The end of Frank.
January 25, 2023 1:39 PM Subscribe
The biggest bank in the country did something extraordinary: It said it had been conned. JPMorgan Chase is suing Frank Financial Aid (YouTube), a higher education financial aid company it bought for $175 million in 2021. The finance company now alleges that Frank massively misrepresented its work and assets, and paid a data science professor to create millions of fake accounts.
“To cash in, [founder Charlie] Javice decided to lie,” the suit said. “Including lying about Frank’s success, Frank’s size and the depth of Frank’s market penetration.” according to the New York Times. Forbes reports that investors are furious at Morgan for not doing due diligence, while others are distancing themselves from Javice.
The Frank website announces the enterprise is finished. Their Twitter account is gone. The LendEdu website still recommends Frank to people.
Fast Company named Javice to their list of Most Creative People 2011 when she was a university student, as she launched a microfinance company, PoverUp. She also became one of Forbes' 30 Under 30 list. In 2020 the Federal Trade Commission formally warned Frank, and everyone, about the difference between what the firm promised and what it actually offered.
“To cash in, [founder Charlie] Javice decided to lie,” the suit said. “Including lying about Frank’s success, Frank’s size and the depth of Frank’s market penetration.” according to the New York Times. Forbes reports that investors are furious at Morgan for not doing due diligence, while others are distancing themselves from Javice.
The Frank website announces the enterprise is finished. Their Twitter account is gone. The LendEdu website still recommends Frank to people.
Fast Company named Javice to their list of Most Creative People 2011 when she was a university student, as she launched a microfinance company, PoverUp. She also became one of Forbes' 30 Under 30 list. In 2020 the Federal Trade Commission formally warned Frank, and everyone, about the difference between what the firm promised and what it actually offered.
They learned it from watching you, JPMorgan Chase. They learned it from watching you.
posted by lefty lucky cat at 1:50 PM on January 25, 2023 [34 favorites]
posted by lefty lucky cat at 1:50 PM on January 25, 2023 [34 favorites]
I don't see what the big deal is.. she's clearly faking it till she makes it. Isn't that common business sense?
posted by pepcorn at 1:57 PM on January 25, 2023 [5 favorites]
posted by pepcorn at 1:57 PM on January 25, 2023 [5 favorites]
Over in the discussion at LGM about this, one of the commenters made an excellent point:
posted by NoxAeternum at 2:08 PM on January 25, 2023 [66 favorites]
The key detail is omitted: Javice herself is the product of an elite education (well, Penn) and a wealthy background (father is a hedge fund manager). This is what let her mingle (or claim to mingle) with movers and shakers when she was in college. This is what let her even have a meeting with JP Morgan Chase. Lest there be any doubt, if there were a real Frank with 4+ million consumers but it was operated by a kid from Penn State who grew up in Scranton as the child of mill workers, JP Morgan wouldn’t deign sully their hands talking to them. Fact.
This should be seen as kith and kin with Theranos: young, ambitious product of elite education risibly claims the moon but investors fall for it because once you are in the club, due diligence doesn’t really matter all that much. What matters is that you’ve coded in, educationally, socially, and culturally with the monied class. In fact, it’s similar to how, if you can get into a Penn or Stanford or Harvard, you are all but guaranteed a 3.6 or better even if you do no work: you’re in the club now, and the club will work overtime to make you successful, for that is the point of the club: elevation for members, stratification for everyone else.
EDIT: chef’s kiss: she was once selected for a Thiel Fellowship (but turned it down).
EDIT 2: additional chef’s kiss: her lawyer is Alex Spiro, who also represents Melon Husk in some (most? all?) matters.
“In 2017, Javice launched Frank with a new focus on improving the student loan application process and making college more affordable…. “There aren’t many good actors in the space, and we just wanted to stand for something that was honest, that was transparent, and where people can really feel as if they have someone who’s got their back,” she said in a 2017 YouTube interview with marketer Bill Carmody. “Frank kind of represented that as a name, because it just meant ‘honest.’” Her ambitions to build the startup into “an Amazon for higher education” or “TurboTax but for financial aid” won her backing from billionaire Apollo CEO Marc Rowan, a lead Frank investor, U.S.-Israeli fund Aleph and other venture firms.”Frank would never have passed the smell test to anyone who ever dealt with financial aid - but none of the people who were vetting this did, and so Javice could easily pull the wool over their eyes.
