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<div type="image" title="The RBI has cracked the regulatory whip on NBFCs and banks, who&amp;#39;ve been pushing microfinance and unsecured loans aggressively to grow their loan books." agency="ANI" msid="114778648" hostid="261" caption="&amp;lt;p&amp;gt;The RBI has cracked the regulatory whip on NBFCs and banks, who&amp;#39;ve been pushing microfinance and unsecured loans aggressively to grow their loan books.&amp;lt;/p&amp;gt;"></div> Imagine this. You have a younger sibling you’re mighty envious of. And why not? Unlike you, they seem to enjoy all the freedom and money in the world. They party like there’s no tomorrow, and here you are, stuck in a boring, ultra-disciplined but responsible routine that feels completely devoid of any independence, and mostly, funds. But of late, things are changing. This sibling is in massive trouble and just cannot escape the parent’s wrath anymore. Long story short, the party is over, and it is time to go back home. The rising defaults on this sibling’s part have now begun pulling the entire house down, thereby attracting the regulator’s ire. <h2>The Wild West of <keyword id="113684" type="General" weightage="20" keywordseo="microfinance" source="Orion">microfinance</keyword> and unsecured loans</h2>It's hard to ignore the issues with microfinance and unsecured loans in India. Many saw them as a small gamble and ignored the rising defaults much like the younger siblings’ tantrums, and now they find themselves in hot waters. The skyrocketing instances of non-payments aren't a micro-issue anymore and are threatening the stability of the entire banking system. In the quarter ended September 30, 2024, 5 of India’s 8 largest private sector <keyword id="19934118" type="General" weightage="20" keywordseo="banks" source="keywords">banks</keyword> reported a steep rise in their bad loan book, mostly thanks to microfinance loans. Some banks, in a bid to strengthen their fortress against these <keyword id="142154" type="General" weightage="100" keywordseo="bad-loans" source="Orion">bad loans</keyword>, have significantly upped their provisions. For instance, IndusInd Bank set aside Rs 525 crore during July and September 2024 to battle the menace of defaults on microfinance loans, which make up about 9% of its total loan book. See, banks rely heavily on their interest income, which they earn from advancing loans. Any loan where the borrower has not paid interest to the bank or defaulted for 90 days or more becomes bad, i.e. an NPA, or non-performing asset for the bank. And who likes things going bad? Simply put, there has been a steep rise in three areas, much to the dislike of banks and MFIs (micro-finance institutions). But hey, it's mostly their doing! <ol><li>GNPA ratio (gross net performing assets): The quantum of non-performing assets a bank has in proportion to its total assets.</li><li>Provision: The amount banks set aside to take care of such NPAs.</li><li>Slippage ratio: The rate at which good girls go bad, or the speed at which good loans turn into NPAs</li></ol>But how are these plaguing the Indian banking sector? And what does the road ahead look like? We decode it for you. <h2> Microfinance: A not-so-micro-menace</h2>Microfinance loans were initially brought forth for low-income households and individuals i.e. for those who might not generally have access to traditional ways of credit, like bank loans and more. They don’t require collateral or an asset to be pledged in lieu of the loan, making it a tad bit easier for borrowers. As of June 2024, the amount of outstanding loans in the microfinance industry stood at a staggering Rs 4,20,256 crore. Of this, NBFC-MFIs accounted for 40% and banks made for 33% of these. In 2022, RBI, in a bid to inspire some competition in this space, did something radical-they did away with the ceiling on how much interest MFIs could charge their customers. Previously, MFIs could add up to 12% to their cost of acquiring funds to determine the final interest rate chargeable to the consumer. So, assuming that Bank A incurs a 5% cost to acquire funds for further loaning, A could charge up to 17% interest from the end consumer. So, interest rates were in the hands of MFIs, and boy, did they have a gala time with it. Instead of spurring some healthy competition, as RBI expected, MFIs and banks went rogue and all guns blazing, competing for the title of “Who will charge the highest interest?” Recently, RBI banned 4 microfinance institutions (MFIs), namely Asirvad Micro Finance Limited, Arohan Financial Services Limited, DMI Finance Private Limited, and <keyword id="20117932" type="General" weightage="20" keywordseo="navi-finserv" source="keywords">Navi Finserv</keyword> from disbursing loans effective October 21, 2024. Why? Because they were charging 14% extra interest over their original cost of funds. To maintain their loan books (and pockets), banks and NBFCs resorted to shady practices like netting off loans, which RBI has now advised MFIs against. Here, lenders allow borrowers to settle a previous outstanding loan by issuing them a new loan! As crazy as it sounds, it helped banks to report less of their total assets as NPAs, since