions of savings and checking accounts for customers without their knowledge or approval. 

For comparison's sake, major WF shareholder "Uncle Warren" Buffett made sure to get a dig into cryptocurrencies today -- "he doesn't hold them and never will"; but WF shares are, presumably, sterling!

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iehi-feed-65200 Mon, 24 Feb 2020 22:20:28 GMT Dow sinks 1,000 points as pandemic fears rattle Wall Street http://implode-explode.com/viewnews/2020-02-24_Dowsinks1000pointsaspandemicfearsrattleWallStreet.html iehi-feed-65199 Mon, 24 Feb 2020 15:58:09 GMT Trump's Seedy & Dysfunctional Relationship With Deutsche Bank: Over $1.7bln In Defaults--$1bln To Outside Bond Investors http://implode-explode.com/viewnews/2020-02-24_TrumpsSeedyDysfunctionalRelationshipWithDeutscheBankOver17blnInD.html iehi-feed-65198 Mon, 24 Feb 2020 13:44:57 GMT Communist Bernie Sanders Owns Three Houses. Not Bad For A "Socialist" http://implode-explode.com/viewnews/2020-02-24_CommunistBernieSandersOwnsThreeHousesNotBadForASocialist.html iehi-feed-65194 Thu, 20 Feb 2020 16:54:47 GMT Rhode Island Property Preservationist Gets 8 Years In Prison http://implode-explode.com/viewnews/2020-02-20_RhodeIslandPropertyPreservationistGets8YearsInPrison.html iehi-feed-65191 Tue, 18 Feb 2020 17:19:53 GMT Rushmore Loan Management Warning! http://implode-explode.com/viewnews/2020-02-18_RushmoreLoanManagementWarning.html iehi-feed-65190 Sun, 16 Feb 2020 23:37:40 GMT Economists Finally Tackle Gentrification: Find Mixed (But Overall Good) Effect of Adding Supply http://implode-explode.com/viewnews/2020-02-16_EconomistsFinallyTackleGentrificationFindMixedButOverallGoodEffe.html Neighbors may assume that the high-rises cause the high rents. That's plausible if new buildings attract much wealthier residents, who in turn attract higher-end amenities that make a neighborhood more desirable... [NYU researcher Xiaodi Li] finds in New York that new buildings do attract more restaurants and cafes nearby. But she concludes that any effect those amenities have pushing up local rents is swamped by the power of new supply to push rents down. On net, she finds, for every 10 percent increase in housing supply, rents for properties within 500 feet drop by 1 percent, relative to other high-demand areas.

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"Wealthy people are already looking to move into the neighborhood," Mr. Mast said of how he would explain his findings to a heated public meeting over such a proposal. "So we can build this building that will give them the sort of unit that they want to live in. Or if we don't, they'll take a unit nearby and renovate it."

That logic may be little comfort to longtime residents, particularly those concerned about neighborhood changes that go beyond rent prices. But it addresses at least one argument against new housing.

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One caution comes from research by Anthony Damiano and Chris Frenier, doctoral candidates at the University of Minnesota who looked at new large-scale buildings built across Minneapolis. Like Mr. Mast and Ms. Li, they find that new supply helped ease rent pressure for higher-end units nearby. But at the bottom third of the market, they concluded that new buildings had the opposite effect, accelerating rents.

It's possible in some contexts that new market-rate apartments could cause one set of nearby landlords to curb their rents even as it causes another set to reassess how cheap their rents have been. It's even possible that lower-income renters may feel a bite from new construction at first, even if they may benefit from it over the long run

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iehi-feed-65188 Fri, 14 Feb 2020 17:12:03 GMT Kraft Heinz takes $666 million charge, misses sales expectations (UNCLE WARREN'S LATEST FOLLY CONTINUES) http://implode-explode.com/viewnews/2020-02-14_KraftHeinztakes666millionchargemissessalesexpectationsUNCLEWARRE.html Kraft Heinz's sales have been muted for 14 straight quarters as consumers turn to cheaper private-label brands, online shopping and fashionable, nonprocessed and organic food. Thursday's results mark the one-year anniversary of Kraft Heinz reporting a surprise loss and taking a $15.4 billion writedown of key brands - a move that rocked the consumer goods industry and led to the ousting of former chief executive Bernardo Hees and several other executives.