Now I’m seeing another reason why everyone fell for it: her sales pitch to VC firms that acquiring student loans is difficult is brilliant because 0.01% of VC partners have ever used student loans. Virtually all VC partners are the products of elite education who were culturally screened in the interview process for IB and VC for positive traits like ‘comfortable around wealth’ and ‘excels in upper crust Olympic sports like rowing and equestrian. Kellog professor Lauren Rivera’s book “Pedigree” explains this in great depth. So these people have no direct knowledge of the student lending process because they are centimillionaires who grew up in Greenwich and Atherton, but they have heard that student loans are a problem so surely the access and servicing of them must be part of it. Except… the student loan process is done through a government form (FAFSA) and your college’s student aid office, who will eagerly help you give them money, and the servicing of federal student loans is through a government portal. There’s no need or room for a third party here. Private student loans could be improved, but private student lenders have no reason or initiative to let a third party barge into the middle of their debt peonage relationship with their customers. So the entire Frank idea was complete vaporware, as far as I can see.
posted by NoxAeternum at 2:08 PM on January 25, 2023 [66 favorites]
Why should anyone tell the truth about anything ever again? It just doesn't pay. And government seems disinclined to force their hand.
posted by ackptui at 2:15 PM on January 25, 2023 [9 favorites]
posted by ackptui at 2:15 PM on January 25, 2023 [9 favorites]
What struck me when the story first broke was the sheer brazenness of it. How could they possibly think the scheme was going to work?
posted by jedicus at 2:31 PM on January 25, 2023 [3 favorites]
posted by jedicus at 2:31 PM on January 25, 2023 [3 favorites]
Why should anyone tell the truth about anything ever again?
There are serious repercussions for little people lying.
posted by Meatbomb at 2:35 PM on January 25, 2023 [22 favorites]
There are serious repercussions for little people lying.
posted by Meatbomb at 2:35 PM on January 25, 2023 [22 favorites]
Why should anyone tell the truth about anything ever again? It just doesn't pay. And government seems disinclined to force their hand.I mean, Javice is pretty definitely going to go to prison for a long time.
posted by kickingtheground at 2:52 PM on January 25, 2023 [3 favorites]
Frank would never have passed the smell test to anyone who ever dealt with financial aid - but none of the people who were vetting this did, and so Javice could easily pull the wool over their eyes.
From the LendEdu writeup: For $500, they look at your file, negotiate with the school, and get you more aid. The downside is that the service costs $500 – but you only pay if Frank is successful and gets you more money.
So, Frank's target audience was probably upper middle class families who are trying to hustle a little more money out of the colleges. They likely are also be considering schools that require the CSS Profile, a more complex private financial aid app that asks about things like the value of family businesses, real estate, trusts, etc. and expected parental income. I could imagine this class of people believing, whether or not it's true, that they would benefit from a TurboTax for financial aid, especially if it's marketed with the idea that it will help them find loopholes. After all, Javice wrote an op ed for The New York Times where she specifically discusses parental retirement funds, real estate, etc.
And Chase probably assumed a lot of that crowd was going to be finishing college, making good money, and looking for banking and broker services!
Of course, the product was probably pretty useless for the class of people who struggle with the FAFSA because their parents don't speak fluent English, or they're difficult to reach, or they refuse to share information about their finances, or the family doesn't want to fill out any government forms even if they don't directly bring attention to their immigration status or cash-based small business, etc.
posted by smelendez at 2:54 PM on January 25, 2023 [7 favorites]
From the LendEdu writeup: For $500, they look at your file, negotiate with the school, and get you more aid. The downside is that the service costs $500 – but you only pay if Frank is successful and gets you more money.
So, Frank's target audience was probably upper middle class families who are trying to hustle a little more money out of the colleges. They likely are also be considering schools that require the CSS Profile, a more complex private financial aid app that asks about things like the value of family businesses, real estate, trusts, etc. and expected parental income. I could imagine this class of people believing, whether or not it's true, that they would benefit from a TurboTax for financial aid, especially if it's marketed with the idea that it will help them find loopholes. After all, Javice wrote an op ed for The New York Times where she specifically discusses parental retirement funds, real estate, etc.
