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Regulators Criticize Banks For Lending Uber $1.15 Billion (venturebeat.com) 139

Federal regulators criticized several Wall Street banks over the handling of a $1.15 billion loan they helped arrange for Uber this past summer, reports Reuters, citing people with knowledge of the matter. From the report: Led by Morgan Stanley, the banks helped the ride-sharing network tap the leveraged loan market in July for the first time, persuading institutional investors to focus on its lofty valuation and established markets rather than its losses in countries such as China and India. The Federal Reserve and the Office of the Comptroller of the Currency (OCC), which are trying to reign in risky lending across Wall Street, took issue with the way in which the banks carved out Uber's more mature operations from the rest of the business, the people said.
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Regulators Criticize Banks For Lending Uber $1.15 Billion

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  • Make the banks take the risk when an driver hit's and kills / get's in a real bad accident and they try to get out of it.

    • by DogDude ( 805747 ) on Wednesday January 11, 2017 @10:54AM (#53647715)
      The whole point of corporations in the US is so that nobody's liable for what corporations do. Corporations can't/don't go to jail, and a member of a corporations going to jail for something done under the auspices of the company is rarer than lightning strikes or lottery winners.
      • by MitchDev ( 2526834 ) on Wednesday January 11, 2017 @10:55AM (#53647729)

        and THAT is the problem

        • by Anonymous Coward

          Totally a problem.

          So enjoy your lengthy sentence for that buggy ass code you wrote, chump.

          • Re: (Score:3, Insightful)

            by dehachel12 ( 4766411 )
            In theory, the people up the chain of command get a huge salary because they are responsible when something breaks.
            in practice, they get to blame you.
            • by Nidi62 ( 1525137 )

              In theory, the people up the chain of command get a huge salary because they are responsible when something breaks. in practice, they get to blame you.

              Of course. They are important to the company (that's why they make that huge salary). The company can't afford to lose them. However some cog way down the chain of command that makes a fraction of what they do (and thereby obviously isn't as important to the company as they are) is easily replaced so they are the ones that get blamed and get fired. Even if they do "resign", they get a seven or eight figure buyout and land somewhere else a few months later after taking a nice long vacation.

              • by Anonymous Coward

                They are important to the company (that's why they make that huge salary).

                Janitors are important too, but look at what they make. A CEO not showing up for two months while he has a vacation in southern France and no one would notice. All the toilets in the company overflowing for two months and that would cause serious productivity damages.

                So why are executives "important" if their absence is not missed?

                • But, without all the shit the CEO generates, they might not need the janitors.

                • by Nidi62 ( 1525137 )

                  They are important to the company (that's why they make that huge salary).

                  Janitors are important too, but look at what they make. A CEO not showing up for two months while he has a vacation in southern France and no one would notice. All the toilets in the company overflowing for two months and that would cause serious productivity damages.

                  So why are executives "important" if their absence is not missed?

                  A janitor is a cog. They can be easily replaced, and in most cases aren't even part of the company: most major companies outsource cleaning. Now, of course my comment was mostly sarcastic, as we all know that most cogs tend to do much more work than those higher ups.

              • There is a difference between 'necessary' and 'mission critical'.

                Which isn't to say CEOs are all 'mission critical', some are about as competent as drunk monkeys throwing darts at 'decision boards'.

                If your Janitors (digital or mop) are 'mission critical', you are doing it wrong.

      • The head of foreign corporation building diesel engines programmed to cheat emissions tests can be arrested while on vacation in the US.
      • by Jahta ( 1141213 ) on Wednesday January 11, 2017 @11:47AM (#53648093)

        The whole point of corporations in the US is so that nobody's liable for what corporations do. Corporations can't/don't go to jail, and a member of a corporations going to jail for something done under the auspices of the company is rarer than lightning strikes or lottery winners.

        This is the result of corporate lobbying over the last 20 years, and the growing view (among the wealthy elite) that white-collar crime isn't really a thing. After the savings-and-loan collapse in the 1990s, over 900 bankers were convicted of criminal offenses [theguardian.com]; after the most recent (and much worse) financial crash, nobody in the banking industry has spent even a night in jail.

        • Re: (Score:1, Insightful)

          by Anonymous Coward

          ... that white-collar crime isn't really a thing.

          There's been an entire attitude shift: Remember, civil forfeiture laws were created to steal boats and houses from rich criminals. Now, they're being used to steal a traveler's laptop and iPhone. Citizens who have won court cases against such theft have never gotten their property back, putting those police in contempt of court.

