Joe G.

This is for everyone annoyed last week by @business and @elerianm circulating stale NDFI data in dollars. Notice the denominator.

@bank_reg Even GSIB advocates have used the "r" word in the past. Pressure from the administration, perhaps.

(3) As others have noted, the agencies appear to have concluded the Collins Amendment does not require a dual stack approach. Maybe that's right, but curious that the proposal doesn’t explain their reasoning (or even mention Collins at all, other than in cites like this).

A five tweet thread on a few legal things in the recent U.S. capital proposals. (1) After not being mentioned at all in the 2023 proposal, Section 165 of Dodd-Frank gets much more prominent treatment this time around.

@Tim_Sweeney_TAR @HuckleberryBen @muddywatersre Just asking questions. No position.

Read that language...I don't know of any party that ever gives the other side more than they contracted. If your counter party loses money, some parties may adjust what they want in future deals. But that provision is accurate, but as I recall may have a materiality limit. Lol I'm not looking up everything because those arguments are just grasping at straws 🤣

$sofi MORE ON SOFI'S UCC FILING Someone asked me about ASC 860 and how its provisions apply to the Sofi $750 million transaction discussed in the Muddy Waters report based on it's review of UCC filings. Section 860 provides 3 conditions to treat a loan as a true sale. Whenever a bank wants to sell loans under any various terms, the attorneys structuring the sale and agreements are well aware of these conditions and draft all the necessary agreements and language in a manner that it satisfies all conditions of a sale, as opposed to a financing, and the attorneys issue a True Sale Legal Opinion. Then the auditors review not only that opinion but all the facts surrounding that opinion and terms of on that True Sale Opinion treatment. The filling of a bill of sale and a UCC financing statement are two small parts of that transaction and cannot be used alone to warrant any conclusion that the loan sales are disguised financings. You would need to review the following documents to make that determination: 1. The Master Loan Purchase Agreement 2. The Credit/Loan Agreement 3. The Security Agreement 4. Master Servicing Agreement 5. Flow of Funds Memo 6. True Sale Opinion Letter (confirming assets are "legally isolated" for bankruptcy purposes) 7. Non-Consolidated Opinion Letter (Stating buyer's assets would not be pooled with Sofi's assets in a bankruptcy 8. Officers Certificate confirming reps and warranties in the Master Agreements. The bill of sale and UCC filings are simply extra protections. Protective UCC-1 filings are commonly made with conditional or "protective" language to expressly state that the filing does not indicate a secured loan exists, but rather covers the contingency of recharacterization, typically to perfect claims in case of bankruptcy recharacterization. They are filed with almost every loan sale. Section 860 requires three conditions to be a sale. 1. The assets must be LEGALLY ISOLATED from the transfer (relating to bankruptcy) 2. The TRANSFEREE’S RIGHTS include the ability to freely sell or exchange or pledge the assets 3. The transferor did not maintain EFFECTIVE CONTROL over the assets There are also provisions in section 860 that state you should review the transactions together to determine if the true terms and economic substance of the transactions differs from the result of applying the conditions separately. However, these issues can only be determined by reviewing the numerous provisions, conditions and restrictions in all of the above documents. The agreements are drafted by highly qualified and experienced attorneys with this issue specifically in mind. They insert numerous conditions and restrictions so that the transaction qualifies as a sale, even if the transaction includes two separate but related transactions. This true sale issue is an issue in almost all loan sales and the idea that the UCC protective filing changes the intentionally created rights, conditions, restrictions and duties that establish a true sale under 860 is not worth a response. This is similar to the bear arguments based on fair value.... where some of them simply say they THINK fair value accounting sofi not be allowed because it doesn’t comport to what they think should be the correct treatment. If you follow the rules and structure transactions properly, what they think doesn't matter. There's an old tax adage cited by courts-- you're under no obligation to structure a particular transaction so it results in the highest tax or any tax. A similar adage applies to loan sales... These transactions are structured in a way to qualify for true sale treatmentall the time. This isn't some one off transaction only done by Sofi The UCC filing has almost no evidentiary bearing on whether a loan sale satisfies the conditions of ASC 860

@Tim_Sweeney_TAR @HuckleberryBen @muddywatersre Assuming no implicit support, right?