the new credit would cover pending instalments of the borrower’s previous loan. Then there was the issue of borrowers overleveraging, i.e. taking multiple loans using different IDs from various lenders and then failing to honour any of them. The consequence? Banks and NBFCs end up with massive NPAs. Data from credit bureaus suggests that over the last quarter, there was a 17.2% rise in the number of borrowers who had 5 or more active loans at the same time. <h2>Growth &gt; Caution</h2>It's an age-old tale unfolding yet again in India’s banking sector- Icarus flew too close to the sun and eventually, fell to its death. Between April and June 2024, NBFCs microfinance portfolio jumped by 2.7%. If you see this in terms of loan sources, microfinance loans issued by banks grew by 11.2% in Q1FY25. But the same portfolio in NBFCs swelled by almost double-23.9%. While most of these loans had an average ticket size between Rs 30,000-50,000, there was a sharp spike in the number of loans that had a ticket size of Rs 80,000 or more. Data suggests that as of March 2024, more than 12% of all microfinance borrowers had over 4 or more active loans. In dating parlance, this is a classic case of borrowers going polyamorous, minus the honesty and transparency. Not the best of situations, you'd agree! <h2>Will banks and NBFCs stand up to this stress?</h2>If their results for Q2FY25 are to be believed, NBFCs are not handling the pressure all that well. Or even slightly well. Only a few banks like Bank of Baroda (BoB), ICICI, and Indian Bank were up for the battle, even witnessing a decline in their loan delinquencies. Some others, like IndusInd Bank, saw their stock dip by a massive 16.2% over the last 5 days. Its slippages in the previous quarter burgeoned from Rs 15.3 billion in Q1FY25 to Rs 17.9 billion in Q2. As a result, the bank pushed a staggeringly high amount of money to create an NPA cushion for itself. While its management has highlighted its preference for secured lending, that was hardly reflected in its actions during the quarter, where growth in unsecured personal loans remained exceptionally high at over 7% on a QoQ basis. Turns out, only 44% of customers in IndusInd Banks’ microfinance loan portfolio were exclusive to it. The rest 47% were, you guessed it right-polyamorous! 27% had borrowed from another lender as well, apart from IndusInd Bank, while 20% were those who had outstanding loans with two other lenders, apart from IndusInd Bank. IndusInd Bank’s credit card segment did not miss the NPA bus and accounted for 7-8% of its GNPAs. Canara Bank’s total slippages during the previous quarter jumped to Rs 11.1 billion, up by 24.7% QoQ, and making up for 3.6% of its total loans. As for Bandhan Bank, its gross NPA for Q2FY25 inched up on a QoQ basis, up from 4.23% in Q1, to 4.68% in the second quarter. IDFC Bank’s heavy provisioning for its NPAs marred its profits significantly, causing its PAT (profit after tax) to dip by 73% on a YoY basis. Data from ICRA Analytics suggest that the AUM (asset under management) growth in microfinance loans and unsecured (personal and business) loans by the NBFCs will moderate to 10-12% and 19-21%, respectively, in FY2025 compared to 30% and 38%, in FY2024. Says A M Karthik, Senior Vice President &amp; Co-Group Head, Financial Sector Ratings, ICRA, “As bank funds constitute a larger share in the overall funding of NBFCs, a slower credit flow from banks to the NBFCs will compress their AUM growth. The NBFCs in unsecured and digital lending businesses shall face a higher squeeze in funding compared to others, and the unsecured lending space will continue to be a source of stress in the near term.” There has been uninhibited growth in <keyword id="6051027" type="General" weightage="20" keywordseo="Unsecured-loan" source="Orion">unsecured loan</keyword>s, apart from just the microfinance segment. For instance, Axis Bank’s gross slippages jumped by Rs 4,443 crore, largely thanks to its unsecured business. The same is the case with Yes Bank, which saw 35–40% of its retail slippages emerging from the unsecured loan portfolio. <keyword id="6376194" type="General" weightage="20" keywordseo="kotak-mahindra" source="Orion">Kotak Mahindra</keyword> Bank was also quick to follow Yes Bank’s suit, with around 35%-40% of its slippages coming from credit cards. <h2>How is the road ahead?</h2>While RBI has just cracked its whip and served a warning at the moment, experts at Morgan Stanley believe that more changes (read regulatory lashes) are underway. Moreover, with both festive and wedding seasons underway in our country, unsecured lending might pick up momentum, much to the disdain of the calibrated approach banks have been taking towards it so far. But if the situation doesn't improve, RBI will not waste any time in becoming the typical tyrannical <keyword id="19897820" type="General" weightage="20" keywordseo="bollywood" source="keywords">Bollywood</keyword> headmaster who runs his dominion with an iron fist. However, that's a story for another day. Do you have a topic in mind you'd want a simpler explanation for, or insights or personal experience to share on personal finance and more? Contact us at businessinsider@timesinternet.in.

