iRobot
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Post by iRobot on Feb 7, 2021 22:12:57 GMT
I agree that this is not a fair offer from Metro Bank and I already complained to them. They pointed me out to the investors T & Cs 3.1 and 3.2, which clearly state that we have appointed RateSetter as an AGENT, to which I replied that they are not an Agent anymore in this transaction but a related party and so the investors Terms don't apply. As pointed out by others on this forum, there should be at the minimum a competitive auction process where other banks and credit hedge and private equity funds can have a view of the loan book, value it according to their own assumptions and bid for it. Given the amount of money looking for yield at the moment I am confident that a loan book with a 8% gross yield should attract a slight premium to par value even after accounting for a higher default rate than implied by RateSetter Provision Fund. Especially that other good P2P lenders have also started to stop diverting a portion of the interests to provision funds (LendingWorks) or lower the extra fees they were charging to manage the loan book (Assetz Capital) so the credit situation seems to be generally improving and MB will benefit from it on our back. If not, then I would accept MB offer. I also think that we would be better off asking for this as a group of lenders rather than individually which MB clearly knows it can ignore so would any other lender be interested to form a group, if it doesn't already exist, to request a competitive auction process to sell the RateSetter loan book? And if they refuse potentially start a class action as I believe there could be enough money involved from a few percent bonus to pay lawyers' fees. Also happy to hear about those who have already asked their solicitors to take action... To play devil's advocate, would MB and RS (MB's wholly owned subsidiary) not have considered lenders reactions to the announcement? I suspect they did. I also suspect they realised that a number would have sighed massively and rejoiced at exiting RS unscathed (and, indeed, in profit; even if marginally over a short period, but quite handsomely if an RS lender for many years.) I further suspect MB/RS realised that a number of lenders would feel cheated and potentially look to air those grievances via the courts. So, is it beyond the realms of possibility that MB/RS sought legal advice as their chosen course of action and, having been given the green light, proceeded with the transaction as announced? After all, given that the transaction between MB and RS did " constitute a 'smaller related party transaction' falling within LR 11.1.10R", advice was sought on the transaction from the MB shareholders perspective. If there had be any possibility of issues with disaffected lenders, couldn't MB have 'bought those lenders out on the cheap' via some other route. MB had just sold a " £3bn residential mortgage portfolio to NatWest Group plc", so why not just top up RS' balance sheet by a few mill and have them buy back the loans from lenders as per 16.1 of the Ts&Cs? I'm pretty sure MB / RS will have had the angles covered, but by all means line the lawyers pockets if you feel that way inclined. If you get as far as asking any lawyers their opinion, I'm almost certain they'll tell you what you want to hear ...
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starfished
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Post by starfished on Feb 8, 2021 0:08:16 GMT
I agree that this is not a fair offer from Metro Bank and I already complained to them. They pointed me out to the investors T & Cs 3.1 and 3.2, which clearly state that we have appointed RateSetter as an AGENT, to which I replied that they are not an Agent anymore in this transaction but a related party and so the investors Terms don't apply. As pointed out by others on this forum, there should be at the minimum a competitive auction process where other banks and credit hedge and private equity funds can have a view of the loan book, value it according to their own assumptions and bid for it. Given the amount of money looking for yield at the moment I am confident that a loan book with a 8% gross yield should attract a slight premium to par value even after accounting for a higher default rate than implied by RateSetter Provision Fund. Especially that other good P2P lenders have also started to stop diverting a portion of the interests to provision funds (LendingWorks) or lower the extra fees they were charging to manage the loan book (Assetz Capital) so the credit situation seems to be generally improving and MB will benefit from it on our back. If not, then I would accept MB offer. I also think that we would be better off asking for this as a group of lenders rather than individually which MB clearly knows it can ignore so would any other lender be interested to form a group, if it doesn't already exist, to request a competitive auction process to sell the RateSetter loan book? And if they refuse potentially start a class action as I believe there could be enough money involved from a few percent bonus to pay lawyers' fees. Also happy to hear about those who have already asked their solicitors to take action... To play devil's advocate, would MB and RS (MB's wholly owned subsidiary) not have considered lenders reactions to the announcement? I suspect they did. I also suspect they realised that a number would have sighed massively and rejoiced at exiting RS unscathed (and, indeed, in profit; even if marginally over a short period, but quite handsomely if an RS lender for many years.) I further suspect MB/RS realised that a number of lenders would feel cheated and potentially look to air those grievances via the courts. So, is it beyond the realms of possibility that MB/RS sought legal advice as their chosen course of action and, having been given the green light, proceeded with the transaction as announced? After all, given that the transaction between MB and RS did " constitute a 'smaller related party transaction' falling within LR 11.1.10R", advice was sought on the transaction from the MB shareholders perspective. If there had be any possibility of issues with disaffected lenders, couldn't MB have 'bought those lenders out on the cheap' via some other route. MB had just sold a " £3bn residential mortgage portfolio to NatWest Group plc", so why not just top up RS' balance sheet by a few mill and have them buy back the loans from lenders as per 16.1 of the Ts&Cs? I'm pretty sure MB / RS will have had the angles covered, but by all means line the lawyers pockets if you feel that way inclined. If you get as far as asking any lawyers their opinion, I'm almost certain they'll tell you what you want to hear ... It is a shame we didn't do a poll at the time. I vaguely remember at the time some suggesting MB had a duty to take the risk. They now have done that and understandably still there are complaints. Sad to see RS go, but given all that has happened I think MB/RS have been fair.
