TRASHFUTURE - Bill Ackman Exclusion Zone feat. Rob Smith

Episode Date: November 4, 2025

The FT’s Rob Smith joins us to talk about the $4.5tn private credit bubble brewing in global financial markets… or to put it in perspective, to answer the question of how a regional Ohio auto parts distributor joined forces with Utah’s Swaggest Mormons to ring alarm bells at the IMF. Get more TF episodes each week by subscribing to our Patreon here! TF Merch is still available here! *MILO ALERT* Check out Milo’s tour dates here: https://www.miloedwards.co.uk/liveshows Trashfuture are: Riley (@raaleh), Milo (@Milo_Edwards), Hussein (@HKesvani), Nate (@inthesedeserts), and November (@postoctobrist)

Hello, everybody. Welcome to this free. It's a Monday episode of TF. I am Riley in the studio, joined by Hussein and Nova. And of course, the man himself, returning guest, FD journalist, Rob Smith, the Bond hack. Rob, how you doing? The Bond hack. Yeah, no, I'm good. Good to be back. Lovely. And we're going to talk about something I've been wanting to talk about for quite a long time and that we've been talking about something around the edges of, which is where all of the money went in the last 10 years. That seems important.

Yeah. Does anyone check the back of the sofa? Does this relate to the years we spent talking about the money being invested in various scams and frauds? Yes. In no small part. Yeah. Yeah. It could be like in a shoebox somewhere because I found like some money like recently in a shoebox

and I forgot that it was there. But it wasn't like money like notes. It was like coins. And so it was like an absurd amount of coins like in a shoebox. And I can't remember like where or why it happened. But like maybe that's the answer. So like imagine that shoebox, but it's like a car parts company in Cleveland. And there's $12 billion in the shoebox and no one knows where the car parts are.

Sort of rattling around. Yeah. Everyone's trying to find windshield wipers because they need them to repay the debt. What's very amusing is when we get to this, which is going to comprise the bulk of the episode, Rob is not exaggerating here. Literally, there are people whose job is trying to find where $12 billion worth of windshield wipers are because otherwise this could precipitate a kind of small financial crisis. Oh, fantastic.

Okay. Being a kind of financial, being a kind of market bomb disposal experts, where someone has buried an IED full of windscreen wipers by the side of the road and you just have to go out there in the big suit and dig it up. But before we get there, I actually realize something, which is that, look, I would say on this podcast, we are Ackman heads. I'm an Ackman head and I'm not on this podcast. We're big Ackman heads.

And there's this piece of Ackman lore that I realize we've never actually talked about, which is probably one of the funniest things that's ever happened to an investor. I wanted to just, I wanted to just like share it with our listeners so you know. and I wanted Rob to be here for it as a fellow Ackmanite. Just at this sort of perfect moment, as Bill Ackman's chosen candidate for mayor of New York City, Andrew Cuomo, seems poised touching wood here to eat shit. Yes, this is a big part of why I thought of it recently, actually,

because I was like, oh yeah, this is like the Bill Ackman's cycling debacle. I was like, oh shit, we've never talked about the Bill Ackman's cycling debacle on the podcast. He had a debacle? He was debacle. It's a debacle. It was a huge public embarrassment that happened to him in 2013, where he was going cycling near the Hamptons

like Lycra cycling like race biking with another investor and Bill Ackman, correct me of him wrong Rob it's not even like he did it a bit he had never done it before yeah he hadn't like because he plays tennis a bit right and is some obviously he bought his way

into an official tournament and then ate shit but at least he had some chops in tennis I don't think he'd certainly never been on like a long hard grueling ride before and the other people more experience

Steve was with. And they were like hobbyist cycle racers led by this other investor called Dan Loeb who I think fucking hates

him now and Lobe was like okay you come like we're gonna meet me at my place and then we're going to meet the other guys and then we're going to ride

to like whatever strapping on putting on like $5,000 worth of freshly bought Lycra and being like I can learn to ride a bike

from first principles right? November this is exactly what happened oh my fucking That's a beautiful level of confidence. I can't imagine to be like, oh, yeah, I'm going to sort of take the strength of character and will that brought us great investment decisions, and I'm going to apply that to

real life, and it's just going to be the one French meme of the guy sticking the baton and the spokes of his own bicycle wheel. And so what they do is he meets Dan Loeb, and then they ride to meet the other guys. And Bill Ackman is unable to stop fucking just booking it. A man putting training wheels on a more expensive bicycle than you will ever see less alone own. Yeah, absolutely. He does that. And then Loeb is like catches up to him. It's like, you should probably, this is quite grueling. You should probably slow down. Plus, when you meet, when, if you're like a road cyclist and you're meeting the rest of your friends, you're in a form like, it's actually called a Peloton, funnily enough.

You're going to form this like group of cyclists. Bill Ackwin's not listening because he looks like smithers on the back of the tandem bike. Well, not quite, he will in a moment, but he's basically like, fuck you, fuck them. I'm the best person who's ever ridden a bicycle. I'm not going to slow down under any circumstances. And he just bombs past the rest of their friends who are, I have to say, again, a bunch of other like multi-fucking zillionaire hedge fund guys who are just looking at. Not the most considerate cyclists in the world necessarily.

Yeah, but they're just looking at him completely fucking bewilder. It's like, was that Bill Ackman? Why was he riding so fast? And then I think an embarrassingly small amount of minutes later. Like, it's like minutes later, right? Yeah, he just, his legs seize up, but he's unable to walk. And two of the other cyclists are like, okay, we have to like basically carry you home on our shoulders. I'm just picturing him on a bike that is now stationary, just falling like a tree.

Yeah, clipped in. Clipped in for sure. Getting sort of brought home by a cyclist on either side of you, like the blind king of Bohemia, having to be strapped to his horse. And what I love about this as well is that this happened, like this, you know, very humiliating thing to happen in front of like all of your peers in the multi-zillion dollar investment. I would never show my face outside ever again. I would become a hermit. I think, and again, I'm turning to Rob on this one. Pretty shortly thereafter, he went on CNBC and had his argument with Carl Ican, where it's,

Carl was like, you're short herbal life, yeah. And what I'm going to do is I'm going to go long herbal life specifically to fuck with you. Yeah. So I don't know if you've talked about it. So it was like one of the Nadeas of Bill Ackman's career. He went short herbal life, which is kind of a multi-level marketing scheme. But it's one which has a lot of legal, like pattern of legality around it. Yeah. And Bill's kind of thesis was this should be illegal. Yeah. Because it's immoral. But he kind of hadn't really done the work. Yeah. And then this guy can't. Carl Icahn, who's in another amazing character. He's in his late 80s now.

He used to be like a corporate raider in the 80s. He's like Gordon Gecko. The 80s guy from Futurama was based on Carl Icah. Yeah, exactly. So Carl Icon had some previous feud with Ackman and out of spite went long herbal life and started propping the company up to like intentionally burn Bill Ackman. And then at one point, it was shortly after the cycling anecdote came out. I can't remember one of them

dialed into CNBC first and then the other one I think it was Carl Icon just dialed in and they started having a fight and I got the quote up because I just yeah so Carl Carl Ican at one point

said I'm not going to do the accent but the accent is great he says I'm telling you he's like a cry baby in the school yard I went to a tough school in Queens you know and they used to beat up the little Jewish boys he's like one of the little Jewish boys

crying they are both Jewish boys men, to be cool. These guys are so cool. I think it's great that they have billions of dollars. And while they were duking it out, you know, like, CNBC often has, like, the pit of traders in the background. The pit of traders were all listening. They're like, oh, like. So, anyway, this is, so this is just our, our salute to Bill Ackman, a man now falling off the bicycle of municipal politics.