And Chase probably assumed a lot of that crowd was going to be finishing college, making good money, and looking for banking and broker services!
Of course, the product was probably pretty useless for the class of people who struggle with the FAFSA because their parents don't speak fluent English, or they're difficult to reach, or they refuse to share information about their finances, or the family doesn't want to fill out any government forms even if they don't directly bring attention to their immigration status or cash-based small business, etc.
posted by smelendez at 2:54 PM on January 25, 2023 [7 favorites]
Oh man, I first heard about this whole mess a couple weeks ago from an issue of Today in Tabs, which has some good links to more writing about it including a good Matt Levine writeup.
It's all remarkably clumsy and brazen when you get a look at any of the details; even as trumped-up scams go it's genuinely sort of impressive, in equal parts for how empty the bullshit was that Javice et al tried to leverage and for what an absolute fucking failure of due diligence and even basic reflexive incredulity went into a huge financial corp making a 9-figure offer. Just, boggling! Boggling!
posted by cortex at 3:11 PM on January 25, 2023 [3 favorites]
It's all remarkably clumsy and brazen when you get a look at any of the details; even as trumped-up scams go it's genuinely sort of impressive, in equal parts for how empty the bullshit was that Javice et al tried to leverage and for what an absolute fucking failure of due diligence and even basic reflexive incredulity went into a huge financial corp making a 9-figure offer. Just, boggling! Boggling!
posted by cortex at 3:11 PM on January 25, 2023 [3 favorites]
And here I was told to never bullshit a bullshitter.
posted by Carillon at 3:19 PM on January 25, 2023 [3 favorites]
posted by Carillon at 3:19 PM on January 25, 2023 [3 favorites]
Never heard the word centimillionaire in my life now it’s in two FPPS.
posted by Iteki at 3:26 PM on January 25, 2023 [7 favorites]
posted by Iteki at 3:26 PM on January 25, 2023 [7 favorites]
I read this, agog. My family would have been precisely in their target audience as at the time of acquisition I had a kid just getting ready to go to college, and yes I did find the world of FAFSA/CSS/everything else really difficult to navigate. (My brain just doesn't work with numbers, and also when I went to college a hundred years ago everything was just simpler.) So you'd have thought we'd have at least *heard* of Frank before yesterday. But nope.
Also the effing FAFSA sucks, and if you can't get it to link up with the IRS portal -- as I could not this year -- then it sucks even harder as you have to enter everything manually. Someone should come up with a better system! But not this straight up cheat, goddammit.
posted by BlahLaLa at 3:40 PM on January 25, 2023 [4 favorites]
Also the effing FAFSA sucks, and if you can't get it to link up with the IRS portal -- as I could not this year -- then it sucks even harder as you have to enter everything manually. Someone should come up with a better system! But not this straight up cheat, goddammit.
posted by BlahLaLa at 3:40 PM on January 25, 2023 [4 favorites]
Why should anyone tell the truth about anything ever again? It just doesn't pay. And government seems disinclined to force their hand.
Elizabeth Holmes might disagree.
posted by Tell Me No Lies at 3:45 PM on January 25, 2023 [2 favorites]
Elizabeth Holmes might disagree.
posted by Tell Me No Lies at 3:45 PM on January 25, 2023 [2 favorites]
Where Javice and Holmes both went wrong was messing with large investors. If you stick to screwing the little guy the consequences (if any) are much lighter.
posted by Tell Me No Lies at 3:48 PM on January 25, 2023 [9 favorites]
posted by Tell Me No Lies at 3:48 PM on January 25, 2023 [9 favorites]
Okay, is anybody at this point just keeping a running list of how many criminals end up being in each year's 30 under 30? This is the first one I found, and it's only up to the Sam Bankman-Fried era.
posted by ivan ivanych samovar at 4:21 PM on January 25, 2023 [11 favorites]
posted by ivan ivanych samovar at 4:21 PM on January 25, 2023 [11 favorites]
gonna be heartbreaking when Griffin McElroy gets convicted of a felony goof
posted by cortex at 4:32 PM on January 25, 2023 [7 favorites]
posted by cortex at 4:32 PM on January 25, 2023 [7 favorites]
Never heard the word centimillionaire in my life now it’s in two FPPS.