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Post by mfaxford on Feb 8, 2021 10:39:49 GMT
Whilst I do not feel terribly aggrieved myself I do think MB has acted disingenuously at best. Taking no risk on the RS loan book appears to have been a condition of the takeover. Fair enough. However, post-takeover MB continued to force lenders for another four and a half months to pay for said risk by taking 50% of their interest. I didn't have too much of a problem with that while my loan book was in run-off (which I had commenced at the end of May last year, the interest rate cut being a catalyst for that) but now that we have paid that risk away (or at least reduced it to minimal) it should be us lenders who reap the benefit, not MB.
I think that is the best summary so far. For me the crucial thing is the timing that RS returned to full interest for investors and then a week later announced that MB are buying out the loan book with the attached provision fund. This gives the impression that one (MB buying the loanbook) was dependant on the other (provision fund being restored). This impression may be wrong, but impressions matter. From a couple of quick scans through the T&Cs I don't think they've done anything wrong. Reading the wind-down section [20] things could also have been a lot worse (they have the option of charging us a 2% fee on loaned capital during winddown). The only place that I can see that there could be a potential issue with the T&Cs is the ability to opt out of changes by closing your account which first requires releasing funds [15]. As we've seen over the last year it's not always possible to release funds quickly, but as the last change to the T&Cs was over a year ago that's irrelevant at the moment. Overall, whilst I may not like the look of it due to the timing of the two announcements things could also be a lot worse (at least for those of us with some investment still in RS).
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littleoldlady
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Running down all platforms due to age
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Post by littleoldlady on Feb 8, 2021 11:10:46 GMT
Those on here who feel aggrieved seem to assume that MB have bought the book because the risk is zero or minimal, otherwise they would not have bought it. An alternative hypothesis is that it is far from minimal - on a restricted number of loans - and risked action being taken if there were big losses suffered by a few lenders towards the end of the run down, in view of RS's failure to make the exit route clear, leaving many lenders remaining invested even though they wanted their cash back because they did not know the opaque mechanism to do so. So MB bought the book to avoid this issue being investigated.
I doubt we will ever know which is correct and suggest that everyone who got their money back with some interest should be happy as it could have been much worse.
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coogaruk
Hello everyone! Anyone remember me?
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Post by coogaruk on Feb 8, 2021 11:24:58 GMT
No they are not. My repayments were due to continue for up to another four years or so.
As for the risk issue, investors have paid MB a pretty penny to help alleviate that risk and do you really believe if MB considers the loan book to be a risk that they would be buying it? It has an average lifespan of two years and an 8% yield!
regardless of what we pay the risk remains. loan default and with another downturn no provision fund will cover it with certainty.so yes risk remains with an 8% yield. Metro are of course guaranteeing all funds are repaid. The book being bought means all funds will be repaid. Many people have said (myself included) that at some point people will be left with a hot potatoe. I thought you had all funds back? No, I have had all capital back. The remainder is in run-off, which should continue until I decide otherwise.
At the time of the acquisition MB were adamant that they would take no risk on the RS loan book, so my question still remains unanswered: If the RS loan book is a risk then why is MB now buying it? Please don't fob me off by trying to convince me that it's for the benefit of the RS lenders!
I am not badly affected by this latest development (although if MB had been more upfront and honest regarding their intentions I may have adjusted my investment strategy last September, another reason to feel slightly aggrieved) so do not wish to become embroiled in a lengthy debate over it but I think a quick glance at MB's website is quite enlightening. Full of priding themselves on being a community bank, doing things differently, customer service at the core, etc. Now I wonder where we have heard all that before? Hmmm, P2P lending!