At the time, the company also slashed its dividend by 36% and disclosed an investigation into its accounting practices by the U.S. Securities and Exchange Commission. In the year since, Kraft Heinz has announced further writedowns, scrapped its full-year adjusted earnings outlook, and is still under SEC investigation.

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Brazilian private equity firm 3G and billionaire Warren Buffett engineered the merger of H.J. Heinz and Kraft Foods in 2015, and since that deal the value of Kraft Heinz's stock has sunk about 60%. Under executives installed by 3G, the company made aggressive cuts using a tool called zero-based budgeting (ZBB) that incentivizes managers to meet strict cost targets - critics say this ate in to investment in brands.

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iehi-feed-65186 Tue, 11 Feb 2020 13:50:07 GMT Deadbeat Dad Bernie Sanders Never Paid Child Support http://implode-explode.com/viewnews/2020-02-11_DeadbeatDadBernieSandersNeverPaidChildSupport.html iehi-feed-65184 Sun, 09 Feb 2020 14:55:48 GMT Foreclosure Horror Stories: 4 Bizarre Foreclosure Stories http://implode-explode.com/viewnews/2020-02-09_ForeclosureHorrorStories4BizarreForeclosureStories.html iehi-feed-65183 Fri, 07 Feb 2020 21:33:18 GMT SoftBank's big bets have backfired. Now it's under scrutiny from a legendary activist investor http://implode-explode.com/viewnews/2020-02-07_SoftBanksbigbetshavebackfiredNowitsunderscrutinyfromalegendaryac.html New York-based Elliott Management revealed Thursday it has built a "substantial" stake in SoftBank, the firm run by billionaire Masa Son known for its $100 billion Vision Fund... Elliott, one of the world's most successful activist investors, said in a statement that it has held private talks with SoftBank leadership aimed at making changes to improve performance at the Japanese firm.

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Elliott, founded by billionaire Paul Singer, did not disclose the size of its stake in SoftBank nor specific steps it wants the company to take.

However, The Wall Street Journal reported that the investment amounts to more than $2.5 billion, or around 3% of SoftBank's entire market value. The paper said Elliott is pushing for up to $20 billion in share buybacks and improvements in SoftBank's corporate governance.

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In some ways, the tables have turned on SoftBank, which has long wielded vast power through its mega tech fund. Now, SoftBank is the one under pressure by a well-heeled investor.

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iehi-feed-65182 Fri, 07 Feb 2020 15:34:19 GMT FT Report: $2B of "Middle Eastern" Money Lies in Kushner Bailout With Secretive Behemoth Brookfield http://implode-explode.com/viewnews/2020-02-07_FTReport2BofMiddleEasternMoneyLiesinKushnerBailoutWithSecretiveB.html On a busy stretch of Manhattan's Fifth Avenue a few blocks south of Trump Tower, a decaying skyscraper stands as a rebuke to the $1.8bn deal that Jared Kushner helped his family sign a decade ago, at the age of 26. It was the most expensive New York office purchase in history, and for a time it looked likely to sink the Kushners' business. Steve Roth, the billionaire who co-owned 666 Fifth Avenue, lamented it would "be worth a lot more if it was just dirt".By 2016, Mr Kushner was searching for a way out. Destined for a top job in his father-in-law's White House the following year, he found plenty of people to talk to, but no one who was buying. Discussions with Anbang, the Chinese insurance group, came to a halt some time before its flashy chairman Wu Xiaohui landed in a Chinese jail. The Qatari finance minister Ali Shareef al-Emadi met Mr Kushner's father in 2017, although Charles Kushner has said he took the appointment "out of respect" and stressed there could be no deal.Then, with months to go before $1.2bn of mortgage payments fell due in February 2019, the Kushners won a reprieve -- one that looked nothing like a favour from a foreign state. It was an investment from financial group Brookfield, which leased the building whole, paying nearly a century of rent in advance.

