Having come from Canada, whose banking system is widely regarded as one of the soundest in the world, I have never understood why the US allows these problems. Get with the program! My fortune cookie says several other banks are scrambling 😂 for how could it not be so?
The Dimon cockroach analogy is spot on. What strikes me most is how quickly confidence evaporates in regional banks once one fraud case sufaces. The California Bank & Trust situation feels like a symptom of the broader issue you outlined with invoice factoring and weak underwritng. The real test will be when those commercial real estate loans start refinancing at higher rates. That's when we'll see how many more cockroaches are hiding in the portfolio. The fact that banks grew lending to private credit funds from $8B to $95B while transparency actually decresed is wild to me. It's like we learned nothing from 2008 about shadow banking contagion risks.
Funny enough, we had another private credit bust, this is a copy and paste from my twitter post from today: "We have our fourth private credit collapse in two months, and this one shows exactly why institutional lenders shouldn't be trusted to verify their own collateral.
Bankim Brahmbhatt ran Carriox Capital, a New York telecom financing outfit that convinced BlackRock's HPS Investment Partners and BNP Paribas to lend him $552.6 million. The entire deal was built on one claim: he had legitimate receivables from T-Mobile, Telstra, BICS, Telecom Italia Sparkle, and Taiwan Mobile backing the loans.
None of it was real. Brahmbhatt forged contracts that appeared to be signed by representatives from these carriers. He created fake invoices supposedly issued by these companies claiming they owed Carriox money. Then he spoofed email addresses mimicking these carriers' real domains and sent fake verification emails to make the receivables look legitimate. By stacking these fabricated invoices on top of each other, he created what looked like $500+ million in collateral. The lenders saw assets and funded the deal without catching any of it.
Here's where it gets embarrassing. When HPS and BNP Paribas finally tried to verify these receivables by actually calling T-Mobile, the carrier said they had no idea what Carriox was talking about. No contracts. No invoices. Nothing existed. One phone call would have instantly revealed the entire fraud. These are supposed to be institutional-grade lenders with world-class risk management. Yet somehow they missed basic due diligence.
While all this was happening, Brahmbhatt's people were also stealing cash. Whenever payments came through the lender-controlled collection accounts, instead of applying those funds to the debt, they diverted the money offshore. So he wasn't just fabricating collateral. He was stealing actual cash flows in real time.
Lenders sued in August 2025 and froze all assets. Carriox filed for Chapter 11 bankruptcy with $500 million to $1 billion in liabilities and basically zero assets remaining. HPS is sitting on $552.6 million in losses with nothing to recover against.
The kicker is BlackRock acquired HPS for $12 billion in July 2025 specifically to expand into private credit and get access to its $148 billion platform. Within 90 days of closing that deal, they're holding a half-billion dollar fraud loss on receivables that HPS supposedly vetted and monitored.
That's not just a bad deal. That's a massive question mark about whether one of the world's largest asset managers actually has the infrastructure to verify complex collateral in modern lending markets. If BlackRock's $12 trillion asset management machine can miss $500+ million in forged documents and fake invoices, what else are they missing? This is the systemic risk that should concern everyone."
Having come from Canada, whose banking system is widely regarded as one of the soundest in the world, I have never understood why the US allows these problems. Get with the program! My fortune cookie says several other banks are scrambling 😂 for how could it not be so?
The Dimon cockroach analogy is spot on. What strikes me most is how quickly confidence evaporates in regional banks once one fraud case sufaces. The California Bank & Trust situation feels like a symptom of the broader issue you outlined with invoice factoring and weak underwritng. The real test will be when those commercial real estate loans start refinancing at higher rates. That's when we'll see how many more cockroaches are hiding in the portfolio. The fact that banks grew lending to private credit funds from $8B to $95B while transparency actually decresed is wild to me. It's like we learned nothing from 2008 about shadow banking contagion risks.
Funny enough, we had another private credit bust, this is a copy and paste from my twitter post from today: "We have our fourth private credit collapse in two months, and this one shows exactly why institutional lenders shouldn't be trusted to verify their own collateral.
Bankim Brahmbhatt ran Carriox Capital, a New York telecom financing outfit that convinced BlackRock's HPS Investment Partners and BNP Paribas to lend him $552.6 million. The entire deal was built on one claim: he had legitimate receivables from T-Mobile, Telstra, BICS, Telecom Italia Sparkle, and Taiwan Mobile backing the loans.
None of it was real. Brahmbhatt forged contracts that appeared to be signed by representatives from these carriers. He created fake invoices supposedly issued by these companies claiming they owed Carriox money. Then he spoofed email addresses mimicking these carriers' real domains and sent fake verification emails to make the receivables look legitimate. By stacking these fabricated invoices on top of each other, he created what looked like $500+ million in collateral. The lenders saw assets and funded the deal without catching any of it.
Here's where it gets embarrassing. When HPS and BNP Paribas finally tried to verify these receivables by actually calling T-Mobile, the carrier said they had no idea what Carriox was talking about. No contracts. No invoices. Nothing existed. One phone call would have instantly revealed the entire fraud. These are supposed to be institutional-grade lenders with world-class risk management. Yet somehow they missed basic due diligence.
While all this was happening, Brahmbhatt's people were also stealing cash. Whenever payments came through the lender-controlled collection accounts, instead of applying those funds to the debt, they diverted the money offshore. So he wasn't just fabricating collateral. He was stealing actual cash flows in real time.
Lenders sued in August 2025 and froze all assets. Carriox filed for Chapter 11 bankruptcy with $500 million to $1 billion in liabilities and basically zero assets remaining. HPS is sitting on $552.6 million in losses with nothing to recover against.
The kicker is BlackRock acquired HPS for $12 billion in July 2025 specifically to expand into private credit and get access to its $148 billion platform. Within 90 days of closing that deal, they're holding a half-billion dollar fraud loss on receivables that HPS supposedly vetted and monitored.
That's not just a bad deal. That's a massive question mark about whether one of the world's largest asset managers actually has the infrastructure to verify complex collateral in modern lending markets. If BlackRock's $12 trillion asset management machine can miss $500+ million in forged documents and fake invoices, what else are they missing? This is the systemic risk that should concern everyone."
FIAT money on a FIAT banking system on a FIAT lender of last resort
Next stop: Private equity, the new WMD