That leaves me with yet more conclusions. RS (given their track record over the last 2-3 years - please don't as some no doubt will accuse Covid as being responsible for their demise) and MB are made for each other. The banks will only ever be out for themselves. And P2P has no future.
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coogaruk
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Post by coogaruk on Feb 8, 2021 11:51:26 GMT
And if they refuse potentially start a class action as I believe there could be enough money involved from a few percent bonus to pay lawyers' fees. We have been here before. Personally I don't get involved in class actions as I generally consider them to be a waste of time and money (unless you are a lawyer). My memory stretches all the way back to Railtrack, etc.
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coogaruk
Hello everyone! Anyone remember me?
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Post by coogaruk on Feb 8, 2021 12:05:04 GMT
Those on here who feel aggrieved seem to assume that MB have bought the book because the risk is zero or minimal, otherwise they would not have bought it. An alternative hypothesis is that it is far from minimal - on a restricted number of loans - and risked action being taken if there were big losses suffered by a few lenders towards the end of the run down, in view of RS's failure to make the exit route clear, leaving many lenders remaining invested even though they wanted their cash back because they did not know the opaque mechanism to do so. So MB bought the book to avoid this issue being investigated. I doubt we will ever know which is correct and suggest that everyone who got their money back with some interest should be happy as it could have been much worse. I think we are split into two camps here. Savers and investors. I consider myself to be one of the latter.
The savers among us put their money into the wrong product in the first place, treating RS like a great big if not instant then reasonably easy access savings account (RS are largely to blame for that perception, particularly in more recent times) but will no doubt now be taking a big sigh of relief and be full of praise for RS and how wonderful they are for giving them their money back.
Investors will take a different view. It's more about weighing up risk and being in control. Granted we were all in the same boat when liquidity was an issue but then that's a normal investment risk in any case.
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jlend
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Post by jlend on Feb 8, 2021 12:25:45 GMT
Those on here who feel aggrieved seem to assume that MB have bought the book because the risk is zero or minimal, otherwise they would not have bought it. An alternative hypothesis is that it is far from minimal - on a restricted number of loans - and risked action being taken if there were big losses suffered by a few lenders towards the end of the run down, in view of RS's failure to make the exit route clear, leaving many lenders remaining invested even though they wanted their cash back because they did not know the opaque mechanism to do so. So MB bought the book to avoid this issue being investigated. I doubt we will ever know which is correct and suggest that everyone who got their money back with some interest should be happy as it could have been much worse. I think we are split into two camps here. Savers and investors. I consider myself to be one of the latter.
The savers among us put their money into the wrong product in the first place, treating RS like a great big if not instant then reasonably easy access savings account (RS are largely to blame for that perception, particularly in more recent times) but will no doubt now be taking a big sigh of relief and be full of praise for RS and how wonderful they are for giving them their money back.
Investors will take a different view. It's more about weighing up risk and being in control. Granted we were all in the same boat when liquidity was an issue but then that's a normal investment risk in any case.
I expect the main loosers in all this may be the equity investors in ratesetter and the ratesetter employees on the p2p lender side of the business who have lost their job. We will never know if Ratesetter/MB could have successfully managed running down the p2p loan book. It may have been fine or not. We have never seen a large p2p lender run down their loan book. I can't help thinking that I would have done exactly the same. Once the decision had been taken to stop p2p lending then buy out the lenders at the earliest opportunity. I don't doubt MB didn't have the capital to buy the loan book last year and I don't doubt it was hard to put anything like a decent valuation on the loan book last year. At worst it feels like I have lost out on a few months interest if the loan book was bought a bit earlier. I can't honestly say it feels like a big loss.
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Post by Badly Drawn Stickman on Feb 8, 2021 21:22:03 GMT
While I am slightly malcontent with how it is finally ending and feel entitled to kick the 'virtual cat'.....
I think it is a good example of 'Events, My Dear Boy, Events' (I think attributable to Macmillan)
Most of them have been alluded to at some point, the obvious start point was the run on RS caused by events elsewhere. After that events pretty much took over (although Metro may have been a shadowy figure in the picture somewhere before the first event). Obviously with hindsight some things should/could have been done differently/better, but it was ever thus with all things.
I agree RS will be missed in P2P and probably never replaced, although it could be argued they were already evolving into something different anyway.
Hopefully events are busy elsewhere and it now ends as planned or does a U turn, who knows.
I think it is safe to say none of us with ever forgive Metro for its sordid part in the piece (unless of course they happen to have the highest paying instant access account next week, in which case forgiving and forgetting may well take place en-mass).