Simply Put: Is the lending party over? The dangerous tango of Indian banks with microfinance and unsecured loans

<ul class="summary-list"><li>Trump's civil fraud trial, which could run him and Trump Org out of NY, is in its second week.</li><li>On Wednesday, state officials called Nicholas Haigh, a former Deutsche Bank banker, to the stand.</li></ul>They called it the Trump "haircut."Really, that was what <a href="https://www.businessinsider.com/trumps-secret-ugly-breakup-with-deutsche-bank-revealed-2022-10">Deutsche Bank – Donald Trump's most generous lender</a> – called the routine cuts they applied to whatever the former president told them he was worth.The "haircut" reference was made Wednesday <a href="https://www.businessinsider.com/trumps-ny-fraud-trial-opens-today-heres-why-still-matters-2023-9">at Trump's New York civil fraud trial,</a> now mid-way through its second week. The word jumped out during an esoteric finance discussion."First of all, what is a haircut?" Kevin Wallace, an attorney for the AG's office, asked while questioning one of the former president's chief barbers, so to speak, Nicholas Haigh.Haigh is a banker who helped sign off on the more than $400 million that Deutsche Bank loaned the former president over the past decade."A haircut is a way by which the bank reduces the stated value of the asset in order to form some kind of assessment of what it might be worth," should there be a default, Haigh testified in a crisp British accent.Trump's pre- and post-haircut net worth varied wildly, the banker showed.In 2011, Trump told the bank he was worth $4.26 billion. But after the bank's haircut, meaning in a hypothetical default, he'd be worth as little as $2.365 billion, according to the fourth page of <a href="https://www.documentcloud.org/documents/24026639-nyag-v-trump-2011-deutsche-bank-trump-credit-report" target="_blank" rel="noopener">Deutche Bank's 2011 Trump "credit report,"</a> an internal banking document entered into evidence in the morning.<h2>So what, in simpler terms, was a Trump haircut? </h2>The Trump haircut, then, was Deutsche Bank's way of taking Trump's very sunny assessments of his worth and using them to calculate what he'd be worth in a very worst-case scenario. If he defaulted on a loan, for example, then the bank might sell his properties in a down market, say, for golf courses.The term first surfaced nearly two years ago in a court filing by the attorney general's office that described how the bank took Trump's self-described net worth and used it to calculate their own separate, lower, "stress scenario" worth.In the lender's own internal paperwork, there was what Trump said he was worth in his annual Statements of Financial Condition. To the right, in a separate column, there was his "DB adjusted," which is Deutsche Bank's fire-sale price, calculated via a percentage "haircut."<div type="image" title="A table listing financial categories, what the client reported them as being worth, and what were worth after being &quot;DB adjusted.&quot; they" height="650" width="1208" msid="104352743" hostid="261"></div>Trump's post-haircut worth was critical, over the years, in evaluating "whether to extend or maintain credit," the AG's filing said. The calculation influenced the bank's decision to lend money to Trump and then continue to let him keep that money during the life of the loan. The loans helped build the Trump empire — and reputation — that, in turn, propelled him, as a billionaire businessman, to the White House.Deutsche Bank financed the Trump National Doral Miami golf resort (he borrowed $125 million), the Trump International Hotel &amp; Tower in Chicago (he borrowed $107 million), and the renovation of the Old Post Office in Washington, DC (he borrowed $170 million).<div type="image" title="A view of a Trump hotel from the street." height="4133" width="5511" msid="104352744" hostid="261"></div><h2>Crew cut? Trim?</h2>That depends.A different haircut would be applied by Deutsche Bank depending on the kind of asset. For instance, the haircut on cash was very small since cash doesn't really depreciate, Haigh testified Wednesday.But the haircut on Trump's golf resorts? That was 50%, he testified.And in 2011, Deutsche Bank gave Trump a 75% haircut on what he said his Seven Springs estate in upstate New York was worth — because that valuation included the development of nine yet-unbuilt luxury "mansions." "Asset properties that are not yet developed have a larger range of possible impacts on their value" in the future, Haigh explained. <div type="image" title="An excerpt from Deutsche Bank's internal, 2011 Trump credit report, mentioning a 75 percent haircut." height="248" width="2500" msid="104352745" hostid="261"></div>That turned out to be a good call by Deutsche Bank. The nine mansions were essentially imaginary, the AG has argued, since zoning laws and other local regulations had already banned their construction, despite Eric Trump's efforts at the time."A haircut in banking is usually when they take a small percentage off the top," said Tammara Buckey, a Huntsville, Alabama-based CPA and career consultant who has been following the trial with an eye toward its potential for comedy – she won last year's South's Funniest Accountant competition."Usually it's just a trim," she said. "But for Trump it more resembled Britney Spears in 2007 – singing, "Ooops, I frauded again."<h2>And why do we care?</h2>It's a point of dispute in the trial. Trump's side says that the former president never defaulted and that Deutsche Bank made many millions off of his interest on the loans. They lent to him regardless of their most severe haircut calculations and were in no way victimized, his lawyers have argued.The attorney general counters that in lending to Trump, Deutsche Bank relied on both Trump's adjusted, worst-case, "haircut" worth and his self-reported worth. The state's expert witnesses are expected to testify that it's unlikely that the bank would have loaned to Trump at all if they knew those numbers were fraudulent.James has accused the defendants in her lawsuit — Trump, his two eldest sons, and two former long-standing executives — of conspiring to lie about his worth by as much as $3.6 billion a year in a decade's worth of the annual statements of financial condition he used to get and keep his loans.She's seeking to permanently ban him from running a business in New York, among other penalties, and has already won a pre-trial ruling that <a href="https://www.businessinsider.com/trump-fraud-ruling-corporate-death-penalty-for-his-empire-experts-2023-9">may shift control of the Trump Organization to a receiver</a> who'd be tasked with selling assets.Haigh's testimony was taken during a break in longer testimony by Allen Weisselberg, Trump's former CFO, who on Tuesday testified that Trump's <a href="https://www.businessinsider.com/allen-weisselberg-testifies-tripling-square-footage-financial-reports-minor-mistake-2023-10">tripling of the square footage of his penthouse in five years of financial statements was a "minor" miscalculation</a>.

The Trump 'haircut': Yes, Deutsche Bank really used this term in reducing what Trump said he was worth