So, uh, a tip of the cap to Bill Ackman. for being a ludicrous person. I mean, here's the thing. Now I know that when Curtis Slewer was recorded saying, stay in your lane, Ackman, that hurt him doubly because that was something he couldn't do on a bicycle. Well, also, maybe that's why you kind of hate Zoran, because Zeran wants to make more bike lanes, right?

Could be. And those are like clearly, like, if you want to create like a Bill Ackman free zone, apparently all you need to do is like make one giant bike lane around the perimeter of New York City. It's kind of establishing a sort of tenets-based thing. where it's like this guy is going to try and destroy the entire world because he was like never loved as a child

but instead of that it's he never learned to ride a bike and that's just been gnawing at him for decades. So at some point, yeah, at some point like, you know, he's going to try ride a bike him and someone will be riding their bicycle backwards. Can we do like a kind of crowd fund to send Bill Ackman to like adult education cycling class? How about this? Check this out.

We're going to protect the world from Bill Ackman by depositing him in the center of like the Hague. Put this man in the Hague velodrome. We should get Jeremy Vine to teach him how to cycle. I would hate to be put on trial in a velodrome. You just have all of the like judgments at Nuremberg stuff happening in the middle and then the peloton of guys on race bikes going around the outside really fast. Well, no, I just think, you know, in the Hague.

It's just not in the court, not on the velodrome, just in the center of the city. He'd be trapped there forever. He'd never be able to get out. we just need to get Bill Ackman a big brother like an adult mentor who can teach him how to ride a bike who's going to like stabilize him on the thing you know I think that could be really inspiring I think it could have been Carl I can

I don't know I worry Carl I can might be giving him some sort of like bad internalized ideas about masculines. Hey Bill I don't want you hanging out with that Carl anymore he's bad news okay all right all right we got to get to the stuff because Let me tell you, the story we are telling today, while I was doing the notes, I said to myself, forget it, Jake. It's Guyna Town.

There are so many guys. That's evocative of something other than what you meant. Okay. Now that I said it in public, now that you've said it in public, it becomes part of the rich tapestry of the podcast, but I am going to note that that's not how I initially, that's not the meaning I initially took from Guyna Town. Guy in a town sounds like a resort for trans men. Or like it's a, you know, like,

one of your favorite things, I think, that's like on your mind recently. That would be one of my favorite things, yeah. Well, your favorite things that's on your mind recently is like different kinds. More stuff should be themed like the Warriors. That's true. There could be a warrior's gang of like OBGYNs. That's true.

That could be their territory. Yeah. Why not? Okay. Cool. All right, all right. Good. Hit it with the four seconds.

Look, we got to move on to the stuff. Uh-huh. Because there's so many guys waiting for us on the other end of a little bit of news. I'm often accused, by the way, of just being the guy correspondent at the FTA. I have a job title like corporate finance editor of the FTA, but I just kind of write about guys. Like, because they keep making them. And they keep presenting you with them. And what are you going to do?

Not write about them. Why do you think that you've been on this podcast more than any other person at the FTA? It's true. Look, I want to talk briefly, though, about a little bit of the sort of development in AI specifically because it kind of does tie into what we're talking about later. We'd be remiss to congratulate OpenAI on the legalist, what some are calling, the most legal transformation of a non-profit into a for-profit entity ever. Now that they've did that, they've taken maybe 10 minutes before announcing that they were

going to IPO at some point in the next four years for a value of a trillion dollars to support $1.4 trillion in spending, all bolstered by $12 billion in revenue. That's a real, like, can I beat Halo before the rubber band's crush my TV thing of like, can Open AI IPO before somebody realizes that there's no windscreen wipers left in the shoebox and no money left in the banks? Because the last company I remember that was like, we are going to IPO a trillion dollars was Aramco. And it was because MBS had this mad fixation with a trillion.

But like, Aramco does piss cash. It is one of the most cash generative companies in the world. So there was at least some architecture through which people, like, they somehow, I think, managed to massage it. up to that, but we've got a big money fire here, Blake. The thing I always go back to is all that infrastructure investment

is like made of paper because all the GPUs burn out. The GPS burn out. It doesn't make any sense. Just noticing here that the Chinese embassy in Washington recently posted, and I would say threateningly high resolution satellite photos of the one

campus in Taiwan where they make all of the chips for everything. So it should be fine. I wouldn't worry. Yeah, yeah, absolutely. The U.S., of course, responded by posting a picture of a really strong staff sergeant, like, lifting weights. Wait, did they really or not? It's so hard to tell what's parody and what's not. The U.S. responded by getting distracted about some shit they made up in their own heads about Nigeria. So, again, I said this about Iran. I'm saying this again about China. It's like, there's a lot of eloquence being wasted in foreign policy. And, like, you make a threat with, like, image resolution and the response.

is nothing. It's just wasted. I think that actually Trump did get like a, I think I read somewhere that he got an email from a Nigerian prince describing the current situation. This is what's led to. Yeah. It's the China's just like, hey, this appears to be the thing underpinning your entire economy. Look,

we're able to make out the face of the guy in the third window. And the US is like, we're going to do another fan cam of like planes taking off from aircraft carriers. But the other thing that's the other big AI story right now course, is gigantic tens of thousands of jobs being cut from middle management at companies up and down the value chain, including but not limited to Amazon, UPS. Like, what are, what is the, there are tons of them. Yeah. There's, it's a slaughter right

right now in terms of just like job losses, all of which are a trip. And Amazon's the biggest. They're losing huge numbers of people from lots of middle management functions. And what they're saying is, of course, this is due to AI. But when you, and that's how it's being reported. But when you read the actual press release that they wrote, there's saying this is in anticipation of AI. This is in anticipation of these jobs being much more automable. So we need a leaner organization for when we eventually are able to do this with the computer. And it could be for some entirely other reason. Yeah. All these companies are cutting people to do the economy and like strength of everything. Yeah. So this is like it's a way

to tell the investors, we're cutting people to make more money, not we're cutting people because oh fuck. Yeah. It's almost as though everyone who got hired when the interest rates were nothing. Now that interest rates are something, and some of those contracts are no longer looking quite so valuable to renew, maybe. Just crazy. It's a crazy idea, I know. But the other thing I want to talk about, though, very quickly is that Amazon is also aiming to automate, like, what, like half a million operations jobs in the next, like, three years. You know, they are, admittedly, they are much better at doing that. They have been able to do more of that than you can do with, like, a sort of large language models, largely because a lot of that is to do with robotics rather than just like chatbots.