Talk of Legal action? I suspect that is high end virtual 'cat kicking', but if it releases the anger then talk is cheap (action a lot less so, and pointless to boot)
I normally delete these long rambling though to paper ones, might just let this one see the light of day.
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Post by anotherexperiencedp2 on Feb 8, 2021 23:02:32 GMT
Those on here who feel aggrieved seem to assume that MB have bought the book because the risk is zero or minimal, otherwise they would not have bought it. An alternative hypothesis is that it is far from minimal - on a restricted number of loans - and risked action being taken if there were big losses suffered by a few lenders towards the end of the run down, in view of RS's failure to make the exit route clear, leaving many lenders remaining invested even though they wanted their cash back because they did not know the opaque mechanism to do so. So MB bought the book to avoid this issue being investigated. I doubt we will ever know which is correct and suggest that everyone who got their money back with some interest should be happy as it could have been much worse. I think we are split into two camps here. Savers and investors. I consider myself to be one of the latter.
The savers among us put their money into the wrong product in the first place, treating RS like a great big if not instant then reasonably easy access savings account (RS are largely to blame for that perception, particularly in more recent times) but will no doubt now be taking a big sigh of relief and be full of praise for RS and how wonderful they are for giving them their money back.
Investors will take a different view. It's more about weighing up risk and being in control. Granted we were all in the same boat when liquidity was an issue but then that's a normal investment risk in any case.
I totally agree with your two camps view: the savers might feel lucky to be made square and get their money back but am an investor and I don't accept the first unsolicited bid without checking the market price. To the people happy with the offer ask yourself if you would sell your house to the first agent who comes to value it and asks you how much you expect for it only to offer to buy it at this price without giving the opportunity to other potential buyers to bid for it. You would probably think twice before agreeing. It's the same here. It's not because a loan book (in which you should never have thrown your money in to start with) is a much more complex asset than a house that there isn't a market price for it for investors with the relevant expertise. As for the legal route, I don't think it would necessary need to get there and would be the "no win no fee" type in any case so lawyers would be honest about the chances of getting anything more rather than "tell me what I want to hear" as suggested. I don't think that MB and RateSetter have really thought about the implications for RateSetter of the related party transaction other than it's indeed very good for MB shareholders. In fact, if the economy quickly rebounds there is a decent chance that their RS acquisition could be more than paid for with this loan book acquisition at par value. I'm still waiting for their response on the Agent conflict and I know am not the only one to have complained so I suppose they are taking the legal advise now. But the first step for me if no response is to request an independent valuation of the loan book by a relevant third party, I maintain that there is a lot of distressed credit funds out there with money to invest should they find a good opportunity to do so. The FCA would be the second step , and they know they haven't been regulating P2P very well so far so might be helpful this time.
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sydb
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Post by sydb on Feb 9, 2021 17:50:59 GMT
But the first step for me if no response is to request an independent valuation of the loan book by a relevant third party Who's paying? FCA are about upholding the regulations, not upholding somebody's value of 'fairness'.
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
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Post by beagle on Feb 9, 2021 18:17:52 GMT
I think we are split into two camps here. Savers and investors. I consider myself to be one of the latter.
The savers among us put their money into the wrong product in the first place, treating RS like a great big if not instant then reasonably easy access savings account (RS are largely to blame for that perception, particularly in more recent times) but will no doubt now be taking a big sigh of relief and be full of praise for RS and how wonderful they are for giving them their money back.
Investors will take a different view. It's more about weighing up risk and being in control. Granted we were all in the same boat when liquidity was an issue but then that's a normal investment risk in any case.
I totally agree with your two camps view: the savers might feel lucky to be made square and get their money back but am an investor and I don't accept the first unsolicited bid without checking the market price. To the people happy with the offer ask yourself if you would sell your house to the first agent who comes to value it and asks you how much you expect for it only to offer to buy it at this price without giving the opportunity to other potential buyers to bid for it. You would probably think twice before agreeing. It's the same here. It's not because a loan book (in which you should never have thrown your money in to start with) is a much more complex asset than a house that there isn't a market price for it for investors with the relevant expertise. As for the legal route, I don't think it would necessary need to get there and would be the "no win no fee" type in any case so lawyers would be honest about the chances of getting anything more rather than "tell me what I want to hear" as suggested. I don't think that MB and RateSetter have really thought about the implications for RateSetter of the related party transaction other than it's indeed very good for MB shareholders. In fact, if the economy quickly rebounds there is a decent chance that their RS acquisition could be more than paid for with this loan book acquisition at par value. I'm still waiting for their response on the Agent conflict and I know am not the only one to have complained so I suppose they are taking the legal advise now. But the first step for me if no response is to request an independent valuation of the loan book by a relevant third party, I maintain that there is a lot of distressed credit funds out there with money to invest should they find a good opportunity to do so. The FCA would be the second step , and they know they haven't been regulating P2P very well so far so might be helpful this time. FCA don't care if terms you agreed to are executed. Third party valuation - Metro own ratesetter therefore they already owned the management of loans just wanted to get rid of us quicker. makes sense.