<ul><li>JPMorgan CEO Jamie Dimon said US regulators should consider a ban on short selling bank stocks.</li><li>The comments come amid a crisis of confidence following a string of bank failures. </li><li>"[If] people are going short and then making a tweet about a bank, they should go after them," Dimon said.</li></ul>JPMorgan CEO Jamie Dimon believes US regulators should consider a ban on the short-selling of bank stocks.In an interview with Bloomberg on Thursday, Dimon said the SEC has the ability to investigate potential collusion amid short-sellers that may be incentivized to spread false information, and that they should do that.The comments from Dimon come amid an ongoing crisis in confidence in regional banks following the collapse of Silicon Valley Bank, First Republic Bank, and Signature Bank.When asked if regulators should look at the short sellers of bank stocks, Dimon responded, "Yes. Look, my folks would tell me that's not the problem... I think they may partially be wrong.""Some people are unscrupulous and they use other means to go short. If you look at the detail, the SEC has the enforcement capability to look at what people are doing by name in options, derivatives, short sales, and if someone's doing anything wrong, [if] people are in collusion, or [if] people are going short and then making a tweet about a bank, they should go after them, and vigorously, and they should be punished to the fullest extent the law allows it," Dimon said.Bank executives are on edge in a world where information, whether true or not, can spread quickly on social media platforms like Twitter and severely impact a company's stock price and underlying business.On Wednesday, <a href="https://markets.businessinsider.com/news/stocks/pacwest-stock-price-deposits-drop-regional-banking-crisis-turmoil-pacw-2023-5?_gl=1*8yth0z*_ga*MTc1OTYzMjQ2Mi4xNjYxOTYxNTUx*_ga_E21CV80ZCZ*MTY4MzgzMzc0OS4xMTQuMS4xNjgzODMzODEyLjYwLjAuMA..">PacWest Bancorp said a report</a> from last week that suggested it was considering a sale to a larger bank <a href="https://markets.businessinsider.com/news/stocks/pacwest-stock-price-deposits-drop-regional-banking-crisis-turmoil-pacw-2023-5?_gl=1*8yth0z*_ga*MTc1OTYzMjQ2Mi4xNjYxOTYxNTUx*_ga_E21CV80ZCZ*MTY4MzgzMzc0OS4xMTQuMS4xNjgzODMzODEyLjYwLjAuMA..">led to a 10% decline in its deposit base.</a> The stock fell more than 20% on Thursday.Last week, a report from the FT said Western Alliance Bancorp was considering a strategic sale to a larger bank. That report <a href="https://markets.businessinsider.com/news/stocks/western-alliance-stock-price-bank-denies-sale-ft-report-wal-2023-5?_gl=1*6dp1vx*_ga*MTc1OTYzMjQ2Mi4xNjYxOTYxNTUx*_ga_E21CV80ZCZ*MTY4MzgzMzc0OS4xMTQuMC4xNjgzODMzNzQ5LjYwLjAuMA..">led to a swift 60% decline in Western Alliance's stock price</a>. Less than an hour after the FT report was published, Western Alliance denied the report and <a href="https://investors.westernalliancebancorporation.com/news-releases/news/news-details/2023/Western-Alliance-Bancorporation-Issues-Statement-Disputing-Recent-Financial-Times-Article/default.aspx" target="_blank" rel="noopener">said in a statement</a> that short sellers were to blame."It is shameful and irresponsible that the Financial Times has allowed itself to be used as an instrument of short sellers and as a conduit for spreading false narratives about a financially sound and profitable bank," the statement read.While short sellers play an important role in making markets more efficient and have in the past identified instances of corporate fraud, some bank executives want a break from the mayhem, at least until the regional banking crisis ends.

JPMorgan CEO Jamie Dimon wants US regulators to consider a ban on the short selling of bank stocks

<ul class="summary-list"><li>For 2 days, Deutsche Banks' in-house Trump credit reports flashed on screens at his NY fraud trial.</li><li>They showed he never missed a loan payment and earned the bank millions in interest.</li></ul>Leaving aside <a href="https://www.businessinsider.com/trump-new-york-judge-finds-business-2023-9">all the fraud that a judge says the loans were based on,</a> Donald Trump was otherwise a model borrower, according to the latest testimony in his New York civil fraud trial.For a second day on Thursday, a former Deutsche Bank executive sat on the witness stand as years of <a href="https://www.businessinsider.com/trumps-secret-ugly-breakup-with-deutsche-bank-revealed-2022-10">his firm's confidential Trump "credit reports"</a> flashed across two big screens.Trump never missed a loan payment, the credit reports and the banker's testimony showed. In almost a decade as a borrower, Trump was never even late making a payment – not before, during, or after his presidency."So far as I can recall, the loans were performing," the banker, Nicholas Haigh, told the judge in the non-jury trial, at which <a href="https://www.businessinsider.com/donald-trumps-biggest-worry-is-still-letitia-james-2023-7">attorney general Letitia James seeks to banish Trump Organization from her state's borders,</a> and to ban Trump and his eldest sons from ever running a New York company again."And all the obligations of the borrower were met," Trump attorney Jesus M. Suarez asked the banker in his next question."As far as I know, yes," the banker answered.If Trump's prompt payments were not enough to burnish his borrower bona fides, the former president's collateral also grew, the credit reports showed. It grew by millions each year, as the projects Deutsche Bank funded with $400 million in loans – his tower in Chicago, his golf resort in Miami, his luxury hotel in Washington DC – were developed.And all the while, the bank made "millions" in interest, the banker testified, to that extent bolstering <a href="https://www.businessinsider.com/trumps-top-5-defenses-massive-ny-fraud-case-2023-9">a frequent Trump defense talking point:</a> that the fraud trial is a political grudge in search of a victim. Trump, who last week attended the first three days of the trial, is expected to return in person next week, <a href="https://www.nytimes.com/2023/10/12/nyregion/trump-fraud-trial-michael-cohen.html" target="_blank" rel="noopener">The Messenger</a> and <a href="https://apnews.com/article/donald-trump-letitia-james-fraud-new-york-c1865da048782b708de74c050f647df2" target="_blank" rel="noopener">the Associated Press</a> reported."These loans are a credit to the fact that you and your team made a good credit decision?" Suarez asked the banker."I generally agree with that," he answered."You did a good job, right?" the Trump lawyer pursued.The banker paused, then answered, "Yes."But then there's all that fraud – <a href="https://www.businessinsider.com/trump-net-worth-math-even-fuzzier-than-ny-last-alleged-2023-9">more than $3.6 billion a year in exaggerated net-worth</a>, James has alleged.That changes a lot, the banker soon suggested from the stand, during an exchange with James' attorney Louis M. Solomon, who heads her real-estate finance enforcement section."Is whether or not a loan gets repaid the same question as whether the bank has accurately weighed the risk of the loan?" James' lawyer asked."No," the banker answered.Asked why that's the case, he answered, "Getting repaid is just one element of what the bank is trying to achieve" when lending money. The bank also wants to get the best interest rate possible, he explained, using the term "a fair return on our capital."The attorney general has argued that by exaggerating his worth, Trump won millions in interest breaks, giving Deutsche Bank and other lenders a decidedly unfair return.As her direct case continues in the coming weeks, James' side will call at least one banking expert who will further allege that Deutsche Bank may never have lent to Trump at all if they knew how large a gap there had been between his self-stated and actual net-worth.One thing is already certain – once Deutsche Bank learned what the attorney general was unearthing about Trump's math, they decided he was actually less than a model borrower. In 2021, <a href="https://www.businessinsider.com/trumps-secret-ugly-breakup-with-deutsche-bank-revealed-2022-10">they forced a "managed exit" from the Trump Organization in an ugly, secret breakup.</a>Testimony continues tomorrow with more testimony from a current Trump executive, Patrick Birney, a vice president of financial operations.Birney played a central role in preparing Trump's net-worth statements between 2017 and 2021.The attorney general's side has suggested in court filings that Birney may implicate Trump by saying the former president liked to see his net-worth increase each year, leaving top executives scrambling to meet those targets.