It's not saying that like language models aren't somehow involved, but it's not just like we've taken you and replaced you with a chat bot. You have to do something to build something. Anyway, they've now announced that. And what I, of course, there's a little bit of fun reading you can do if you just search, even from this year what the UK government has said. For example, PM Hales, this is from earlier this year, PM Hales 40 billion pound Amazon investment set to create thousands of jobs. Oh. Uh-huh. Yeah, sure. It's going to create them. That's the verb that's going to do. Yeah, 100%. It's like, hey, these include 2,000 jobs at previously announced state-of-the-art

fulfillment centers in Hall and in 2000, another Northampton, plus additional positions at new sites in the East Midlands and at delivery stations across the country. Oh, so those jobs are coming then. They're coming? They're going to be here. And of course, they're going to stay crucially, because one feature of automation is, as soon as you get it working, the guys who did the automation, you just keep those guys around for vibes, right? Yeah, they hang out. What if one of them's like the office cut up. Can't lose that guy. Oh, absolutely. Yeah. It's more about the kind of culture of the office than it is about like producing. Yeah, sure. Yeah. It's like it's Amazon is a company now of what like one and a half million personality hires. But the thing I always might want to remember

though, right, is we talked about this every time we talk about the recession, the sort of long recession in the auto industry that was then punctuated by 2008 that just completely killed, you know, a huge amount of like the heartland middle class in America that is a similar recession that killed the same kinds of middle class here. And also the sort of collapse in service industry jobs like after that as well. Well, like those jobs don't come back. They either when they get offshoreed or automated, they don't return. And I always go back to the best example of that is the new way that you order at McDonald's as of like 2013, 14, not new now, but new as the current way. when that allows them to employ fewer people, and they never have to employ that many people

again, and they can reduce the quality of the job that's relatively low quality already. And it's just now, we always talk about the wire getting smaller. Well, here, there you go, white, like white collar, middle class professional and like HR or whatever, the wire just got smaller. You're now outside of it because that job that got automated away, even if they have to like, they realize it didn't work very well, that you're now gone, which means that they can solve it another way without hiring you back and it doesn't have to be solved well. it just has to be basically good enough to keep ticking over.

So the labor market scarring that happened to people in the blue-collar sectors and in the service sectors, especially at the lower end, it's not that that's coming for white-collar middle-class professionals. That is now here. This is still a comedy podcast. Sorry. I've not been on the show for a year or so. We'll do some jokes around this.

I mean, to be fair, this is something that you also saw in the consumer experience. as well. Not that I'm ever going to advocate using Amazon, but Amazon sort of like, its quality as a

place to buy things nose dived first and like stayed that way. In part because of the same impulse, right? I highly recommend, just as an experience for yourself, go and look on Amazon

for like the most recent thing that you bought that you could plausibly have bought on Amazon. And you will find that you, you cannot get like actual brands there. any more necessarily. If you try to get a kitchen spatula or something, you're just in this madness of

these weird Chinese brands and you have no idea. It's not like going to go back in the day where you're like, oh yeah. What are you talking about? I can't wait to have my beloved two bod, four pieces, rave glasses, wrap around sunglasses, rave sunglasses, stylish and cool. Both men and women can use for party, shade, sports, driving bikes outdoors. And it's kind of funny as well because this is something that's predicated on an economic model that we're seeing, we're seeing the ticking sort of economic IED on of China makes everything very, very cheaply, the US buys everything and Europe too. And you will continue buying kitchen spatulas from a company whose name is four unpronounceable consonants strung together. And you're going to keep doing that forever.

And that's just, if we just kind of tinkle with the process there, if we make that more efficient and incidentally make fewer and fewer jobs in that in that sort of supply chain, then question mark, question mark, question mark. Well, what fits into that question mark increasingly is a post-scarcity economy brought about by Sam Altman Oh yeah, okay, okay, okay, sure. Yeah, it all comes back around to the chatbots.

It's completely self-referential. You don't have a job, right? You are maintained by some kind of like AI UBI and you speak exclusively to chat GBC which is your best friend and chat GBC goes, I have ordered you 50 more spatulas and you go, I didn't tell you to do that and it says,

I understand. I've ordered you a hundred more spatulas. Ordering spatulas isn't just important. It's also a great way to relax. So this is like the big labor market story that's happening right now. And I think it's going to just keep getting bigger because we're talking about things. Just a quick question, Riley. I'm not someone who's like very, very literate in these things, despite having, you know, been on this podcast for years. Is the labor market connected to the economy in any way? Rob, you're part of the FT. Labor market and the economy. are they connected? I'm just the guy correspondent

so the employment of guys you know what we'll see we will see okay yeah sure I'm excited

I'm excited for the theme of this season being I personally find out whether or not the labor market is connected to the economy

hey you know what we are all going to come and see well actually I mean it's a good question like to be honest it is a genuine good question

because like I don't know I'm not, I'm not a finance guy by any means, but like, you know, the sort of stories that I kind of see, it's like, I often think to myself just looking around in general, as well as I reading stuff, like, how on earth does the economy actually function, right? That's like a genuine question. I think it's like a really good question to ask because it's just like, you're sort of apparently experiencing like growth that you've never seen, like, you know, we're apparently living through like this very good and very revolutionary time, but it's also one where like no one can get jobs and, you know, the labor market makes no sense. And when you try to go on to LinkedIn, you just sort of go in. saying because of like whatever the fucking recruiters are saying nothing makes sense and i think actually it's a really good question to be like does can be economy work if no people work and you're not really supposed to be able to understand it is the thing that's for that's for sam altman to worry about i'll tell you this the story we're about to talk about actually quite neatly fits into answering that why question where is all this prosperity coming from if no one's experiencing any of it Well, someone is.

There's one guy driving a Koenigseck around. So the story we're going to tell is actually the piece that I think fits into that puzzle. Bill Ackman falls off a like $5,000 road bike, totals it, buys another $5,000 road bike. And at this point, I go, it sounds like you're just feeding jobs to Bill Ackman's bike habit. That's Keynesianism. So, and this is, but this is something I think we mentioned a few years ago, right, which is, because we're asking, when all these big trades get really crowded, right? When people start just pouring into them.

This is what happened with subprime mortgage in the early 2000s. They were really attractive. They seemed quite safe. And, you know, all this money poured into them, which meant, like, you know, they became very popular and on. They became their very systemically important. Obviously, money kind of had to go out of them once after the crash happened. And then you kind of wonder, well, where did the money start going to?

You know, it's popular to say, oh, well, it's, went to crypto and say, yeah, some went to crypto, but the amount of money in the mortgage-backed securities market was truly staggering, dwarfs the crypto economy. And so it's like, where in the real economy did this stuff go? And the answer is that it went into lending to private businesses through non-bank financial institutions, which are, hey, guess what, unregulated because we didn't call it a bank. Is that basically right? Well, it's, you know, as we've established, as isn't a comedy podcast. Don't worry.

There are guys coming. Don't worry. But I guess briefly, like part of this is to do with a regulatory structure after the financial crisis because there was a massive fuck up in banks.

So regulators were like, we don't want that to happen again. So they put new, more onerous rules on what banks could do, but capitalism finds a way. So a bunch of people said, oh, why don't we lend

through things that aren't banks? And, you know, that was cool at first. But then it's got more and more complex and guess what, the banks are lending to the funds that lend to the companies because it's more capital efficient to lend to the funds than to the company directly. So, yeah, I mean, yeah.

What they've done is the banks are all exposed to what we're going to go through. Yes. Like deposit-taking financial institutions that are insured and have to be backstopped by their governments. Just sort of going, hey, I see this mousetrap here. I'm not going to go for the cheese. I'm sure someone is. I'm just going to, like, put my neck under this, though, and I'm going to watch the cheese. The thing is, this is, again, as this is not a comedy podcast, then we can talk about this.

This has happened a lot. So there was something called, like, the secondary banking crisis in the 1970s in the UK, where, like, credit conditions got loosened. And there are these things called secondary banks that started, like, giving all the consumer credit. And then main banks were financing those. We still have some, correct me have been wrong, nationwide's a relic of that, right? I think that's right. Yeah. Yeah, yeah, yeah.

But then they, you know, there was a kind of, the chancellor at the time, like, primed the pump and, like, everyone was really happy. And then the end of the 1970s, we all know, with four day weeks and everything happened after the sugar high. And, yeah, there was a big secondary banking blow up. And yeah, yeah. It's just a really, a really beautiful thing to be able to have a boom and bust cycle when no one experiences the boom. Well, it's like, I think in the boom and bus cycles, right, it's like each time fewer people experience the boom. Yeah. It's the joke about, like, Germany being the only country to have a counter-revolution with no revolution.