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To unpack the Canadian group's accounts is to discover not so much a company as a giant, triangular jigsaw board that spreads across the world and covers assets worth $500bn. The pieces are hundreds of corporate entities, all locked together by elaborate contracts, which give 40 people at the top the right to rule huge sections of the puzzle almost as if it were their own. Those insiders wield such power that the companies below them could face risks similar to those of "pyramid control companies", according to a draft investor disclosure that Brookfield filed with the Securities and Exchange Commission in 2013. (The final version warned instead of risks "associated with a separation of economic interest from control".)

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The known links between Qatar and Brookfield all converge on the investment group's listed property fund BPY. About one-tenth of the fund's assets are tied up in skyscrapers in Canary Wharf and Manhattan that are co-owned by Qatar, but the connection goes further. Through a sovereign wealth fund, Doha is one of BPY's biggest investors, holding $1.8bn worth of BPY preferred equity. The securities have a debtlike quality, and Qatar can force BAM to buy them back for $1.8bn over the next six years.In theory, Qatar has significant influence over BPY. It is entitled to choose one person to sit on BPY's board, and to receive confidential information that other investors never see. Brookfield says the kingdom has never exercised either of those rights. (The Qatar Investment Authority declined to comment.) Both sides have previously indicated that, when Brookfield was negotiating a $1.3bn lease on 666 Fifth Avenue, a building that Charles Kushner had discussed with the Qataris the previous year, the kingdom was not involved.No matter who made the decision or knew about it, rescuing the Kushners strikes some real estate investors as ill-advised.

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In the public accounts of BPY, the listed property fund that received Qatari investment, 666 Fifth Avenue has already all but disappeared. Last January, BPY lost control of BSREP III, the private vehicle that owns the building, after reducing its stake to $1bn. New investors piled in, each taking a piece of the Kushner tower, and lifting the private fund's firepower to $15bn.That influx of cash has not made the tower's ownership any more transparent. A handful of US pension funds have acknowledged their participation, but few other investors have been identified publicly. Knowledgeable people insist that no Qatari money is involved. Materials reviewed by the FT show that about $3bn of the total comes from sovereign governments, although they do not specify which ones, and $2bn of it from the Middle East, although the document does not say exactly where.

So, despite claims to the contrary, Qatari money was indeed involved in "bootstrapping" the Kushner bailout (based on God knows what geopolitical pressure). Now a bunch of other anonymous investors have taken their place and piled on, but admittedly, as $3 bln from sovereign governments, $2 bln from the Middle East. The potential conflicts of interest with US foreign policy are unknown (and, given recent experiences with the Trump administration, constitute a realistic, if not critical, concern).

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iehi-feed-65181 Fri, 07 Feb 2020 14:28:05 GMT Lender moves to foreclose on site of NYC hotel linked to Adam Neumann, Mexican magnate http://implode-explode.com/viewnews/2020-02-07_LendermovestoforecloseonsiteofNYChotellinkedtoAdamNeumannMexican.html East West Bank is moving to foreclose on the loans secured by the Selina Chelsea NYC property, citing a missed payment last monthly.

In a complaint filed in state court Monday, the bank said it issued two mortgages totaling $31 million in 2013, but the borrower -- a limited liability company led by Mexican hotel magnate Moises Micha -- is in default.

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Just last month, the owner of the Blakely Hotel on West 55th Street told staff he was shutting down his operation because of financial pressures, a move he said was symptomatic of wider problems across the industry

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iehi-feed-65180 Thu, 06 Feb 2020 19:53:33 GMT Attorney Anthony Colleluori: The Lionel Hutz Of Long Island http://implode-explode.com/viewnews/2020-02-06_AttorneyAnthonyColleluoriTheLionelHutzOfLongIsland.html iehi-feed-65179 Wed, 05 Feb 2020 16:57:57 GMT Former Porn Lawyer Off To Federal Prison For Mortgage Fraud http://implode-explode.com/viewnews/2020-02-05_FormerPornLawyerOffToFederalPrisonForMortgageFraud.html iehi-feed-65178 Tue, 04 Feb 2020 23:43:54 GMT Macy's to close 125 stores, cut 2,000 corporate jobs, in hunt for growth http://implode-explode.com/viewnews/2020-02-04_Macystoclose125storescut2000corporatejobsinhuntforgrowth.html The company has lost market share in core categories like apparel, and its profits have been pressured, as fewer shoppers take trips to malls, and instead are buying on Amazon and other online retailers.