@SEC_digger @HuckleberryBen @muddywatersre That depends on the documents

@Tim_Sweeney_TAR @HuckleberryBen @muddywatersre And can $SOFI buy portions of the junior tranche and keep SSFA treatment on the sr loan?

@SEC_digger @HuckleberryBen @muddywatersre A lot of times the ucc1 protective filings are never released. That means nothing

@HuckleberryBen @Tim_Sweeney_TAR @muddywatersre If structuring things properly can give $SOFI a legal path to gos and SSFA capital treatment (20% rw), why do anything stupid w/ the paperwork to risk it? For instance, what would be the upside of not releasing liens?

@Tim_Sweeney_TAR @muddywatersre I’m just surprised they released a follow up post yesterday of their 12 outstanding questions when others like yourself have broken down in detail what they got wrong. I’d assume they would just take their small short sale profit and move on haha

That’s interesting. Even if they were just structuring to get SSFA, I’d expect them to transfer the assets properly, then immediately lend against the entire trust reference pool. They’d be able to advance as much as 87.5% at origination for the sr secured tranche and still get a 20% RW.

@SEC_digger None. The liens were never released per the UCC filing, while the loan receivable was pledged by SOFI. In other words, CSS PL 2023-1 didn’t transfer the loans it bought from SOFI.

We asked $SOFI 11 questions before we published. It answered zero. The only response was to have the in-house lawyer demand to know who we are. It’s been 5 days since the report. We’re still waiting. Our unanswered questions: muddywatersresearch.com/research/2026/…

@antibearthesis I see

I haven't found a single thing wrong with this company yet - every "poor" metric i've come across, they're doing better than legacy banks. Hard to put odds on my thesis being wrong, only time will tell. I guess regulatory landscape changes is the biggest risk - but that stuff is pure speculation.

I spent over 1000 hours analysing $SoFi and wrote a 60-page deep dive for my college economics major finals. These are the top 10 reasons SoFi will become the largest bank in America during our lifetimes (A thread)

@Vince_Ltd What?

@SEC_digger A question that would discredit the report

This response is gold. Breaks apart short thesis... now fly away short fairies 🧚‍♀️

@antibearthesis Which part of your thesis are you least confident about, and what are the odds you’re wrong?

@SEC_digger Market cap

@larry_bukowski @shortbus_ace Same bro

@shortbus_ace @SEC_digger Would love to learn more about your de novo project.

Middle-market lending is being handed off to big banks and private credit, and you’re still tweeting about de novos and CUs. The BPI is running circles around you guys and you don’t even realize.

@shortbus_ace @Ticketmaster Competition is for losers

21% fees? fuck you @Ticketmaster

Still my favorite

@Jeremy_Kress Hard to blame the banks...

Remember: when the agencies want to raise capital requirements, banks invent baseless legal theories to delay and deflect. But when the agencies want to lower capital requirements, they ignore basic statutory mandates.

Graham is right: the Basel proposal appears to violate the Collins amendment. And it's telling that the agencies did not even attempt to address Collins compliance in moving from a double- to a single-stack. Per @AidenReiter

@UnicusResearch Shoulda added S&P to the list. Many of these are securitized Laks, so advance rates matter too.

🚨It is important to understand the how much banks are allocating to Non-Depository Financial Institutions (NDFIs - private credit comes under NDFIs). Everyone talks about private credit risk as if banks are on the sidelines. They're not. Overall, the largest banks dominate this space, as institutions with over $500 billion in assets accounted for 68.20% of NDFI loans held. Here is what the data actually shows. 🧵

@origoinvest @elerianm lol fair

@elerianm To be fair you don't do much to bring any nuance to the conversation either

This, from Bloomberg, is not good news for a market segment that is already challenged to separate signal from noise, let alone properly differentiate among funds/firms in this space. #markets #privatecredit

@LeylaKuni The changes increase incentives for banks to lend to NDFIs. x.com/SEC_digger/sta…

2010 Regulators: “Let’s make it really hard for banks to do business” -> private credit eats banks’ lunch 2026 “Cracks in private credit” Regulators: “Let’s loosen bank regulations and see what happens”