Aside from the fraud, Donald Trump was a very well-behaved borrower, Deutsche Bank testimony shows

<ul class="summary-list"><li>Trump deceived banks and insurers, a Manhattan judge found Tuesday.</li><li>The ruling is a pre-trial win for the state Attorney General, who wants him banned from doing business in NY.</li></ul>In a stunning, pre-trial win in <a href="https://www.businessinsider.com/donald-trumps-biggest-worry-is-still-letitia-james-2023-7">New York attorney general's all-out war on the Trump Organization</a>, a Manhattan judge has found that Donald Trump committed fraud for years by inflating his worth to banks and insurers by as much as $3.6 billion a year.A strongly-worded ruling by state Supreme Court Justice Arthur Engoron rejected outright Trump's request for a range of pre-trial victories, calling his arguments "rehashed" and "erroneous."Instead, the judge gave a major victory to Attorney General Letitia James, immediately revoking Trump's license to do business in New York."It's the corporate death penalty," said Diana Florence, a veteran financial crimes prosecutor for the Manhattan district attorney's office, now in private practice."This ruling essentially dissolves his company," she said, though she predicted that years of appeals may pass before anything actually happens.A trial, scheduled for next month, must still be held to determine if Trump and company executives acted intentionally.The trial will also determine what further penalties Trump, his two eldest sons, and his company must pay.For now, though, James is entitled to cancel "any certificate" allowing Trump Organization to operate as a New York-chartered company, the decision says. "Today, a judge ruled in our favor and found that Donald Trump and the Trump Organization engaged in years of financial fraud," James said in a statement Tuesday night."We look forward to presenting the rest of our case at trial." Trump's side, meanwhile, promised an immediate appeal, and to keep fighting."Today's decision is fundamentally flawed at every level," Trump attorney Alina Habba said in a statement."It is important to remember that the Trump Organization is an American success story," she added, calling the decision "an affront to our legal system." James is seeking $250 million in penalties, and to ban Trump and his adult sons from ever running a business in New York state again. She also wants to ban Trump and the Trump Organization from borrowing from a New York bank and from purchasing real estate in the state for five years. Almost as an aside, the judge on Tuesday also ordered that Trump attorneys Michael Madaio, Clifford S. Robert, Michael Farina, Christopher Kise, and Armen Morian pay penalties of $7,500 each in the next 30 days.The sanctions, requested by the attorney general, are "the only way to impress upon defendants' attorneys the consequences of engaging in repetitive, frivolous motion practice after this Court, affirmed by the Appellate Division, expressly warned them against doing so," the judge wrote.Engoron saved some of his harshest words for Trump's claim that no banks were victimized, and that "disclaimers" in his official banking statements somehow render him fraud proof.Such claims "invoke the time-loop in the film 'Groundhog Day,'" Engoron wrote, in a scorching latest chapter to the state's lawsuit against Trump, his two adult sons, two of his senior managers, and Trump Organization.At another point in the 35-page ruling, the judge referenced "Defendants' inscrutable persistence" in repeatedly claiming that the attorney general, Letitia James has no power to sue him."Infants, legally-declared incompetents, and persons under certain legal disabilities are not allowed to sue," the judge wrote. "The New York Attorney General is none of the above." <a href="https://www.documentcloud.org/documents/23991850-nyag-v-trump-summary-judgement-sanctions-decision-20230926" target="_blank" rel="noopener">Read the judge's decision declining to streamline Trump's business fraud trial</a>.Engoron, who will preside over the non-jury trial, has insisted on opening statements starting promptly on <a href="https://www.businessinsider.com/trump-ny-ag-fraud-trial-judge-warns-lawyers-delay-sanctions-2023-2">Monday, October 2, "come hell or high water."</a> Trump's side threw that timing into question two weeks ago by <a href="https://www.businessinsider.com/trump-appellate-judge-grants-interim-delay-ny-business-fraud-trial-2023-9">asking a Manhattan-based appellate panel to consider Trump's bid</a> to toss at least part of the AG's case on statute-of-limitations and other grounds.The trial can't start until that five-judge ruling, expected to come in days.<div type="image" title="Donald Trump" height="1667" width="2500" msid="103972565" hostid="261"></div>Trump's legal team has argued that real-estate appraisals are subjective, and that Deutsche Bank in particular, far for being victimized, actually profited from the disputed loans, arguments <a href="https://www.businessinsider.com/trumps-top-5-defenses-massive-ny-fraud-case-2023-9">Trump himself has continued to make, including, in a deposition.</a>"The defenses Donald Trump attempts to articulate in his sworn deposition are wholly without basis in law or fact," the judge wrote on Tuesday. "The documents here clearly contain fraudulent valuations that defendants used in business.""Defendants' respond that: the documents do not say what they say; that there is no such thing as 'objective' value, and that, essentially, the Court should not believe its own eyes," he added.At that point in the decision, the judge inserted a footnote, citing the Marx Brothers."As Chico Marx, playing Chicolini, says to Margaret Dumont, playing Mrs. Gloria Teasdale, in 'Duck Soup," the footnote read, "'Well, who ya gonna believe, me or your own eyes?'" Engoron singled out for scorn Trump's claim that he couldn't have overvalued his properties in official banking statements if the property values ultimately went up."He also seems to imply that the numbers cannot be inflated because he could find a 'buyer from Saudi Arabia' to pay any price he suggests," the judge scoffed at another claim from Trump's deposition.The decision focused on the five years of Trump's annual financial statements, from 2012 through 2016, when he tripled the square footage of <a href="https://www.businessinsider.com/ny-ag-trump-falsely-valued-apartment-3-times-real-size-2022-1">his three-story penthouse atop Trump Tower</a> on Manhattan's Fifth Avenue."In opposition, defendants absurdly suggest that 'the calculation of square footage is a subjective process that could lead ot differing results or opinions based on the method employed to conduct the calculation,'" the judge wrote, quoting from previous Trump court documents."Well, yes, perhaps, if the area is rounded or oddly shaped, it is possible measurements of square footage could come to slightly differing results," the judge countered. But "a discrepancy of this order of magnitude, by a real estate developer sizing up his own living space of decades, can only be considered fraud."Last week, during the parties' last in-person appearance, Engoron signaled he was unswayed by Trump's no harm, no foul defense."There's a role here for the attorney general," the judge said. "What was arguably hurt was fairness in the marketplace. Honesty in the marketplace." The parties are scheduled to return to the courtroom Wednesday for their final pre-trial conference. This story was updated with response from Trump's legal team and additional details from the decision.

