Author: admin

Yesterday, when we first reported that JPMorgan was probing its employees’ role in abuse of PPP funds following reports of “instances in which Covid-relief funds were misused by customers and is probing employees’ involvement in the potentially illegal activities”, we said that it was about time the role of banks was put under the microscope because ” while it was easy to blame the administration for rushing to hand out hundreds of billions in grants/loans (without which the US economy would still be in a depression), a key question is how and why did the private banks that were gatekeepers for all this capital, allow such abuse to take place.“

Well, it now turns out that not only did JPM employees allegedly enable fraud by clients when obtaining PPP loans, the largest US bank also found that some of its employees themselves “improperly applied for and received”, i.e. stole, Covid-relief money that was intended for legitimate U.S. businesses hurt by the pandemic, according to Bloomberg.

The bank discovered the actions, which were tied to the Economic Injury Disaster Loan program, “after noticing that suspicious amounts of money had been deposited into checking accounts owned by bank employees.” The findings prompted an unusual all-staff message from JPMorgan Tuesday which according to Bloomberg “puzzled many across the industry for its candid admission of potentially illegal acts by some of its own while not describing what they had done.”

What is odd, is that unlike with the Paycheck Protection Program, banks didn’t issue or underwrite the disaster loans and grants. Instead, loans or grants came directly from the SBA, which raises questions how employees of the largest US commercial bank intermediated themselves in a process that should have been streamlined without middle-men.

JPM’s surprising findings of illegal employee activity come amid a broader sweep of individual accounts that received business aid. On July 22, the SBA warned banks to be on the lookout for suspicious deposits or activity as part of the EIDL program. The SBA’s inspector general has also flagged evidence of fraud in the program, saying it identified more than $250 million in aid given to potentially ineligible recipients as well as $45.6 million in possibly duplicate payments. A Bloomberg analysis of SBA data last month identified $1.3 billion in suspicious payments.

As a result, prosecutors have brought charges against more than 20 businesses for fraud under the CARES Act, which authorized the PPP loan program, and a recent report by the House Committee on Oversight suggested that there could have been billions of dollars worth of fraud in the PPP program. Rep. James Clyburn, a Democrat from South Carolina, called on the inspectors general of the U.S. Treasury Department and SBA to investigate the program.

“The SBA does not comment on individual borrowers. Evidence of waste, fraud, and abuse with any of SBA’s loan programs is not tolerated and should be reported. … The SBA successfully distributed 5.21 million loans and $525 billion to small businesses in an unprecedented amount of time, through the Paycheck Payment Program,” the SBA said, misstating the name of the Paycheck Protection Program.

“This is going to be the biggest fraud in government history, the magnitude of which we will not know for many years to come,” said Vic Hartman, a former FBI agent and author of a 2019 book about fraud based on lessons from his career.

As such, it is hardly a surprise that banks are involved.

On Tuesday, JPM’s leaders sent a memo to roughly 256,000 employees Tuesday in which senior leaders said they were probing whether any staffers helped people misuse aid programs including “Paycheck Protection Program Loans, unemployment benefits and other government programs.” The firm had said it identified conduct by customers that didn’t meet its principles and “may even be illegal” and that some employees had fallen short on ethical standards. The bank also asked employees to report any unethical activity they’d witnessed.

While the bank has identified rampant misuse of the EIDL program, only a small percentage of it has been tied to bank employees, said the person. The bank hasn’t found evidence of wrongdoing by employees related to the PPP program.

With Sino-U.S. relations deteriorating, American companies operating in China believe tensions between the world’s two biggest economies will remain in place for years, according to a new survey. 

About 92% of respondents said they would continue operating in China even as soaring tensions between Beijing and Washington are expected, the study said, which was published Wednesday by the American Chamber of Commerce (AmCham) in Shanghai. These deeply rooted multinational corporations have revenues over $500 million per year – it appears these corporations are snubbing President Trump’s push to decouple both economies. 

“Under my administration, we will make America into the manufacturing superpower of the world and we’ll end our reliance on China, once and for all, whether it’s decoupling or putting in massive tariffs like I’ve been doing already,” Trump said in a Labor Day speech on Monday. 

The survey reveals an overwhelming number of respondents have zero plans on reverting manufacturing plants to the U.S. Only 4.3% said they would move back stateside. 

When it comes to how long the souring relations would last, at least 25% of U.S. firms surveyed said tensions between both countries would last “indefinitely,” compared to 17% a year ago. About 20% said tensions would last 3-5 years, up from 10% in 2019. Only 14% of firms believed tensions would be resolved in the next 12 months. 

Ker Gibbs, president of AmCham, said U.S. firms operating in China are hoping Beijing and Washington can resolve “outstanding issues” in the near term. 

“U.S. businesses in China would like to see the two countries resolve their outstanding issues quickly and reduce tensions. A workable cooperative framework for the next decade would be a good place to focus discussions,” Gibbs said in a statement. 