          There were many complaints when NY police began 'stop and frisk' procedures but the courts have approved such fishing expeditions so the practice has spread. Police departments h

        • Well, some were [cnn.com] gaoled. But mostly low-level, none of the big fish.

    • by Anonymous Coward

      "hit's", "get's"? Seriously?

    • by Joce640k ( 829181 ) on Wednesday January 11, 2017 @11:19AM (#53647889) Homepage

      Where were these "regulators" when the banks were lending trillions on junk mortgages then reselling them to people as bonds?

  • I hope that Uber dies and with each loss they sustain, I cheer. The company cheats its drivers out of so much. Uber is just another predatory company.
    • by Anonymous Coward

      Can't they just not drive for uber? Or just drive for Lyft?

      • by Anonymous Coward

        Exactly. Why do people think they need to be white knights for Uber drivers? Uber drivers know what they are doing.

        • by Nidi62 ( 1525137 )

          Exactly. Why do people think they need to be white knights for Uber drivers? Uber drivers know what they are doing.

          Your post reminds me of this clip [youtube.com] from Airplane.

    • Clearly you have never caught an Uber, or if you have you have never bothered to actually speak to the driver(s). I usually use my motorbike to get to work and back, but when the weather is really crappy I catch an Uber, and I chat with the drivers. Of all the Ubers I have caught I have only encountered one disgruntled driver, ironically he didn't like meeting all the different people and wanted to go back to driving long distance trucks. All the other drivers have been happy driving for Uber, sure the m
      • Re:Death of Uber (Score:5, Insightful)

        by aaarrrgggh ( 9205 ) on Wednesday January 11, 2017 @11:31AM (#53647975)
        Most are happy until they go to sell their cars and learn there is no equity left after a few years. The more you drive, the more you loose.
        • That's why you buy an older used car. Taxis routinely buy old cop cars with over 100,000 miles or more and use them for several more years.
          • Where I live, Taxis must be 7 years old or less, and most drivers buy them with 2-3 years and 100k miles on them. Uber has an age limit of five years; I don't think I have ridden in more than a couple that seemed "used", and most were fairly new. But yes, if you buy a 3-4 year old car to drive 50k miles per year you might be able to keep your costs around $0.25/paid mile, earning $0.60 net after self employment taxes, or about $30k for about 1,00-1,500 hours behind the wheel with the app on... best case s
      • I'm sure they're perfectly free to say how much they hate the job and driving you round with no percussions whatsoever.
        • Usually, you don't have to worry about percussions with Uber drivers, except when you get one of those beatnik drivers. I try to stay away from them.

        • I find the idea that someone can make anecdotal claims on the Internet and pass them off as a comprehensive study probably the oddest part of the parent's claims.

          "Oh well, fuck employment law, because sometimes I take an Uber ride, and the drivers seem totally cool with it!"

    • Found the cabbie scum.

      • by Mashiki ( 184564 ) <mashiki@@@gmail...com> on Wednesday January 11, 2017 @11:41AM (#53648059) Homepage

        Some of us just expect them to follow the same laws that cabbies are required to. You know like the same insurance that's required for a commercial operator. Vehicle inspections, CPR training and so on. You know, exactly the same things that were put into law because cabbies had such a terrible track record that it was killing people.

        Yes, how dare people demand they actually follow the law.

        • Some of us just expect them to follow the same laws that cabbies are required to. You know like the same insurance that's required for a commercial operator. Vehicle inspections, CPR training and so on. You know, exactly the same things that were put into law because cabbies had such a terrible track record that it was killing people.

          Yes, how dare people demand they actually follow the law.

          I don't particularly like Uber as a company and I'm not at all happy with the current contractor vs. employee status quo in general, but if there was ever an argument for a libertarian-ish view of things, it would have to be here. You're describing things that aren't necessary or indeed pertinent to driving someone safely from point A to point B with the possible exception of vehicle inspections[1]. Simple performance tracking should suffice here.

          Piling on the red tape to give it a veneer of professiona

          • by Mashiki ( 184564 )

            1. But how many fatal car accidents are caused by hardware failure? Surely it's a tiny percentage? Regardless, I don't see any reason to single out cabs for hardware inspections. Either everyone should be forced to get them or no one should.

            Dig back through the news, you'll see the stories of "cabs with wood covering holes in floors" or people becoming sick because of fumes in the cab because of exhaust leaks or brake failures. Those cases are the reasons why 6mo safety inspections exist. What would happen is either the person or company would buy absolute rust buckets and use them to ferry people around. Round that out that those vehicles have very high mileage, and get driven very hard. Especially in city environments where poor roads h

          • Vehicle inspections can be useful for safety. Adequate insurance is useful for when safety fails. If you're operating a dangerous machine, you're creating a danger for others, and should be in a position to deal with the consequences.

