Press

“Corporate defaults on loan obligations are higher now than in 2009, right after the massive crash, as banking expert Mayra Rodriguez Valladares wrote at Forbes. The total number of defaults could pass those in 2009. That’s bad news for the bundled debt business. According to data from S&P Global Ratings, hundreds of CLOs have been downgraded to junk status.”

“Providing a sign of the gross fiscal mismanagement is fellow Forbes contributor Mayra Rodriguez Valladares, who noted how excessive use of leveraged loans in PE-owned firms has become unmistakable. The number of third-party rated companies defaulting is on a sharp rise and more than half are PE-owned, the results of leveraged buyouts. As she wrote: During the first half of this year, rated companies owned by such private equity firms as Blackstone BX -1.9%, Goldman Sachs Group GS GS -0.8%, KKR KKR KKR -0.1%, and Thomas Lee have defaulted; Ares Management ARES ARES +0.3% owns the highest number of defaulted private-equity owned rated companies.

As Mayra Rodriguez Valladares discusses in a 2019 Forbes article, Latinos represent a great market opportunity for financial services providers, such as banks and fintechs. The article cites research that shows this group also represents the largest demographic in new entrepreneurship, which is the backbone of the American economy

Banks should have prepared investors for potential dividend cuts on their own through a “massive public relations” campaign, said Mayra Rodríguez Valladares, managing principal at the consulting firm MRV Associates. While JPMorgan Chase & Co. CEO Jamie Dimon has mentioned scenarios under which the country’s largest bank would consider suspending dividends, other major banks have yet to publicly prepare shareholders for that possibility. The longer they wait, the more likely investors “will be shocked and punish” their stocks if they do cut their dividends, Rodríguez Valladares said.  

Minority-owned banks tend to serve people in communities where jobs have been hit hard by the pandemic, says banking consultant Mayra Rodriguez Valladares at MRV Associates. “And so they’re withdrawing deposits from the banks. And so what that means is that the banks don’t have enough money to lend,” she said. By purchasing a loan from a bank’s balance sheet, Citi is giving the minority-owned lender capital in return. Valladares says that can help those lenders issue more loans than they otherwise could with their own deposits. “And really, right now, it’s critical to be making loans to as many people as possible,” she said.  

“I think it will be closer to a depression than a regular recession,” said Mayra Rodriguez Valladares, a managing principal at the financial consulting and research firm MRV Associates. Rodriguez Valladares sees evidence that the nation is heading toward something similar to the Great Depression based on the millions of jobs lost over the past few weeks. “What we’re seeing right now is closer to the Depression than it was in the 2008 financial crisis,” she said. Rodriguez Valladares foresees workers not quickly returning to their old jobs after the economy eventually rebounds. “When people are fired … they are not immediately brought back. They’re not redeployed, and some may never come back,” she said, adding, “I think we are going to be in a recession for several quarters, and then, recovery will be slow.” Rodriguez Valladares reasoned that the current crisis developed so quickly that there was little data that companies could depend on to prepare, shore up resources, and save jobs. Instead, companies find themselves financially vulnerable as they try to survive the economic shutdown.