And in metric prefixes it means hundredth, so anyone who has more than 10 grand in their accounts would be a centimillionaire. That's not the level of wealth the above quote is referring to. I'm guessing they mean hectomillionaire but thought that was etymologically obscure enough that it wouldn't take.
posted by solotoro at 4:32 PM on January 25, 2023 [16 favorites]
And in metric prefixes it means hundredth, so anyone who has more than 10 grand in their accounts would be a centimillionaire. That's not the level of wealth the above quote is referring to. I'm guessing they mean hectomillionaire but thought that was etymologically obscure enough that it wouldn't take.
posted by solotoro at 4:32 PM on January 25, 2023 [16 favorites]
Any company which compares itself favorably to TurboTax deserves to fail.
posted by JohnFromGR at 4:50 PM on January 25, 2023 [15 favorites]
posted by JohnFromGR at 4:50 PM on January 25, 2023 [15 favorites]
I hate Intuit but I still use TurboTax because I found it works. I would probably use Frank if the prices/ time savings was in balance. Of course like TurboTax, Frank/JP Morgan would probably have lobbied to make the process harder if their app actually had the traction claimed.
I did college applications right around the time that some schools did it online and others you had to print and mail things. My mom did the FAFSA, so I don’t remember that part of the process. Still got the big envelope/small envelop part of notifications. My mom cried when she got accepted to a big name private school because she didn’t think she could afford it. She didn’t ascend to the elite status, probably because she became a teacher and married a teacher who went to a low tier state school. I had lots of support through the application process, but My middle class family would have been the target market for Frank.
There are tons of pitch decks that oversell the product or total addressed market. Fabricating fake accounts is pretty clearly fraud.
posted by CostcoCultist at 5:38 PM on January 25, 2023
I did college applications right around the time that some schools did it online and others you had to print and mail things. My mom did the FAFSA, so I don’t remember that part of the process. Still got the big envelope/small envelop part of notifications. My mom cried when she got accepted to a big name private school because she didn’t think she could afford it. She didn’t ascend to the elite status, probably because she became a teacher and married a teacher who went to a low tier state school. I had lots of support through the application process, but My middle class family would have been the target market for Frank.
There are tons of pitch decks that oversell the product or total addressed market. Fabricating fake accounts is pretty clearly fraud.
posted by CostcoCultist at 5:38 PM on January 25, 2023
The biggest bank in the country did something extraordinary: It said it had been conned.
This story is wild (also funny), but a bank, even a big bank, alleging fraud in a transaction that goes sour is a reasonably routine action.
Lest there be any doubt, if there were a real Frank with 4+ million consumers but it was operated by a kid from Penn State who grew up in Scranton as the child of mill workers, JP Morgan wouldn’t deign sully their hands talking to them. Fact.
This is not a fact. If you have something of actual value to sell, they will be happy to take it off your hands. Your social status is a matter of indifference at that point, except to the extent it might make you naive enough not to negotiate a good deal. The thing a mill-worker's child (are there even still mills in PA?) wouldn't get is seed money to get started in the first place, or maybe series A funding.
posted by praemunire at 5:58 PM on January 25, 2023 [9 favorites]
This story is wild (also funny), but a bank, even a big bank, alleging fraud in a transaction that goes sour is a reasonably routine action.
Lest there be any doubt, if there were a real Frank with 4+ million consumers but it was operated by a kid from Penn State who grew up in Scranton as the child of mill workers, JP Morgan wouldn’t deign sully their hands talking to them. Fact.