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sydb
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Post by sydb on Feb 9, 2021 19:03:34 GMT
(in which you should never have thrown your money in to start with) The Ts & Cs were clear; 2 months notice. You agreed to it.
P2P has been historically about who can run for the door fastest. It's not about savers vs investors; it's been about active vs passive investing and it is not the domain for the passive investor.
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
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Post by beagle on Feb 10, 2021 10:17:22 GMT
I think we are split into two camps here. Savers and investors. I consider myself to be one of the latter.
The savers among us put their money into the wrong product in the first place, treating RS like a great big if not instant then reasonably easy access savings account (RS are largely to blame for that perception, particularly in more recent times) but will no doubt now be taking a big sigh of relief and be full of praise for RS and how wonderful they are for giving them their money back.
Investors will take a different view. It's more about weighing up risk and being in control. Granted we were all in the same boat when liquidity was an issue but then that's a normal investment risk in any case.
I expect the main loosers in all this may be the equity investors in ratesetter and the ratesetter employees on the p2p lender side of the business who have lost their job. We will never know if Ratesetter/MB could have successfully managed running down the p2p loan book. It may have been fine or not. We have never seen a large p2p lender run down their loan book. I can't help thinking that I would have done exactly the same. Once the decision had been taken to stop p2p lending then buy out the lenders at the earliest opportunity. I don't doubt MB didn't have the capital to buy the loan book last year and I don't doubt it was hard to put anything like a decent valuation on the loan book last year. At worst it feels like I have lost out on a few months interest if the loan book was bought a bit earlier. I can't honestly say it feels like a big loss. I expect the main loosers in all this may be the equity investors in ratesetter and the ratesetter employees on the p2p lender side of the business who have lost their job.The irony is those who got it in the neck from us for nearly one year will be the first ones losing their jobs first. It is all business.
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beagle
Investor in ratesetter, funding circle, lendy (lesson learnt) and AC
Posts: 670
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Post by beagle on Feb 10, 2021 10:35:50 GMT
I think we are split into two camps here. Savers and investors. I consider myself to be one of the latter.
The savers among us put their money into the wrong product in the first place, treating RS like a great big if not instant then reasonably easy access savings account (RS are largely to blame for that perception, particularly in more recent times) but will no doubt now be taking a big sigh of relief and be full of praise for RS and how wonderful they are for giving them their money back.
Investors will take a different view. It's more about weighing up risk and being in control. Granted we were all in the same boat when liquidity was an issue but then that's a normal investment risk in any case.
I totally agree with your two camps view: the savers might feel lucky to be made square and get their money back but am an investor and I don't accept the first unsolicited bid without checking the market price. To the people happy with the offer ask yourself if you would sell your house to the first agent who comes to value it and asks you how much you expect for it only to offer to buy it at this price without giving the opportunity to other potential buyers to bid for it. You would probably think twice before agreeing. It's the same here. It's not because a loan book (in which you should never have thrown your money in to start with) is a much more complex asset than a house that there isn't a market price for it for investors with the relevant expertise. As for the legal route, I don't think it would necessary need to get there and would be the "no win no fee" type in any case so lawyers would be honest about the chances of getting anything more rather than "tell me what I want to hear" as suggested. I don't think that MB and RateSetter have really thought about the implications for RateSetter of the related party transaction other than it's indeed very good for MB shareholders. In fact, if the economy quickly rebounds there is a decent chance that their RS acquisition could be more than paid for with this loan book acquisition at par value. I'm still waiting for their response on the Agent conflict and I know am not the only one to have complained so I suppose they are taking the legal advise now. But the first step for me if no response is to request an independent valuation of the loan book by a relevant third party, I maintain that there is a lot of distressed credit funds out there with money to invest should they find a good opportunity to do so. The FCA would be the second step , and they know they haven't been regulating P2P very well so far so might be helpful this time. I'm still waiting for their response on the Agent conflict and I know am not the only one to have complained so I suppose they are taking the legal advise now.
They may well be taking advice, they may well be overwhelmed. They also likely do not care that much (the business on the face yes) the staff member likely not at all, it is just another twist in the tale. They probably know some of their jobs will go. Would be interested to see where you get to, good luck.
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