Donald Trump committed fraud for years by inflating his worth to banks and insurers, a New York judge finds

<ul class="summary-list"><li>Democrats in both chambers are attempting to consolidate their various <keyword id="11984873" type="UNKNOWN" weightage="60" keywordseo="stock-trading" source="Orion">stock trading</keyword> ban proposals.</li><li>But while key questions about the bill have been largely worked out, obstacles remain.</li></ul>Democrats in Congress are slowly coalescing around a single bill that would ban federal lawmakers from trading stocks."There is consensus around the basic, fundamental principle that members of Congress shouldn't be serving their stock portfolios, they should be serving the people," said Democratic Rep. <keyword id="13570606" type="UNKNOWN" weightage="60" keywordseo="joe-neguse" source="Orion">Joe Neguse</keyword> of Colorado at a <a href="https://youtu.be/WqnNhEYBhtc">press conference</a> Thursday following a Committee on House Administration <a href="https://www.businessinsider.com/republicans-congress-stock-trade-ban-kevin-mccarthy-2022-4">hearing</a> on congressional stock trading. "I think we'll have robust debate on the finer points."Seven of the main Democratic co-sponsors of the various proposals to ban lawmakers from trading stocks shared a stage for the first time Thursday, with members from the progressive left to the moderate middle largely echoing each other's points."I mean, we're all here for the same purpose," Democratic Rep. <keyword id="11949072" type="UNKNOWN" weightage="60" keywordseo="alexandria-ocasio-cortez" source="Orion">Alexandria Ocasio-Cortez</keyword> of New York said. "Rep. [Abigail] Spanberger said it so well, that this isn't just about actual impropriety, but this is about the perception of impropriety."House Administration Committee Chairwoman <keyword id="12577839" type="UNKNOWN" weightage="60" keywordseo="zoe-lofgren" source="Orion">Zoe Lofgren</keyword>, a Democrat of California, told Insider that <a href="https://www.businessinsider.com/republicans-congress-stock-trade-ban-kevin-mccarthy-2022-4">her committee</a> is "engaged in an honest inquiry to find out what are the various issues and how they can be resolved."But when asked the timing on when she thinks Democrats will come to a consensus on what kind of stock ban measure should be put to a vote on the House floor she responded, "I can't say." Nor would Neguse."I can't speak for House leadership," he said when asked whether House Speaker Nancy Pelosi, who <a href="https://www.businessinsider.com/we-are-free-market-economy-pelosi-rejects-stock-ban-congress-2021-12">initially opposed</a> stock-ban legislation, is supportive of her Democratic colleagues' efforts. "I would just simply say that when you have folks like Rep. Spanberger, and Chair [Pramila] Jayapal, Rep. [Andy] Kim, and Rep. [Angie] Craig all on the same team pushing forward on an issue of this substance, I'd bet that we're gonna get this done."Sen. <keyword id="12467485" type="UNKNOWN" weightage="60" keywordseo="jeff-merkley" source="Orion">Jeff Merkley</keyword>, a Democrat of Oregon, said on Thursday that his Democratic Senate colleagues were on board with the core goal of the legislation."On the Democratic side of the aisle, the principle of ending conflicted stock trading is essentially unanimous," he said, adding that there were still some issues to iron out, including when the new rules would take effect, exactly how blind trusts would be implemented, and how spouses would be affected."<h2>Numerous STOCK Act violations</h2>The Committee on House Administration hearing on stock trading represented a big step in lawmakers efforts to pass measures to restrict lawmakers trading individual stocks.It followed publication of Insider's "<a href="https://www.businessinsider.com/conflicted-congress-key-findings-stock-act-finances-investing-2021-12">Conflicted Congress</a>" investigation in December, which found that <a href="https://www.businessinsider.com/congress-stock-act-violations-senate-house-trading-2021-9">59 lawmakers</a> and <a href="https://www.businessinsider.com/congress-staff-violated-stock-act-conflicts-of-interest-possible-2021-12">at least 182 senior-level congressional staffers</a> have violated the Stop Trading on Congressional Knowledge (STOCK) Act of 2012 by failing to disclose their stock transactions within a timely manner. "<keyword id="12727727" type="UNKNOWN" weightage="60" keywordseo="conflicted-congress" source="Orion">Conflicted Congress</keyword>" <a href="https://www.businessinsider.com/congress-members-are-trading-defense-stocks-while-shaping-military-policy-2021-12">found</a> <a href="https://www.businessinsider.com/lawmakers-bought-sold-covid-19-related-stocks-during-pandemic-2021-12">numerous</a> <a href="https://www.businessinsider.com/congress-democrats-with-fossil-fuel-stocks-investments-2021-12">examples</a> <a href="https://www.businessinsider.com/lawmakers-investing-in-crypto-as-congress-weighs-regulations-2021-12">of</a> <a