But with tensions unlikely to be resolved this year, Gibbs said AmCham members are awaiting clarity from the U.S. government about U.S. firms using popular Chinese messaging app WeChat. He said the lack of clarity surrounding WeChat from Washington is like “pins and needles right now,” adding “if American businesses in China have to stop using WeChat, this would be devastating.”

“Members are concerned, but dedicated to the market, which is attractive, large, and growing. We are aware of the national security issues and members hope that there can be some rebalancing of the relationship,” Gibbs said. “A lot of members do feel a bit of whiplash from the past three-and-a-half years and want to see a more long-term strategy.”

To make matters worse, nearly a third of respondents said souring tensions have made it more challenging over the last several years to retain staff in the country, as Chinese workers shun U.S. firms. 

The survey was conducted in June and July of this year and didn’t cover the latest spikes in tension between both countries. For instance, the push to decouple by Trump, and China, indicating it may cut some of its holdings of U.S. Treasury bonds and notes, serves as a warning that relations will only deteriorate from here. 

If readers want more color on, the already decoupling, well, check out the chart below: 

In terms of trade flows between both countries, decoupling started during the trade war.

Authored by Daniel Horowitz via ConservativeReview.com,

Remember the goal of flattening the curve?

Ensuring that hospitals weren’t overrun? Well, what do you call a scenario where thousands of cases result in zero hospitalizations? I’d call it the ultimate flat curve – or downright flat line.

Yet rather than recognizing the detection of mild cases among college students as portents of good news, universities continue to sow panic for no good reason.

If we had in place the strict eligibility threshold for COVID-19 testing that we had in March when tests were scarce, we quite literally would not know the “epidemic” of mild and asymptomatic cases on college campus even exists. After being open for weeks, college campuses have no reported deaths or even hospitalizations that I can find. You might say that’s because they’ve done such an amazing job preventing cases. Nope: They have tons of reported cases. Dr. Andrew Bostom, a cardiovascular and epidemiology researcher, posted a spreadsheet on twitter of all the cases in 17 state university systems as of September 4:

1/ Very Reassuring U.S. Return To Campus C19 News: ZERO reported C19 hospitalizations despite >11,000 students testing C19+, i.e., being declared “C19 cases” pic.twitter.com/XrGlWddlsd

— Andrew Bostom (@andrewbostom) September 5, 2020

There is not a single hospitalization among them. How is this an emergency situation? If anything, the fact that there are so many cases is a blessing, because, with such a young population, these cases are a de facto vaccine, creating herd immunity without danger.

Despite this blessing, the University of Arizona has hired a private security company to “patrol and ensure compliance of health and safety directives” on campus, essentially turning the campus into a prison and criminalizing the lives of young adults who have near-zero risk from the virus. They must be suffering the epidemic of the century there in order to warrant such heavy-handed policing, right?

Well, according to Dr. Richard Carmona at the College of Public Health at the University of Arizona, they found a few “cases” at a sorority house and “were able to identify, very early, before anybody was symptomatic, that there were sick people in their dorm.”

The horror! Some asymptomatic cases. What are they going to do during the flu season when even young people actually get sick for a week? The entire purpose of counting cases during an epidemic is because they might predict mass casualties. During this pseudo-epidemic on college campuses, they need to count cases to even know they exist. But if they don’t result in serious illness, then what is the purpose of counting them more than rhinovirus colds?

Then there is the issue of what exactly these PCR tests are detecting. Many of them could be false positives, insignificant viral loads, or the dead RNA of a virus that passed weeks ago still being carried around in the student’s nasal passages. There is no metric for any of this being monitored in the testing. The irony of the University of Arizona using positive testing of benign cases as the baseline for such draconian measures is that so many of those tests turn out to be false positives. Out of the 13 positive results among members of the university’s athletics department last week, 11 of them turned out to be false upon retesting.

But evidently, negative tests aren’t even enough to escape to clutches of tyranny. Last Monday, Ohio Health Director Lance D. Himes signed an order requiring even students who test negative to be isolated in a quarantine house on campus. It includes asymptomatic individuals or even those merely “exposed” to a COVID-positive individual. They’d be barred from exiting the quarantine house without written permission from a health official, and individual universities would decide whether parents are even allowed to visit them. This is a mandate for de facto prison – all for an “epidemic” built on false or notional positives with no health risks beyond the ordinary bugs that spread on campuses every year.

By sending your children to Ohio’s public colleges, you are essentially sending them off to jail, because it’s nearly impossible for them not to be quarantined. Ohio State University is conducting mandatory random testing of 8,000 students each week via their “surveillance testing program.” Based on everything we know about false positive or old dead viral RNA, it’s a near-certainty that the testing will net dozens of people every week. Now, this order will force numerous friends and dorm-mates to be confined as well.

It’s becoming self-evident every week that the virus that is really spreading is an incorrigible psychosis. Rather than confining our youth for a cold that might not even spread in its asymptomatic form, perhaps its time to start confining some of the public health officials … to a mental health facility.

Don’t count the venerable – if bankrupt – department store and mall anchor tenant, J.C. Penney out just yet.