As you say, I think Riley's right in that, like, in the 1970s, there's a bunch of people who got free TVs for a while on credit. Yeah. And then they couldn't have them anymore. Whereas now it's, like, loads of AI companies are getting, like, free money from private credit firms. It's, like, becoming more oligarchical, the brief window of credit. In the 90s and early 2000s, a lot of people were housed for at least a bit. Yeah. Right?

Right? But then in this one, this is why we call it the K-shaped economy. It's like a smaller and smaller number of people doing better and better and better, whereas the vast majority of people are going, you know, down and down and down. I assume that it's because it's the idea is, well, they've taken a large amount of ketamine is they forgot how to walk and are falling over. So, but this is, this is a credit boom. It's sort of a K-shaped economy with another line because most people go down, a few people go up and Bill Ackman goes sideways and then into the pavement. It's a K with a little squiggle. This is the podcasting tech, right? You find one thing that's kind of funny to you and then you just beat it to death. So there's a credit boom right now. And, you know, it's not even housing people for a little while. Most of the credit is going to privately owned businesses. So it's called private credit. But the risks are once again socialized because as we say, U.S. and European banks have between them, what, four and a half trillion of exposure to non-bank financial groups, i.e. private credit providers. That sounds about right. I don't have the biggest in front of me,

but it's a lot. Yeah. I mean, there are lots of companies. companies in this space. A lot of them right now are auto, subprime auto lenders, like tricolor, which just went under, I believe. Yeah, there's basically been a bunch of them which have blown up with allegations of fraud specifically. And a few of them have an auto nexus. And there's various different reasons, but they're in areas where they've been stress in the economy. And, you know, there's a kind of thing where fraud often washes out, right, when there's stress on the business model. Like, that's kind of obvious. Like, if you're running a scheme, and then something fundamental happens.

The scheme may come under pressure. Maybe. But the main one we're going to talk about is first brands. So first brands, as we've hinted at earlier, is this company that is a holding company of a bunch of other like auto parts manufacturers, spark plugs, windshield wipers, the button that you use to turn seat heating on,

like that level of auto part manufacturer. Yeah, stuff that you're not going to do in-house necessarily. Yeah, exactly. But also we're going to learn that by changing the name, of the organizations involved, or by having one intermediary between the bank, which is highly regulated, and the auto parts company, which is not, you're going to be able to create huge amounts of systemic risk, not from this one company, but like from the fact that every bank, your pension fund, anything, is exposed to these kinds of incredibly risky private loans, and no one really

knows how much. And there's really kind of no way to judge the quality of each one, although guess what ratings agencies love to do? They love to brand. them investment grade anyway. It's like a microcosm of everything that's going to happen is happening on mass, but centered around a car parts maker in Cleveland. So it's kind of fascinating. Yeah. So, and the car parts company's like billions and billions of credit that's just exploded upwards

from like, I don't know, a few million dollars worth of windshield wiper. Yeah, we'll get into it, but people were literally doing financial engineering around the windscreen wipers. Like, there were windscreen wiper-backed structures in this capital structure. I love that. So, like, the big short, but, like, you're shorting windscreen wiper bonds rather than subprime mortgage bonds. So stupid.

It's so stupid. But the basic structure is kind of the same, right? Which is where, you know, shitty companies and shitty loans that pay high rates of interest on their debt, at a time when, you know, there's a lot of money sloshing around, looking for somewhere to go, they'll just keep piling into that trade. And guess what? as long as nothing bad happens, all of the shady shit going on underneath can just continue. When you say as long as nothing bad happens, is this a further question related to your little

collection that you've been assembling of headlines that used the phrase since 2009? That's a big part of it. The other part is imagine that you are a highly, highly leveraged with a ton of debt on and off your balance sheet auto parts supplier. And then liberation day comes. Yeah, that's part of it too. Yeah, you are fucked. But we'll get there. So you basically said, like, this is a sort of summary, which is just very simple. The collapse of Ohio-based automotive parts maker first brands has rattled global markets,

prompting alarm among gatekeepers of the hot financial system as high up as the IMF with the Bank of England now alert over the risks lurking in non-bank lending. So this is really the story of how an auto parts, like, conglomerate of many small companies, based in Cleveland, Ohio run by like one guy enabled by another hell of a guy. One fucking hell of a guy was able to like make the IMF go

oh fuck. Oh shit. That's basically it. And because at the FT we basically were very early on this story sort of small humble brag there. We started writing about it about six weeks.

I think maybe just over a month before it. Yeah, about a month before it far for bankruptcy. And we got an early 10. this was going to be a complete cluster fuck, basically. And when I got that tip, I'd never heard of this company, right? Someone was like, it's called First Brands Group. I'm like, what the hell is this thing? And then he's like, well, it has $6 billion of debt on his balance sheet,

but I understand it has billions of dollars more that's kind of opaque and not well understood. So at my desk at the FT, I was having this weird moment of, oh my God, this like thing I've never heard of that makes windshield wipers could cause an absolute, like, You know, and so it did. Yeah. What it's doing is it's causing a mini crisis at the very high levels of, like, finance among lenders and hedge funds and, like, private equity funds and stuff like this, right?

Everyone's like, is there another first brands? Like, how the hell did we miss that this thing was a debt bomb? Are there more of these? It's kind of the wild. And there are banks that have loaned to them as well. And you never know, like, what funds that might be contained in our bank umbrellas might be lending to them. And then the crucial thing, the thing that means that this is, that makes this sort of globally important, because this is like, it's multi-billion dollars, but that's not enough to be globally important. It's not to be globally curious, maybe, even not globally important. What's globally important is that this asset class, everything is exactly as opaque as first brands. Everything, right? So it's all, it's all as hidden as one another. So any case, one of their main financiers is a bank called Jeffries, which is not a deposit taking bank. And they basically just started, the one, run by Rich Handler, who's got a lot of the fun

anecdotes about it. Yeah, so the very quick thing on Rich Handler, so he worked for Mike Milken in the 8th. Yeah, Rich Handler. But yeah, he's like, pugnacious would be the adjective you'd use. He worked for Mike Milken in the 80s. But the one thing your listeners should watch is he did an ice bucket

challenge video in the early 2010s in his like Manhattan Penthouse. But the Pete, you remember you had to nominate people? Yeah. So his list included Carl I can. who've discussed and Pitbull and he says

like Pitbull's actual name which I can't remember and he's like Mr. Worldwide himself so like that's the kind of guy Rich Handler of Jeffreys is so they

Jeffries has been lending to First Brands quite a bit or more specifically what they've done is they've created funds for and everybody

I know Hussein and Nova you don't have buzzers but please and you at home as well buzz in when you realize the financial instrument I'm talking about here. Oh, God.

Is that Jeffreys, what they would do is they had an asset management arm. And then what they would do is they would set up these funds that then external investors could invest in, where what they would do is they would purchase the account for receivable. I'm, I don't have a buzzer, but I have to shake hands with danger drop from well, there's your proper. Shake hands with danger. It's cool. This is a collateralized debt obligation, isn't it?

It's a collateralized debt obligation specifically against your supply chain. because they worked so beautifully last time okay sure what if what we did for housing we did for the stuff yeah okay it's the exact same thing green still was doing

yeah that's yeah oh my god again that's why this came on my radar I passed from the heart of the machine to break down what Jeffries were doing a bit so Jeffries on the investment banking side was shoveling the company's normal loans into these things called CLOs, which are collateralized loan obligations. Why can't you be Margo Robbie?