            The difference between commercial and non-commercial auto insurance isn't in general government-mandated. Your insurance company will sell you a policy cheaper if you agree to no commercial use, because they expect the personal policy to cost them less. If commercial ins

        • The point of Uber is not just a relabeled Taxi. Uber exists because Taxi's have a horrible tract record and are synonymous with shitty service, Uber exists because we want something diametrically opposite. It's shitty cabbies cannot compete on a level playing field, but they should campaign to fix their situation, not to drag others down.

    • Why not just create a competing version that gives drivers their due and lures them all away from Uber?

      At the moment Taxi drivers are notorious for really nabbing passengers. Perhaps you are a couple steps ahead?
      • Because, as Uber's loss of $2+ billion a year shows, you cannot make a profit doing this kind of business. It doesn't work. There's a reason cabs cost what they do - it's kind of what you have to charge to make a profit as a business. Right now, we have billions of dollars given to Uber to use to subsidize (pay) customer's rides. Once that subsidy goes away - Uber's costs will greatly increase to that of a cab, and Uber loses its value.
        • I wasn't aware Uber was receiving subsidies. Are you talking government subsidies (i.e. tax revenues)?
          • No, I'm talking riders getting subsidies - via Uber paying more to the drivers than the costs support. Once that subsidy to the rider goes away, either the driver loses money (and Uber loses drivers in droves), or the cost of the ride goes up (and the number of riders plumments). Cut the billions that Uber is spending to buy riders - and you have no more riders.
  • by dave420 ( 699308 ) on Wednesday January 11, 2017 @11:04AM (#53647785)

    Ride sharing has a specific meaning, and Uber is not it.

  • by Anonymous Coward

    When every last customer and driver you have can walk away after a 3-minute download, how can that "lofty valuation" be justified?

    What I don't get is how the company can be worth more than every last taxi medallion in every major US city combined.

  • That's almost as much money as it took Nick Leason to bankrupt Bearings Bank ($1.4M) back in the ninety's https://en.wikipedia.org/wiki/... [wikipedia.org]
  • by TTL0 ( 546351 ) on Wednesday January 11, 2017 @11:53AM (#53648121)

    ...long long ago, an out-of-town visitor to New York was admiring the elegant vessels harboured off the Financial District; "Those are the bankers' and brokers' yachts!" exclaimed the guide. "But where are the customers' yachts?" questioned the naÃve visitor in response...

  • ...or, for a rather heavily-regulated industry, banks seem to behave in a rather cavalier fashion?

    • Important Lesson (Score:2, Insightful)

      by Anonymous Coward

      The 2008 crisis taught investment banks an important lesson. If you are politically connected enough, the government will bail you out if you screw up.

  • Everyone is judging how much Uber is worth and talking about their services but no one here has actually looked at their finances, loan agreements, and most probably haven't even read the article. How can this? How can that? Uhh guys you have no idea what makes a company valuable and especially the government doesn't know. They look at one thing, collateral, and say screw it when it comes to all the other details. Of course a 'new' and growing company doesn't have much collateral. Banks don't just loan bas
    • by Cederic ( 9623 )

      You're demonstrating a fair amount of ignorance yourself here.

      Banks don't just loan based on

      The banks didn't provide the loans. The banks helped Uber secure investment from others, and likely made a hefty profit on their fees.

      This is precisely why the regulators are getting grumpy. The banks have a history of disregarding whether they're providing those investors with a viable and sensible product or not - and that's explicitly one of the factors that led to the financial crash.

      The banks haven't bet on anything. They've facilitated othe

      • Your comment is a joke. Everything that I said that apples to "banks" applies to "institutional investors." The one reviewing the loans is the government and that is the point. I don't know if you are just incompentant or you have never worked in the banking industry.
        • by Cederic ( 9623 )

          The government isn't criticising the institutional investors, its criticising the banks for their role.

          So no, your comment remains utter fucking nonsense and you've failed miserably to understand the situation or my comment.

      • You apparently don't know how the financial collapse happened. The banks took junk loans, sliced them up and packaged them as AAA (the highest rating) investment grade even though 80% of the loans were subprime that the banks KNEW were going to default. The banks then turned around an invested the banks money in shorting those very same investments.

        The banks can't be trusted, and the investors can't know what the risk is when the banks lie about it. That is what the government is saying with Uber because th

  • Please, Mr. Trump! Stop the regulators from deciding who they should be lending to!
  • If anything should happen to these banks the U.S. taxpayer will be there to bail them out and make sure the executives get their bonuses.

    Just like the last time.

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