This is not a fact. If you have something of actual value to sell, they will be happy to take it off your hands. Your social status is a matter of indifference at that point, except to the extent it might make you naive enough not to negotiate a good deal. The thing a mill-worker's child (are there even still mills in PA?) wouldn't get is seed money to get started in the first place, or maybe series A funding.
posted by praemunire at 5:58 PM on January 25, 2023 [9 favorites]
of how many criminals end up being in each year's 30 under 30
30 under 30-to-life, somewhere
posted by clew at 6:14 PM on January 25, 2023 [3 favorites]
30 under 30-to-life, somewhere
posted by clew at 6:14 PM on January 25, 2023 [3 favorites]
If a security guard let someone steal millions, he would probably face consequences.
posted by Repack Rider at 6:23 PM on January 25, 2023 [1 favorite]
posted by Repack Rider at 6:23 PM on January 25, 2023 [1 favorite]
From the LGM post linked above:
posted by mhum at 6:45 PM on January 25, 2023 [14 favorites]
In an email at 12:56 p.m., the Data Science Professor, referring to the template Javice sent an hour earlier, asked Javice: “You have the student email marked as ‘provided as unique ID’ but didn’t we agree to make fake ones a la ‘asdugnsdf@gmail.com’? Or do you want unique ID after all?”Note to self: stop documenting crimes in email.
In a response sent six minutes later at 1:02 p.m., Javice asked, “will the fake emails look real with an eye check or better to use unique ID?”
At 1:37 p.m., the Data Science Professor confirmed “[t]hey will look fake. So let’s use unique ID.”
posted by mhum at 6:45 PM on January 25, 2023 [14 favorites]
> praemunire: "If you have something of actual value to sell, they will be happy to take it off your hands. Your social status is a matter of indifference at that point, except to the extent it might make you naive enough not to negotiate a good deal."
I believe the problem is that "value" is not something that is always evaluated objectively and consistently. And, in many (most?) startups, a huge chunk of the "value" is in the future which can make the evaluation of value even more squishy.
posted by mhum at 7:08 PM on January 25, 2023 [5 favorites]
I believe the problem is that "value" is not something that is always evaluated objectively and consistently. And, in many (most?) startups, a huge chunk of the "value" is in the future which can make the evaluation of value even more squishy.
posted by mhum at 7:08 PM on January 25, 2023 [5 favorites]
Elizabeth Holmes might disagree.
She's yet to see the inside of a cell, and has lodged an appeal. The cynical among us might be suspicious of how many of the supposed consequences will actually catch up with her.
posted by Dysk at 7:59 PM on January 25, 2023 [4 favorites]
She's yet to see the inside of a cell, and has lodged an appeal. The cynical among us might be suspicious of how many of the supposed consequences will actually catch up with her.
posted by Dysk at 7:59 PM on January 25, 2023 [4 favorites]
It's amazing how badly people want to believe the rule of law still exists in a meaningful way for the powerful and connected. Can't believe our lying eyes...
posted by flamk at 8:08 PM on January 25, 2023 [1 favorite]
posted by flamk at 8:08 PM on January 25, 2023 [1 favorite]
I believe the problem is that "value" is not something that is always evaluated objectively and consistently.
The example given here, of a "real" Frank, i.e., one that actually fit the description the actual Frank offered of itself to the world, would be of value in the real world. Overpaying for bullshit with a pedigree is a common phenomenon of the modern age; ignoring actual realized value just because it's without one is not. The poor kid with a dollar and a dream trying to start the real Frank isn't going to get it from traditional sources. Once that poor kid has eaten the risk herself and succeeded despite the odds, though...
posted by praemunire at 8:47 PM on January 25, 2023
The example given here, of a "real" Frank, i.e., one that actually fit the description the actual Frank offered of itself to the world, would be of value in the real world. Overpaying for bullshit with a pedigree is a common phenomenon of the modern age; ignoring actual realized value just because it's without one is not. The poor kid with a dollar and a dream trying to start the real Frank isn't going to get it from traditional sources. Once that poor kid has eaten the risk herself and succeeded despite the odds, though...
posted by praemunire at 8:47 PM on January 25, 2023
Send just one dollar today and you too can learn the secret to becoming a micromillionaire!
posted by fairmettle at 11:43 PM on January 25, 2023 [2 favorites]
posted by fairmettle at 11:43 PM on January 25, 2023 [2 favorites]
Hmm, I’d be happier with the dollar.
posted by Servo5678 at 11:51 PM on January 25, 2023 [1 favorite]
posted by Servo5678 at 11:51 PM on January 25, 2023 [1 favorite]
What on earth was this supposed to offer? As i found out and will probably have to pay for, (although it’s been so long now, who knows), it’s extremely easy to get student loans. You just typey typey clicky clicky and before you know it, you can afford to go to college. it’s shocking really, given how much the risk/reward center of the brain was still forming, that it was so easy. then if you stay in grad school you can keep taking out loans to eat and pay rent and you don’t have to pay them, that seems like an impossible, far off future.