Those are literally the same thing as the big short, but they contain corporate loans and, you know, have actually never really blown up. You know, this time it's different in inverted commerce. So Jeffries were doing that and that was kind of well understood and everyone knew it. And then until we actually, we reported this, we kind of revealed it for the first time. What a lot of people didn't realize was a different bit of Jeffries, the asset management arm, was doing this finance against invoices, which is the same structure green sale used, like exact same structure.

And that was like not well disclosed. So there were like indications of it in the accounts, but there was billions of dollars more of this stuff. And it is basically like debt, but it's not treated as debt on your balance sheet. Yeah. So the people on the CLO side, like happily like,

oh, I'm packaging up these nice loans into a AAA security, they weren't really aware that the same bank they were buying the loans off was merrily doing all this kind of opaque slightly under the table financing and Jeffries will say, oh, there's Chinese walls in art internally and, you know, blah, blah, blah. But it doesn't look great when you take a step. So they, because they had about $6 billion of loans to them on the books and then another, what, 5.4 off the books. Yes.

So there's, I won't go into all the details, but there's a load of, different types of things like supply chain finance you can do so you can do them with your supplier invoices your custom invoices and then First Brands was also doing something with its inventory so it just had a lot of windshield wipers sitting around

in warehouses right because it needs to have every you know like the Mazda that came out in 1995 someone might need that windshield wiper one day and it was this is crazy it was doing sale and leasebacks of those through off balance sheet conduit

SPVs, just don't worry too much about the meaning that just kind of let the financial complexity wash over you. When there's that level of complexity, it is inherently hiding something. Keep this purchase and lease back. Because what happened is

an organization would like buy all those windshield wipers and then first brands who just lease them back. They were turning a bunch of 1995 like Mazda Miata windscreen wipers into an ongoing cost because they were leasing them, basically.

I love to rent my car door handles. Yeah. If that makes your head hurt, it should. It's supposed to. And what's funny here, because we were basically, the way the story came to us was we heard, I'll sort of give a slightly anonymized PG version. We heard that something awry had been caught in a private credit fund involving a big company. Like my colleague had a tip as vague as that.

But we knew it had something to do with invoices. So I was like, oh, you know, I reported on Greensill. I know lots of those people reached out to people. Two weeks later, a guy came back and was like, oh, it's first brands. But what he did at the time was he bet me a beer. It would have to file for bankruptcy by end of October because he was like, I've loaded it all. It actually filed for bankruptcy, I think it was September 28th. So like a month after we talked.

And he basically then after bankruptcy was like, yeah, I knew about all the invoice stuff. I didn't know about the inventory stuff. That was like, it was like layers within layers. That was even more hidden and even fewer people knew about it. So this thing filed for bankruptcy and people thought, oh, yeah, it's got $6 billion of debt. It had nearly $12 billion of debt, essentially. And just to, again, bring that into why it matters is this is now one of the most popular asset classes. It's where banks, your bank, your pension fund is putting stuff.

Everybody's cars got windscream wipers, right? That's right. Got to lease him. And here's where you can sort of tell people started getting suspicious. This is from one of your articles, Rob. One asset back lending specialist said that Ed James, brother of the CEO and sole owner, Patrick James, once rang him to tell him to tell a new inventory back deal. But the discussion turned tense when the lender explained that he would just want to go and do a stock check against the actual inventory, where Ed James simply said, we don't let lenders into the warehouse. You cannot.

May I see it? Absolutely not. You may not count the windscreen wipers, but I would like you, please, to purchase them and lease them back to it. us, you can't see them. So we've not been able to reach Ed James for comment, he's somewhat unreachable right now. He and his brother are both like, I describe

them to you as like, as brother especially, it's like the Thomas Pension of Finance. Like you can't find this guy. Yeah, the brother is now like he has a PR guy, you can reach him. The sorry, Patrick James. Ed James, I have a mobile number for him which I know was real at some point and it

just dials out. But yeah, before we wrote about Patrick James, There is now, if you Google him, you will find a lot of things. If, you know, me in August when I googled him, I've never seen like a more skeletal web presence for a billionaire. You know, I know, I know, billionaires like to, you know, protect their privacy, but this guy was a ghost online. There were no pictures of him.

You couldn't even find, like, local Cleveland articles about, oh, success of local automaker. And basically what people think happened was he paid sort of private intelligence type people to scrape the internet and file takedown notices and that sort of thing like he was intentionally trying to make himself a ghost online yeah and you know this is so this is like the network of characters but it's just like i think it's really important to remember right like this is these are the same kinds of people who were you know packaging up collateralized debt obligations or who were these are and yeah there it might be like more midwestern auto parts company billionaires who've been sort of had their web presences scrubbed but it's all the same kinds of people and especially the same

kinds of people lending to them, which is crucial. And I want to go back to what I have here, right, is some fear that is your words. Rather than a free concurrence, first brands is an omen of corporate flameouts to come after years of loosening lending standards. And the other thing we know is that once one asset category starts having rats fleeing the ship, the rats see the other rats fleeing and they flee, and then more things have to get sold, and more things have to get sold, and more things go bankrupt and more counterparties to deals with other private companies fall apart. And then those companies go bankrupt. And all of a sudden, right, you might have a bank that actually is in need of rescuing. Basically. Yeah. I mean, it's kind of obvious, right? It's like if you guys didn't

know how much debt there was at this massive thing you lent to and it had $6 billion nearly of off balance sheet debt that you didn't even know about or poorly understood. What handle do you have on the rest of this stuff. Like these are the lenders, by the way, who are supposed to know, like, for the public, it's incredibly hard to tell what's going on. Even the lenders here who were supposed to have private financial information, like, most of them didn't know the extent, yeah, they didn't know anything. They didn't know who the guy was, really.

They didn't know how much he borrowed elsewhere. This company, you know, there's now a DOJ investigations, this company. It's been accused of fraud by some creditors, so we'll get into some of that. He better start buying Trump coin quick. I would comment. Get that pardon. But this is also tied to a time with the free episode, right? It's all gambling.

This is just gambling. And why this hasn't worked its way through it under Castro yet is there's a lot of institutional weight for this kind of gambling impulse to bore through. It takes time for gambling losses to mount and crash over those institutional structures. And I go back to our discussion with Nathan Tankus, right? The institutions that made neoliberalism functional, such as the Fed, the global system of free trade, they're being dismantled for two by people from whom neoliberalism was gay and soy and, too kind. And these institutions are getting weaker in the face of crisis. The collapse doesn't happen all at once. But, you know, that these things are getting weaker and the gambles

are getting bigger. And, you know, it just means like, is the federal government, are they in a position to like do tarp again? Is the UK government? There's no libraries left in Wolverhampton to close. Don't worry. Listen, Joe Biden, he's out, right? Donald Trump is in charge of this one. He's president deals. Yeah. But like, and in the UK, there are no libraries left to close in Wolverhampton. You know, you're going to have to do austerity too with what's left to do austerity too on if like another wave of like bank failures happens because all of a sudden everyone all at once realizes that a huge percentage more of the private credit economy looks like first brands. Yeah. Let alone data center investments. Well, it's an obvious point,

but like opacity is a feature, not a bug of private credit. And you're seeing the downside of opacity. And it's actually burning the people who've like enjoyed this. Like, oh, we're doing this fun lending over here. No one's really able to track it, but we know what we're doing. And then you're like, no, wait, the guy's doing the lending don't know what they're doing. They don't know what they're lending to. So we're talking about Patrick James a little bit. Interviews with former employees, this is from another article of yours, business associates and others who knew James reveal that he was intensely private, going to lengths to avoid his photo being taken, scrubbing himself from the internet, describing him as a, quote, nerdy germaphobe,

a man who could pass for an engineer or computer programmer more easily than an industrial magnate. And, you know, this is a guy, he's a, like an Indian Catholic who grew up in Malaysia and then moved to the U.S. to study and then just found his way into buying a small auto parts manufacturer, borrowed a bunch of money to buy another one, borrowed a bunch of money to buy another one, and then another one, and then another one, and then another one. And by 2011, he owns, like, several. Well, I think the key thing is in the noughties, he had several industrial businesses collapse on a much smaller scale and was accused of fraud by lenders on multiple occasions. Ah, okay.