The steps Macy's is taking are expected to generate annual gross savings of about $1.5 billion, which will be fully realized by the end of 2022. This year, Macy's expects to save roughly $600 million.

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iehi-feed-65177 Tue, 04 Feb 2020 19:43:20 GMT New York Zombie Foreclosure Warning: Second Lien Holders Are Coming! http://implode-explode.com/viewnews/2020-02-04_NewYorkZombieForeclosureWarningSecondLienHoldersAreComing.html iehi-feed-65176 Sun, 02 Feb 2020 17:12:51 GMT Slow GDP Growth Undermines Trump "Success" Claims http://implode-explode.com/viewnews/2020-02-02_SlowGDPGrowthUnderminesTrumpSuccessClaims.html iehi-feed-65174 Fri, 31 Jan 2020 22:23:13 GMT The U.S. Housing Affordability Crisis Is Making Its Way to the Heartland http://implode-explode.com/viewnews/2020-01-31_TheUSHousingAffordabilityCrisisIsMakingItsWaytotheHeartland.html Earning $40,000 a year in Omaha used to be enough to make rent comfortably. Not anymore. Housing costs are slipping out of reach for the middle class in smaller and medium-size cities across the U.S., the latest sign that the affordability crisis that started on the coasts is moving inland, according to research released on Friday by the Harvard Joint Center for Housing Studies. From 2011 to 2018, the proportion of households making $30,000 to $45,000 a year that were "cost-burdened" -- paying more than 30% of their income on rent -- soared the most in metros including Nashville, Tennessee; Greenville, South Carolina; and McAllen, Texas.

The data highlight a harsh reality of the U.S. economy a decade into the longest expansion on record: For people who don't make big salaries, there are fewer and fewer affordable places to go.

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Wage growth has been lackluster in recent years compared with previous periods of economic expansion, and has failed to keep pace with rental costs. The consumer price index for rent rose an average 3.2% year-over-year from 2011 through 2019, Bureau of Labor Statistics data show. That outpaced average yearly earnings growth over the period of 2.4%.

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The share of low-cost units in the national rental stock shrank to 25% in 2017 from 33% in 2012 -- with the biggest declines in Iowa, Montana, Nebraska, North Dakota, Oklahoma, and Texas.

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iehi-feed-65173 Fri, 31 Jan 2020 01:19:35 GMT "Opportunity Zones" Tax Break Being Investigated For Sweetheart Approvals To Trump Allies http://implode-explode.com/viewnews/2020-01-30_OpportunityZonesTaxBreakBeingInvestigatedForSweetheartApprovalsT.html A federal tax break meant to help poor communities that became a windfall for wealthy investors is being investigated by the Treasury Department, the agency's deputy inspector general said on Wednesday.

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The legislation, part of the 2017 tax overhaul, is supposed to encourage new investment in poor neighborhoods, leading to new housing, businesses and jobs. However, wealthy investors are piling into the initiative, including developers with ties to the Trump administration.

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In October, The Times described how the financier Michael Milken stood to benefit from a move the Treasury Department made over the objections of some agency officials to permit a census tract in Nevada to qualify for the Opportunity Zone tax break. Mr. Milken is a longtime friend of Treasury Secretary Steven Mnuchin's.

"Despite these warnings from staff, Secretary Mnuchin instructed Treasury officials to allow the otherwise ineligible tract to qualify for the incentive," the lawmakers wrote in seeking the inquiry. "If the Treasury Department provided a stamp of approval as a political favor, it is not only unacceptable, but in complete violation of the congressional intent of the Opportunity Zones."

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Other potential beneficiaries of the Opportunity Zone tax break, The Times reported last year, were billionaire financiers like Leon Cooperman; Chris Christie, the former New Jersey governor; Richard LeFrak, a New York real estate titan who is close to the president; and the family of Jared Kushner, Mr. Trump's son-in-law and senior adviser.

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