One week after we reported that J.C. Penney (docket #20-20182, in the U.S. Bankruptcy Court for the Southern District of Texas) was on the verge of liquidation after talks with its two largest landlords had collapsed, today the company’s lenders reached a tentative deal with mall landlords Simon Property Group and Brookfield Property Partners to buy the bankrupt chain. The deal, valued at $1.75 billion, would rescue the beleaguered department store chain from bankruptcy proceedings, averting a liquidation that would have threatened roughly 70,000 jobs and represented one of the most significant business collapses following the coronavirus pandemic, Joshua Sussberg, a Kirkland & Ellis LLP lawyer representing the company, said during a brief court hearing Wednesday, confirming an earlier Reuters report.

The landlords are poised to put $300 million toward the rescue and have agreed to a nonbinding letter of intent with J.C. Penney, he said. The operating company they are acquiring would assume $500 million of debt. The deal also calls for new financing from existing lenders; in the end, J.C. Penney will have about $1 billion of cash to fund its business when the deal closes, Sussberg said.

The financing includes a commitment for $2 billion of new asset-based lending led by Wells Fargo, as well as $500 million of so-called takeback debt from existing first-lien lenders, he said. The deal would split J.C. Penney into an operating company and two real estate holding companies.

The restructured retailer is expected to operate about 650 stores, according to Reuters: hedge funds and private-equity firms financing J.C. Penney’s bankruptcy, meanwhile, would take ownership of 161 of those stores and separate distribution centers after forgiving portions of the Plano, Texas-based company’s $5 billion debt load, Sussberg said. These lenders, led by H/2 Capital Partners, would own those assets in two separate real estate investment trusts.

The Wall Street Journal reported earlier that the deal is valued at about $800 million, with the mall owners taking about 490 of the chain’s 650 stores. Lenders would swap some of their debt for control of another 160 locations and the distribution centers, which would be rented back to the landlords, the Journal reported.

“The transaction between the lenders, the company, and Simon and Brookfield contemplates a $1.75 billion total enterprise, plus a post-closing earn-out and a significantly negotiated working capital adjustment,” Sussberg said in the hearing.

J.C. Penney plans to move at “lightning speed” to seek approval of the deal from a bankruptcy judge in early October, Sussberg said. “We are in a position to move this into the endzone,” he told U.S. Bankruptcy Judge David Jones, noting that previous talks were in the “red zone” before faltering and then gaining renewed traction.

The iconic 118-year-old retailer, which went public at the start of the Great Depression, filed for bankruptcy in a Texas court in May after the pandemic forced it to temporarily close its then nearly 850 stores. Should it survive, J.C. Penney will have withstood unprecedented economic turmoil stemming from the pandemic and bankruptcy proceedings that have felled other retailers during less fraught times. In recent years, Toys ‘R’ Us Inc and Barneys New York Inc failed to reorganize under bankruptcy protection and liquidated.

A deal is not yet completed, Sussberg cautioned. Talks with the landlords have hit roadblocks before, and the parties engaged in screaming matches as recently as Wednesday, he said. Negotiations continued during phone calls moments before the court hearing, he added.

If the tentative deal falls apart, J.C. Penney would resume its course for liquidation. Sussberg expressed optimism a deal would be codified and the judge encouraged the parties to keep working to seal an agreement.

“Time, as we’ve mentioned over and over again, is not our friend,” Sussberg said. “It is important — for this transaciton to stay together and for all these stores to stay open and for the 70-plus-thousand employees to stay employed — for us to move with lightning speed.”

J.C. Penney’s survival has hinged on sale negotiations, which have consumed the summer and drawn urgent directives from the company’s bankruptcy judge for parties to set aside what he labeled egos and negotiating postures to consummate a deal to save the beleaguered retailer. The talks dragged on for weeks in part amid haggling over lease terms, Reuters sources said. In late August, the discussions with Simon and Brookfield reached an impasse, prompting J.C. Penney to ask lenders to take control of its retail operations in addition to the real estate investment trusts they envisioned owning. After further discussions, the company reached a deal with Simon and Brookfield to buy the retail operations.

Any deal would require approval from the company’s bankruptcy judge and potentially be subject to competing bids in a court-supervised auction. This means that private equity firm Sycamore Partners and Saks Fifth Avenue owner Hudson’s Bay may have another say in the final transaction; the two vied for J.C. Penney’s retail business earlier this summer.

So why are Simon and Brookfield doing a deal with one of the biggest clients? Because as Reuters explains, the deal reflects a dramatic shift following the pandemic that is pushing them to rescue faltering retailers occupying malls they own across the United States. The demise of large tenants such as J.C. Penney would deprive them of rent and also potentially trigger contract clauses allowing other retailers to pay them less or break their leases altogether, further darkening malls.

Simon, the largest mall operator in the United States, has already this year negotiated separate deals to rescue the two-centuries-old men’s apparel clothier Brooks Brothers and denim retailer Lucky Brand from bankruptcy. Brookfield in May said it would devote $5 billion to non-controlling investments designed to revitalize retailers struggling in the wake of the coronavirus outbreak. In effect, Brookfield is paying rent to itself to avoid even more rent shortfalls.