So again, like on our first article, as I said, it was about a month before the bankruptcy. That was like a key detail we published. So these cases were dismissed, but they're dismissed after settlement. So it wasn't like, you know, the judge threw them out. It was Patrick James paid money to make them go away. And it's the kind of thing which you think might give a lender pause. And I'm just going to read, and we should say, like, this was also, you were talking about the collapse of the car industry, right? Like some of these were around the same time.

GM was going bankrupt. People do make lurid claims in lawsuits, right? But one of these lawsuits was the bank, it was actually a regional bank at that point. Again, migration from regional banks, so these big private credit complexes. So this bank accused them of making misrepresentations and emissions relating to accounts receivable and inventory. so that means invoices and inventory that he was financing at the time the main thing here

is that he's now financed billions through invoices and inventory and people think that there may be fraudulent activity there so you'd think if you were like lending to the guy against his inventory you might look at that previous lawsuit and think like maybe you'd say he did it got sued this is why you need the kind of financial regulation

that imposes a fifth and proper person test on financializing all of the windscreen wife. Also, this is like, partly it's also just like everyone involved is so greedy that they're like, I don't care if he's being fraudulent. I'll take the yield as long as I can and I'll sell it before it collapses. Or they're just like,

it's actually better for me if I get that yield and I ignore all that stuff. Or you could just say, look, he's learned his lesson. He did his time in court. He would never do that again. What would lightning strike twice? Come on. Yeah, because there's two options here. Like, I think a lot of the lenders didn't know about the law.

lawsuits. What would they do? Google him? Come on. Right. I mean, that's the thing. We, at the F.T, if we're writing about someone interesting and there's nothing online about him, one of the first things we do is go to the courthouse and go through like Ohio court filings. That's literally what we did. We'd heard, oh, you know, he's had an interesting past. The tip was as vague as that. So we're like, oh, let's go to the courthouse. Oh, my God, there's all these lawsuits from lenders and he's had a lot of businesses collapse. But I think what's interesting is like, So he kind of did this kind of trying to build up an industrial empire in the 2000s. And the lawsuits are all like for, you know, a few million dollars, like a six million dollar loan here.

And now we've got like 12, after the private credit boom, we've got 12 billion dollars of debt and the same guy at the center and kind of similar allegations being made. Yeah, the scale is one of, yeah, like 2,000 times. It's literally mind boggling. This is astonishing. You know, they say several CLO managers told the FT that many of their peers were likely to have done only cursory checks on James's business records in their haste to packages companies dead up into tradable securities to sell them. Oh, my God. It's just the same thing. It's just the big short again, but with car parts instead of houses.

Yeah. So one interesting sidebar here is the CLO things I just described. The private credit guys see that as like a different thing. They're like, that's not really private credit. That's his own thing. They've all been trying to blame the CLO market. They've been like, no, no, no, it's not a private credit thing. It's those crazy CLO collateralized loan obligations.

But then the private credit funds were doing all the inventory, the invoice. Wacky stuff. They were doing all the wacky stuff. So it's like all these different silos of non-bank credit, credit not in banks, in different stripes, just piled in here and did differently stupid stuff. But he also personally, he's like he loves Catholicism. we started like a philanthropic concern called the Sandor Foundation

and he's done what I can only describe as purchasing indulgences from his like local American priest to the tune of one million dollars for philanthropic consultancy. Yeah, so this was part of our long story on the guy. So it was actually my colleague

Aliai who's fantastic. She's very good at going through charitable foundations in the US and yeah, he's Catholic as we discussed. And we noticed there was a guy called Father Robert Steck, who was a philanthropic consultant, and he'd got paid a million bucks over seven years. And then we noticed that, like, a church that some of the money was going to, a foundation,

some of the money was going to, he was like the trustee of the foundation. I'm tearing off the calendar here, and we appear to be in the sort of early modern period of Italy. Exactly. It gets better. It gets better. And then, you know, through human sources, you know, me talking to dudes in Ohio, they were like, oh yeah, that's Father Bob.

Did you know that Patrick built a chapel in his compound? And Father Bob goes over to the compound regularly. Private Vess. He's like an Ohio Medici. So, by the way, you can go on YouTube and put Father Bob, Ohio in, and you'll find some nice videos. He's got like a lovely deep voice. He kind of talks about the local quarterback, you know, making the touchdown and

what Jesus would think about it. So, you know, I need to, I do need to say here, there is no implication here that Father Bob knew what was going on with all the car parts sale, lease back stuff. I very much doubt he did. Yeah. But, oh, confession. I'm, we have no evidence. We should also say that, like, Patrick James himself has denied all allegations of fraud. There's a kind of board level investigation, which he says he hopes will clear him.

Yeah, he said the bankruptcy will vindicate me. Yes, essentially. I'll say 12 Hail Mary's, but it'll be fine. But, you know, at least some of his wealth went into his private chapel, paying philanthropic peace to the priest. He also owns, like, loads of property. So he has oceanfront mansions in the Hamptons and Malibu, so like both coasts and the elite enclaves.

It's all protected as well by, like, ex, like, by military veterans, like, an almost Mark Zuckerberg level protection force. Yeah. Like any sort of modern billionaire, he has his own quasi-private army. You know, the Medici allegations are stacking. Yeah, yeah. The Ohio condottieri. Oh, okay.

The vibes on this one are fucked. Yeah, the Pennsylvania Secret Service versus the Ohio Conditieri, who would win? Oh, I back to Secret Service on that one. Once you start centralizing state capacity, we're like the Ottomans, you know? Wait, only we have the state capacity to fill, like, athletic socks with batteries. That's right. That is true, yeah. The one thing I'll say quickly about Patrick James as well, which is interesting.

is he didn't meet that many lenders, but some lenders did get to meet him. So, you know, if they're important enough, if they're trying to do something complicated enough, he would meet them. And the thing they do or say is, like, this guy knew loads about car parts. Like, that wasn't, it wasn't like one of those things

where the person's, you know, he doesn't know what the hell he's doing. Like, he could talk in, like, detail about how you strip costs out of a carburetor maker in Minnesota and all of this. So he had that part down really well. It's just when the lenders were like, okay, so your margins are like 10% higher than everyone else and this is a low margin business. Why?

They couldn't get a good answer out of him. They couldn't get like the kind of financial records of how the cash flows worked they need. I hate to look at my supply chain and find that someone has soared the catalytic converter company out of it while I've been away. but Rob has sort of set me up for the for the next bit here which is I think this is the guy the guys in here Patrick James is not the guy he's a guy he's a guy he's the Ohio Medici but there's another guy because the thing is right we all know that Lex Green Silt really was enabled by one Australian man right that was the story of Lex Green Silt's really the story of one Australian man enabling another in this case Rob set this up as though there are other financial institutions other than Jeffries

and their associated acts that were lending to first brands. And one of them was called Onset Financial. It's based in Draper, Utah, not even like Provo. It calls itself, quote, dominant force in equipment leasing. And I'll tell you this, it is one Mormon man that enabled all of this mess. And I would like to direct you both, please, to the WhatsApp. The Mormon windscreen wiper magnate. where I have linked a YouTube video that I would like you to watch, please.