if anything, we need someone who makes it harder to take out loans
posted by dis_integration at 5:13 AM on January 26, 2023 [1 favorite]
if anything, we need someone who makes it harder to take out loans
posted by dis_integration at 5:13 AM on January 26, 2023 [1 favorite]
Just a minor blip in the long history of privatizing the fucking around and socializing the finding out.
posted by allium cepa at 5:14 AM on January 26, 2023 [12 favorites]
posted by allium cepa at 5:14 AM on January 26, 2023 [12 favorites]
I have an easy solution for the financial aid problem: a college education should be free.
Fixed it.
posted by misterpatrick at 8:35 AM on January 26, 2023 [6 favorites]
Fixed it.
posted by misterpatrick at 8:35 AM on January 26, 2023 [6 favorites]
The Indicator podcast just did an episode covering this story. One of the things that was most interesting to me was that the value of Frank to JPM was not in their actual functionality but in their 4-million email addresses.
Also good was the due diligence that apparently just checked that the count on the emails they received was the same as what Frank said it was and then it got stamped and approved.
posted by machine at 8:40 AM on January 26, 2023
Also good was the due diligence that apparently just checked that the count on the emails they received was the same as what Frank said it was and then it got stamped and approved.
posted by machine at 8:40 AM on January 26, 2023
No one else wants to know more about “the depth of Frank’s … penetration”?
Can we please not name businesses common first names? Lol
More seriously, my kid is doing the FAFSA and CSS this year. They are very detailed, and for people with complex finances, undocumented parents, people with low financial literacy, etc. it would be hard, but it’s loads easier and the physical paperwork and lengthy paper app per college I had to do in the 1980s. And the state schools at least are all over getting you money once you are accepted and are very good at it, do I don’t get why a paid service is necessary at all. Of course, yes, free college would solve all this.
posted by caviar2d2 at 9:11 AM on January 26, 2023 [1 favorite]
Can we please not name businesses common first names? Lol
More seriously, my kid is doing the FAFSA and CSS this year. They are very detailed, and for people with complex finances, undocumented parents, people with low financial literacy, etc. it would be hard, but it’s loads easier and the physical paperwork and lengthy paper app per college I had to do in the 1980s. And the state schools at least are all over getting you money once you are accepted and are very good at it, do I don’t get why a paid service is necessary at all. Of course, yes, free college would solve all this.
posted by caviar2d2 at 9:11 AM on January 26, 2023 [1 favorite]
At first this seemed like the most victimless of all possible crimes
So here's the thing. Few if any people involved with this fuckup will pay any cost for it. The losses will be passed onto the investors, who include basically everyone who has a pension or 401(k). You're gleefully shitting on that teacher in rural Idaho who has no choice in what stocks their pension fund invests in.
posted by Candleman at 9:11 AM on January 26, 2023 [1 favorite]
So here's the thing. Few if any people involved with this fuckup will pay any cost for it. The losses will be passed onto the investors, who include basically everyone who has a pension or 401(k). You're gleefully shitting on that teacher in rural Idaho who has no choice in what stocks their pension fund invests in.
posted by Candleman at 9:11 AM on January 26, 2023 [1 favorite]
Yeah, fuck that hypothetical teacher in rural Idaho in particular. HE KNOWS WHAT HE DID.
But ... if we're going to go look at things this way, then most fraud that doesn't end with money being hidden in an attic or something would actually seem to be value-neutral. I don't suppose the scammer in this case got to spend very much of the cash, but if she had gone on to build a mansion or a yacht or whatever then that would be money in the pockets of lots of working people, who would go on to spend that money in their local economy, which would filter upwards to ultimately contribute in some small way to rising profits across the board. Indeed, the spending of those ill-gotten gains might perhaps (perhaps!) even have a greater net benefit to our hypothetical teacher's index fund than whatever microscopic long-term hit JPMC ends up taking to its valuation because they thought they were investing in a scam on college students and it turned out to be a scam on JPMC instead.