href="https://www.businessinsider.com/congress-holding-stocks-facebook-twitter-disney-fox-news-2021-12">conflicts</a> of interest among federal lawmakers, both Democrats and Republicans.But the hearing also revealed that significant obstacles remain. For example, will Democrats and Republicans work together in a bipartisan fashion, as some on both sides hope? Will the legislation itself seek to ban lawmakers alone from trading stocks — or extend to immediate family members? Will a bill include Pelosi's demand that the judicial branch be included in reforms?Will stock-ban legislation find itself in election year competition with other bills for scarce floor time in both the House and Senate?The final measure that Democrats introduce on stock trading could indeed get some Republican votes. Already, several of the proposed bills have garnered co-sponsorships from lawmakers such as Sen. Lindsey Graham of South Carolina, Sen. Marsha Blackburn of Tennessee, and Rep. Matt Gaetz of Florida. Rep. Chip Roy, a Republican of Texas, <a href="https://spanberger.house.gov/posts/spanberger-roy-todays-stock-act-hearing-positive-step-but-meaningless-without-further-action">released a joint statement</a> Thursday with Spanberger, a Democrat, that touted their bipartisan bill, the TRUST in Congress Act, and in part lauded the Committee on House Administration's hearing."Today's hearing shows that pressure and public opinion can indeed force a reckoning with Washington's status quo," Roy and Spanberger wrote. "We are encouraged by this step."<h2>Stock-ban skepticism</h2>Nevertheless, Thursday's hearing and press conference <a href="https://www.businessinsider.com/republicans-congress-stock-trade-ban-kevin-mccarthy-2022-4">made clear that significant objections from the right remain</a>."If we enact something like this, it will strip the rights and the freedoms of individuals, and everybody on this committee is a free American citizen that has rights," Rep. <keyword id="13570607" type="UNKNOWN" weightage="60" keywordseo="barry-loudermilk" source="Orion">Barry Loudermilk</keyword>, a Republican of Georgia, <a href="https://www.businessinsider.com/post/preview?post_id=624f10858fde94217d78b208&amp;mode=desktop">said</a> at the committee hearing on stock trading. The Committee on House Administration's ranking Republican, Rep. <keyword id="12866487" type="UNKNOWN" weightage="60" keywordseo="rodney-davis" source="Orion">Rodney Davis</keyword> of Illinois, expressed skepticism about an outright congressional stock ban and said he's more inclined to back stronger disclosure rules and enhanced enforcement of current laws. <div type="image" title="Republican Reps. Rodney Davis of Illinois and Barry Loudermilk of Georgia at a House Administration subcommittee meeting in June 2021." height="1333" width="1777" msid="90716772" hostid="261"></div>Doug Andres, a spokesman for Senate Minority Leader Mitch McConnell declined to comment. In February, McConnell <a href="https://www.businessinsider.com/mitch-mcconnell-ban-stock-trading-lawmakers-take-a-look-2022-2">said</a>: "We'll take a look at that kind of legislation and see what may be appropriate."Notably, House Republican Leader, Kevin McCarthy, had championed the notion of banning stock trading in Congress early this year. Republicans have also used the issue of stock trading as <a href="https://www.businessinsider.com/stock-ban-congress-republicans-democrats-midterms-elections-2022-2">a political weapon</a> against some House Democrats who've run afoul of the STOCK Act. But McCarthy has been conspicuously quiet about stocks in recent weeks, and his office didn't reply to a request for comment. <h2>Working toward an endgame</h2>The bill Merkley originally introduced <a href="https://www.businessinsider.com/nancy-pelosi-ossoff-kelly-spanberger-unsure-spouses-stock-trading-ban-2022-2">would not ban spouses from trading stocks</a>. But <a href="https://twitter.com/metzgov/status/1512054297915240454?s=20&amp;t=PMWMac5Ww8JcrReYuqDxhw">Insider learned</a> Thursday that Democratic Reps. Raja Krishnamoorthi of Illinois, as well as Ocasio-Cortez and Neguse, introduced <a href="https://krishnamoorthi.house.gov/sites/krishnamoorthi.house.gov/files/KRISHN_065_xml2.pdf">an amendment to their own bill</a>, the House companion of Merkley's legislation, that <a href="https://krishnamoorthi.house.gov/sites/krishnamoorthi.house.gov/files/An%20amendment%20to%20HR%201579%20the%20Ban%20Conflicted%20Trading%20Act.pdf">would broaden the legislation to include spouses and dependents</a>.It would also institute new restrictions on the implementation of blind trusts. Martina McLennan, a spokesperson for Merkley, told Insider that the senator was generally supportive of the proposal.