The Mormon Equipment Financing Rap Video. Oh, no. Okay. This is the Christmas Adventurers Club building from the end of one battle after another, first of all. I'm going to stop referencing that film at some point. Oh, here we go. Here we go. Here we go. Who works is mostly ripping on that monster type flow. Dricking green, yellow blue, mainly white's hero.

Hate again. Baking dives, making deals on that grind, spinning wheels. They'll appendages awards Far from the sky and us We never trying to be a bang Fun and faster build with social feed We think They smoke too tough

They'll kill you on set financial They have They have Also I need to emphasize This is an original song That they have made This is not just like a fan camp This makes me feel so

Hype to be Do you think this is something They show new hires Like hey congratulations on I'm getting the job Here's a little sense of what the culture is like I think it's the get new hires, like, this is who we are. We drink monster energy drinks, we go to Utah Jazz Games, and we ball down and sell

equipment these things. I love the Signet Ring so much. Like, that's going to become a very culturally important item if this is the company that ends up detonating the economy to be like, that's going to be up there with the like Enron risk management team baseball cap, you know? This is what the working from home thing has taken. away. It's taken away B-roll for corporate rap videos where everyone, one, I just, I just sort of paused on a scene. There's a guy, he looks like a magician. He looks like a magician's face,

but he has like a black suit and a black shirt, but he's got like a very garishly looking tie. And it reminds me a lot of just like what I used to wear in sixth form when we were, when we had to wear suits and no one really like knew how to wear a suit. It is, it is giving very like regional English six form aesthetic. It feels like a very 2000s aesthetic actually. Like quite a lot of this. What I want to know, what I want to know,

and here's the thing, I'm taking a page out of the Ottomans playbook and then I'm trying to sew religious discord in the enemy's interior. What I want to know is whether Father Bob is okay with this Mormon shit. I've not been able to reach Father Bob for comment on that matter.

Let's see. This is the lyrics, right? These are the lyrics as well as my colleague, Louie could determine them because it's got a kind of ringtone rap production where it's quite hard to hear what he's saying. But to be clear, by the way, it's made in 2020. Yeah. They got together in the office to make their corporate equipment leasing rap video, which will, by the way, play the whole song for the outro. This was a super spreader event. Yes. Oh, there's no question that this was a super spreader event. Somebody's grandma is dead

downstream of this rap video. They might have filmed in 2019. Yeah. only got around. We don't know how long this video was in production. They did this. You're taking a year of editing. And then the pandemic happens. You're like, well, I'm still going to drop the video. Yeah, it's going to give people a needed morale boost. Everybody's getting a bit stir crazy.

Well, they'd also just built a 55,000 square for office. Is this the one that looks like the Christmas adventurers building that Sean Penn? Yeah, they've subsequently built two of these things, a different part of but this was the first one. Nasty work. Okay, sure. part of it was like look at our amazing office I think that was part of the

I want to read a little bit of the lyrics because they're hard to make out whose work is mainly ripping on that monster type flow drinking green yellow blue mainly white zero hey they're making dimes making deals on or grind spinning wheels airplane flies as awards fall from the sky

and we never try to be a bank run them dots like social feeds with the thanks we're never trying to be a bank we'll never be regulated we lead the leasing game and it won't be the same as we brings the mills you know it's us you'll blame

and it's the same line but we see dollar signs and we're making double but in the same time we got the options and you never you always get to choose we never leased a single

we always lease a few and we say it's better when it's us the number in the bank is the reason as to why you trust amazing literacy I need I need the fire in the booth perfect drop

over this a few times I yeah fantastic damn son where'd you find this was that was that try was that like an impression of Charlie Slough just ripping the audio from this in order

to illustrate my like Battlefield 6 hype reels fantastic this is this is that we have to like the next time like some I don't know it's like what is this well it's the it's the in-house rap video for a like car parts leasing firm.

So it's like this can be the music for the next like tomorrow some other guy is going to make like a fan cam of like F-35's being like hey watch out Nigeria. We're coming. And they're going to use this. Like maybe you'll use this song for that. So we got the team of many and we ring in big. Just read the stat line. Oh, we're still going.

Okay. We got the next gig. It's done. And that's it. That's it. That's it. So first brands relied hugely. like so for one lender to lend over I think the first onset provided what 10% of their

of their off balance sheet financing yeah yeah yeah so yeah this was the crazy thing because these guys the rap guys yeah so ahead of the bankruptcy we we kind of discovered who some of the main players were we found out about the Jeffries fund and a bunch of others I wrote name we had not heard about onset before the bankruptcy your life has changed now that you know about onset of course they initially filed this thing which said like like 1.9 billion onset leases. And that's a huge number, 1.9. So at first, I was like, oh, onset leases, that must be some product or something. And then it was only a couple of days later when more disclosure came out. I was like, no, wait a minute. This is a firm. What is this firm?

And then found these guys in Draper, Utah, and found the rap video pretty shortly afterwards. And then found the founder, this guy, Justin Nielsen, who's the 100% owner, CEO. And, you know, We discovered he apparently drives a Lambo and a Ferrari and on set bought a private jet. I think more importantly, I mentioned that they have two offices. One in Draper and one in St. George. St. George, yeah, which I think is a few miles drive away. In the second office, on the fourth floor, there's a quote, corporate penthouse for Justin Nielsen. And we kind of got the planning application for this.

So it has some wonderful description around it. So he has like his, you know, car garage and there has a private elevator, which takes Nelson up to the floor to, quote, ensure the privacy required by the CEO. That floor then has a sauna, hot tub and private open-air Zen Garden. And the Zen Garden is the quote, allow for moments of isolation and introspection. I imagine there's some introspection going on. Just doing the, like, what's he building in there? And I should say, Onset's PR team told us that they're proud of its growth and innovation as a leader and that it's, quote, top tier amenities reflect a corporate culture that values and supports its team. That's right.

That's great. Yeah. Their innovation is like, hey, no one else will lend to you? We will. Yeah. That's the innovation. That was literally their marketing documents. So we found one where they're listing.

Oh, my God. They market themselves like a fucking payday lender. Bad credit, no credit, no windshield wipers, no problem. You're making the comparison to payday lenders. All I will say that was this was a like 12 to 15% interest rates. So we can all think what those interest rates, you know, imply. But yeah, their marketing is like, we've leased chickens before. We've leased Black Hawk helicopters.

Like, sort of there isn't anything we can't lease. And then. Who's owning and then leasing back a Black Hawk helicopter? I didn't know you could buy those. Exactly. And then obviously there's a whole thing where. Exeter's doing a sort of payday loan when his card gets declined. Rolling into the liquor store,

card declined three times, gets on the phone and leases a black hawk out. Or more specifically, he has to put his black hawk in a pawn, since he gets a pawns, his black hawk to onset financial. Well, and this is the thing is like equipment leasing is a thing.

It's America. Everything's incredibly financialized. So you're building a new, you know, factory and for the robotic arm, you might lease it over time. But that robotic arm's kind of like fixed in place. It has a serial number. If you're like leasing a thousand windshield wipers or a hundred thousand chickens.