In general, I'll confess that "nobody will face any consequences, therefore we should focus on whether we have the correct feelings about events we have no control over" is puzzling to me. Perhaps I am misunderstanding.
posted by Not A Thing at 9:31 AM on January 26, 2023 [1 favorite]
But ... if we're going to go look at things this way, then most fraud that doesn't end with money being hidden in an attic or something would actually seem to be value-neutral. I don't suppose the scammer in this case got to spend very much of the cash, but if she had gone on to build a mansion or a yacht or whatever then that would be money in the pockets of lots of working people, who would go on to spend that money in their local economy, which would filter upwards to ultimately contribute in some small way to rising profits across the board. Indeed, the spending of those ill-gotten gains might perhaps (perhaps!) even have a greater net benefit to our hypothetical teacher's index fund than whatever microscopic long-term hit JPMC ends up taking to its valuation because they thought they were investing in a scam on college students and it turned out to be a scam on JPMC instead.
In general, I'll confess that "nobody will face any consequences, therefore we should focus on whether we have the correct feelings about events we have no control over" is puzzling to me. Perhaps I am misunderstanding.
posted by Not A Thing at 9:31 AM on January 26, 2023 [1 favorite]
> praemunire: "The example given here, of a "real" Frank, i.e., one that actually fit the description the actual Frank offered of itself to the world, would be of value in the real world."
I think even in the case of a "real" Frank, the value of that email list would still be not be directly observable to JP Morgan. The value lies in how much money JPM can extract from the people on that list which they would only really know once they started, well, trying to extract that money. Prior to that point, it's just going to be estimates. And, having been slightly involved in similar (but not identical) kinds of estimation tasks, I am not super confident that subjective biases would not be at play.
Even in the case of buying a startup for its own revenue/cash flow, a non-trivial portion of the value is not in its current earnings but in its future potential earnings. And in my experience, practically anything involving forecasting the future potential of a business is going to be subject to a certain amount of non-objective judgment calls.
posted by mhum at 9:54 AM on January 26, 2023
I think even in the case of a "real" Frank, the value of that email list would still be not be directly observable to JP Morgan. The value lies in how much money JPM can extract from the people on that list which they would only really know once they started, well, trying to extract that money. Prior to that point, it's just going to be estimates. And, having been slightly involved in similar (but not identical) kinds of estimation tasks, I am not super confident that subjective biases would not be at play.
Even in the case of buying a startup for its own revenue/cash flow, a non-trivial portion of the value is not in its current earnings but in its future potential earnings. And in my experience, practically anything involving forecasting the future potential of a business is going to be subject to a certain amount of non-objective judgment calls.
posted by mhum at 9:54 AM on January 26, 2023
I'm guessing they mean hectomillionaire but thought that was etymologically obscure enough that it wouldn't take.
Such a missed opportunity, when they could legitimately have referred to them as decibillionaires.
When you have a grand in the bank, you're a millimillionaire, and when you give your kids their pocket money you can tell 'em they're nanobillionaires.
posted by rory at 9:57 AM on January 26, 2023 [2 favorites]
Such a missed opportunity, when they could legitimately have referred to them as decibillionaires.
When you have a grand in the bank, you're a millimillionaire, and when you give your kids their pocket money you can tell 'em they're nanobillionaires.
posted by rory at 9:57 AM on January 26, 2023 [2 favorites]
JPMorgan's diligence was also comically bad beyond being out of touch elitists; IIRC at some point after they were in over their head, Frank claimed to have had added more new users than there were graduating high school seniors that year in the US.
posted by snuffleupagus at 12:27 PM on January 26, 2023 [3 favorites]
posted by snuffleupagus at 12:27 PM on January 26, 2023 [3 favorites]
A professor looks at colleges encouraging students to start low-quality businesses. Or at least failing to discourage them-- very basic questions about whether the student know anything about what they're trying to do don't get asked.
posted by Nancy Lebovitz at 1:02 PM on January 26, 2023 [2 favorites]
posted by Nancy Lebovitz at 1:02 PM on January 26, 2023 [2 favorites]
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At first this seemed like the most victimless of all possible crimes, but then I got to the FTC notice about scamming students seeking CARES Act relief. Oh well...
posted by Not A Thing at 1:46 PM on January 25, 2023 [6 favorites]