<div type="image" title="Merkley, Ocasio-Cortez, and Neguse at Thursday’s press conference on a stock trading ban. All three are cosponsors of the Ban Conflicted Trading Act." height="1338" width="1784" msid="90716773" hostid="261"></div>In a <a href="https://krishnamoorthi.house.gov/sites/krishnamoorthi.house.gov/files/2022.04.06%20Letter%20to%20Chair%20Lofgren%20on%20amending%20the%20Ban%20Conflicted%20Trading%20Act.pdf">letter to Lofgren outlining the changes</a>, the trio of House Democrats urged the House Committee on Administration to "move without delay to mark up the Ban Conflicted Trading Act with the attached changes." "I think it's great," said Spanberger, the Democratic co-lead of the TRUST in Congress Act, when Insider asked her about the amendment. Her bill, co-sponsored with Roy, included a ban on spouses from the beginning. "It's helpful that they're just affirming that, you know, spouses are part of the discussion," said Spanberger, who attended Thursday's hearing as an audience member. But she and Roy <a href="https://spanberger.house.gov/posts/spanberger-roy-todays-stock-act-hearing-positive-step-but-meaningless-without-further-action">also called</a> for their TRUST in Congress Act to serve as the basis for further stock ban negotiations, adding that the hearing would "ultimately prove to be a meaningless delay tactic if not accompanied by action." That could portend an ongoing tug-of-war among Democrats over whose bill gets to be the main vehicle for reform or what specific reforms are included.Even Lofgren, the top Democrat at Thursday's hearing, at times expressed doubts about a full-blown congressional stock trading ban. At one point, Lofgren suggested focusing on harsher penalties for people who violate existing law and offering better compliance training for freshmen members of Congress.She also sarcastically asked witnesses why members' stocks should have to be treated differently from other assets, including their homes. She noted that her husband has a retirement account — it includes many individual corporate stocks, according to congressional disclosure records — managed "by some guy at a bank." <div type="image" title="Democratic Rep. Zoe Lofgren, the chair of the Committee on House Administration, at a hearing on December 1, 2021." height="1333" width="1777" msid="90716774" hostid="261"></div>And she questioned why members might have to either dump their stocks or create a blind trust rather than set up a similar arrangement as her husband. Additionally, upon reversing her prior <a href="https://www.businessinsider.com/we-are-free-market-economy-pelosi-rejects-stock-ban-congress-2021-12">opposition to a stock trading ban</a>, Pelosi has insisted that the <a href="https://www.businessinsider.com/if-members-want-nancy-pelosi-reverses-on-stock-trade-ban-2022-1">judiciary must be included</a> in any reforms. "I say, when we go forward with anything, let's take the Supreme Court with us," she told reporters in January.That demand has been met with some skepticism from Democrats. Ocasio-Cortez told Insider on Thursday that while the idea made sense on principle, it was more important to address the issue as it applies to Congress."Do I think that the judiciary should have similar restrictions? Yes," said Ocasio-Cortez. "Do I think the inclusion of the judiciary is make or break in passing [the bill]? No."<keyword id="11893346" type="UNKNOWN" weightage="100" keywordseo="politics" source="Orion">Politics</keyword> won't be the only factor to slow consensus on the issue of congressional stock trading. Despite Capitol Hill's attempts to return to normal — following polling showing that's what voters prefer — several of its members have gotten COVID-19. The most recent is Pelosi herself, who <a href="https://www.businessinsider.com/house-speaker-nancy-pelosi-tests-positive-for-covid-19-2022-4">tested positive</a> on Thursday. The diagnosis led to Pelosi canceling a planned weekly press conference, so she was not available to answer questions after the House hearing about whether she would support any specific STOCK Act reforms.Thursday's stock hearing itself was <a href="https://www.businessinsider.com/congress-stock-ban-hearing-covid-postponed-zoe-lofgren-2022-3">originally scheduled</a> for March 16, then delayed after Lofgren got COVID-19. All the delays bring Congress to a moment ever-closer to Election Day, when it becomes more difficult to reach bipartisan consensus on most any topic as each side leverages their preferred policy narratives that they think will best motivate voters. "Let's not lose this opportunity," Merkley said. "Time is running out. Campaign season is upon us."

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Simply Put: Is the lending party over? The dangerous tango of Indian banks with microfinance and unsecured loans

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The Trump 'haircut': Yes, Deutsche Bank really used this term in reducing what Trump said he was worth

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Donald Trump committed fraud for years by inflating his worth to banks and insurers, a New York judge finds

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Democrats are struggling to unite on stock trading ban details as the window for reform narrows

Bryan Metzger,Camila DeChalus…

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