Yeah. It's a little bit harder to track that collateral. I'm being very generous here. But we found another marketing document where they said other firms may only want your best equipment. We understand you need all of your equipment. All in caps. Do you want to financialize your like furniture?

Fuck it. We don't care. We will buy and lease your chairs back to you. We literally don't care. That has happened before, by the way. Someone in this world was saying I've seen scenarios where like the coffee maker has been sailed and leased backed. And in the bankruptcy, they're like, oh, we don't own the coffee maker.

I don't know if first man's did that. You'll own nothing and be happy. But it's on set. It's Mormon weft. So Justin Nielsen. he's this giant former college basketball player and yeah he like loves he's very swag he's like the swagest Mormon that's ever lived

the thoughts of a swagged out Zen Garden CEO that's that's interesting to me that's compelling he's like sitting in the onsen like in Ghost of Sushima contemplating leasing your coffee making he's literally sitting in the Zen Garden imagining new types of things he can buy and lease back to someone like we're saying coffee maker. He's like come up with things we haven't even dreamed of. Oh, the paint on your walls

you thought you could own that? You could financialize that. I don't care. He's like, he's Runker Howard doing that. I've leased things you wouldn't even believe. He's like, I mean, you know, we often speculate as well as on the no gods, no mayor's show. Like, what will Eric Adams' post-majoral career be? He would fit in so well at onset financial. With the corporate culture there, that's an incredible match. Yeah, please. Invite Eric Adams to your Zen Garden. He could just be employed to like sit in the Zen Garden and wait for Justin Nielsen to come and need a moment of inspiration. And then he'll just like deliver like a gems beneath Manhattan style Eric Adams line. And Justin Nielsen will be like, I've just invented a way to lease oxygen.

I think the other interesting thing here is like we've said they say in their rap video, we're not a bank, right? So we're legally not a bank. This counts as disclosure. The thing is that the raps are admissible. Anything you flow can and will be used to get you in court of law. We finally found the reverse of the Met Police using drill lyrics, you know? Exactly. But it's like, okay, so where is this thing funding? Where is the funding coming from?

Oh, God, this is so funny and so fucking Mormon. Well, so there's a few things here. So the Mormon Church has essentially a sovereign well fund. and it's called Ensign Peak, and it's $120 billion in assets. I think that's an estimate. And it makes a lot of investments. So there were a lot of questions among our sources, people in the situation, like, is it actually Mormon money?

We don't think it is, and like people close to them have denied it. And we actually sent someone down to Utah, and it seemed to bear that out. What has kind of happened is this risk has been sold to a network of Utah-based private credit firms that specifically do this. And then it seems like maybe not on set directly, but some of the people it passed it to then sold it to individuals, which include like some prominent Mormon people, some people in Onset, Onset employed like other former sports stars who are like big Mormon former baseball stars.

The Qualtricks guy. And then, yeah, well, the Qualtricks guys, okay, I need to do a disclaimer here. The Qualtrics guy did a talk at onset. Right. And was at pains to say like, I. He was like, I just did a talk. I'm not, you know, I'm not a board member. But, you know, he has a lot of cash in that community.

And he certainly went in to do some kind of internal presentation. He owns the Utah Jazz as well, the big basketball team. So they had like in their network, they had glossy, big high profile moments. But the craziest thing we learned was that some people told us that some first brand executives were investing in the onset stuff. so they were like profiting from the high interest rates their company was being charged and we don't have specifics on who exactly and how much but we had enough sourcing around this to put it in an FT news article also before you came down we were talking about how like popular multi-level marketing and stuff is in Utah among Mormons it just feels a bit like

this like there's this just this instinct to be like well I guess I bet in multi-level market this warehouse full of windscreen wipers in Mexico I suppose yeah and like Again, like the structure of this, we're not saying it's a multi-level marketing scheme. It rhymes with that. But like Utah does have, as you can imagine, like its own sort of investment community where people are very happy to invest in something if someone in their community says, oh, this is a great investment. So as a corollary of that, by some measures, Utah is like the Ponzi scheme capital of the US.

I think some people claim per capita it has the most Ponzi schemes. To be clear, this is unrelated to what we're talking about. It's just an interesting fact. We just did a separate segment that where we just talked about that for no reason. We are not saying, yeah, we're not saying anything about onset and the structure of the investments, but we're just saying there is a culture of people getting into deals because, you know, someone in your community is investing and saying, hey, this is a great deal. So you can imagine how risky investments, not necessarily fraudulent investments,

but risky investments could spread for a community like that. can you can have something that is not a multi-level marketing thing that lands in a community of robs i didn't say that you said that so just to finish up uh before you get off uh just nielsen in onset though i wanted to say uh another another thing about their office is earlier this month a large screen in the lobby of onset's draper offices beamed the word tron set in futuristic graphics an homage to the science fiction film franchise tron a schedule of upcoming events listed a quote Breakfast of Champions

in a party a Mormon style no drinking party at the win a five-star resort in Las Vegas. Like imagine like this just

imagine close your eyes imagine the most swagged out Mormon you've ever seen but like instead of holding like a bottle of like

champagne or Hennessy in their rap video they are holding the most fucked up drink you can have as a Mormon which is a white monster energy

drink. A white onset. So it's like a white knockoff monster energy which like could could out could also be like basically, I mean, it could also be worse

than alcohol, I don't know. Just to finish up, because we're running very long. This is one more quote from one your articles. A lawyer for one financer of receivables linked to first brands recently asked the company's bankruptcy counsel two questions. First, did the company actually receive $1.9 billion of payments against receivables that have been discussed? And second, how much money is in specific bank accounts

from those payments? A lawyer replied in a succinct email. As to your first question, we don't know. That's your second question, zero dollars? that's good right yeah I don't know where the money went and there's none of it left yes was basically I don't know where it came from

why it's there all I know is the amount that there currently is which is nothing yes basically oh my god first brands anyway that's all the time we have for today so I just wanted to say number one Rob thank you very much for not only talking to us today but coming in today

it's a pleasure honestly and like discussing corporate ringtone The Ramp is a delight. And I also want to thank everyone out there listening, remind you that we have a Patreon. There is a second episode. It's coming this week that we will be doing later this week. I'm so good at ending the show. I've been doing it for eight years.

We managed to start it well. Yeah. We just go from that. We build sort of confidence slowly. So yeah, thank you very much for listening. Thank you, as ever, to my lovely co-host. We're going to plug the concept of the financial times. You should read the financial time.

You genuinely should. Yeah, check out the FT. It's really good. There's a small sort of like, underground thing, you know, relative to it. It's a very easy.

If you follow the FT journalists on, on Blue Sky or Twitter, they generally will post gift links to their articles. Yeah, I do quite a lot. Yeah, so if you want to read it for free, just like follow them on social media,

you will get to read this stuff. There, yeah. Yeah. Just feel that. I know it can be kind of intimidating if you're not like in the scene to like get into into zines like that.

So like, People need to stop gatekeeping the FTC. All right, all right, all right. We got to go. Bye, everybody. We'll see you a few days. Bye. We're pushing on that monster-type flow, drinking green, yellow blue, mainly white's hero.

Hate again, baking dimes, making deals on that grind, spinning wheels, airplanes, there's awards far from the sky, and us. We never try to be a bang, fun and fast up there's social feed, we think. We lead the least in game, and it won't be the same, as we bring the mills, you know what's such a blame, blame and it's the same line but we see dollar signs and we're making double but in the same time we got the options and you always get to choose we never least a single we always lease a few and we say it's always better when it's us the number in the bank is the reason as to why you trust we got the team of many and we ringin big just read the stab line

we got the next gig You're going to be.