All eyes are on the Fed next week with the upcoming FOMC meeting; but there is still plenty to go over this week. Here is the Uncle Sean Update for 6/9/23:
Bankers Helping Bankers Fund (BHB Fund) is at it again – Huge shout out to Community Capital as the latest recipient of an investment round from the BHB Fund!!!
ICYMI – the FDIC, Federal Reserve, and OCC issued final joint guidance designed to help banking organizations manage risks associated with third-party relationships, including relationships with financial technology companies. “The final guidance covers risk management practices for the stages in the life cycle of third-party relationships: planning, due diligence and third-party selection, contract negotiation, ongoing monitoring, and termination,” the regulators said in a statement.Here is the full 68-page doc – Interagency Guidance on Third-Party Relationships: Risk Management; and below are some key observations from Uncle Sean:A tailored approach to risk management – “not all third-party relationships present the same risks.”Monitor third parties on an ongoing basis, and to direct-test the third party’s controls. Beware of pivots in business model.This part really stood out to me – particularly from a BaaS platform provider / Connector model… 👀Third-party relationships may involve subcontracting arrangements, which can result in risk due to the absence of a direct relationship between the banking organization and the subcontractor, further lessening the banking organization’s direct control of activities.As did this part…The use of third parties does not diminish or remove banking organizations’ responsibilities to ensure that activities are performed in a safe and sound manner and in compliance with applicable laws and regulations, including but not limited to those designed to protect consumers (such as fair lending laws and prohibitions against unfair, deceptive or abusive acts or practices) and those addressing financial crimes.As Uncle Sean likes to say, “you can delegate responsibility, but you cannot delegate accountability.”One of the better summaries I saw was this update from Strategic Risk Associates (SRA – credit Michael Glotz and Edward Vincent) – BaaS Banks should view their FinTech partnerships as a digital branch of the bank encompassing all laws and regulations related to the services being offered. Nailed it!!!
It was pretty much just a matter of time since the Wells Notices went out earlier this year…. Nonetheless, the SEC was busy this week with largely expected crypto crackdown aimed at Coinbase and Binance:SEC Charges Coinbase for Operating as an Unregistered Securities Exchange, Broker, and Clearing AgencySEC Files 13 Charges Against Binance Entities and Founder Changpeng ZhaoBinance.US (the American subsidiary) announced on Twitter that due to pressures from regulators and banking partners, they “are suspending USD deposits and notifying customers that our banking partners are preparing to pause fiat (USD) withdrawal channels as early as June 13, 2023. We encourage customers to take appropriate action with their USD.” YIKES!!!! 😬
SEC Chair Gary Gensler went even further with an appearance on CNBC’s “Squawk on the Street” stating, “Look, we don’t need more digital currency. We already have digital currency. It’s called the U.S. dollar. It’s called the euro or it’s called the yen; they’re all digital right now. We already have digital investments.”
Momnt (real-time lending and payment solutions for businesses) partners with Cross River to allow Momnt’s merchant customer base to offer flexible financing solutions to their customers.
Another CU buying a bank. This week it is Nusenda FCU (Charter #948; $4.1B Total Assets) to acquire Western Heritage Bank (Cert. #35492; $335M Total Assets).Scorecard – this is the fourth CU acquisition of a bank so far for 2023. That compares to 16 in 2022, 13 in 2021, 7 in 2020, and 16 in 2019 (Source: FedFis).
CFPB released a new issue spotlight on the use of chatbots by financial institutions.
Also CFPB related…. PGX Holdings (parent company for credit repair company Progrexion that operates under several brands such as creditrepair.com, credit.com and Lexington Law) filed for bankruptcy citing a recent loss in a court case brought by the CFPB over its billing for credit repair services – to which the CFPB is seeking a whopping $3B in damages. WOWZA!!! 😲
Sable (fintech challenger with immigrant focus including debit, int’l transfers, and secured charge card credit builder program) is no longer accepting account applications and will be sunsetting on June 22, 2023.
Bringing sexy back to fixed income (LOL)… Wealthfront launches Automated Bond Portfolio currently featuring 5.48% blended 30-day SEC yield. Designed to provide less risk than equities with a higher yield and more liquidity than a variety of popular fixed-income products including CDs, I-bonds and Treasury bills.
American Express partners with Yodlee for customer-permissioned data sharing.
Qorbis (embedded finance for business) has partnered with Mbanq (BaaS platform provider) to enhance international capabilities and brand control with full regulatory compliance.
BitGo to acquire Prime Trust further strengthening BitGo’s custody, settlement and compliance functions; as well as integrating Prime Trust’s “world-class network of banking partners and payment rails, crypto IRA, and additional wealth management offerings.”
Congratulations to Jacqueline L. White as the newly appointed President at i2C Inc (issuer processor for banks and fintech companies).
Amazon Pay taps Affirm to be the first US BNPL provider as Affirm continues to roll out their Adaptive Checkout technology in the US.
Notable FinTech funding for the week:Keeta (instant and secure cross-border payments) announced $17M in funding and has launched with a network of interconnected real-time payment rails capable of processing more than 50 million transactions per second with the goal of making international payments “as easy as Venmo.”LendingStandard (CRE financing) raised $6.7M in Equity financing.
Random Uncle Sean stuff:This week we recognized the 79th anniversary of D-Day – USA Today has a good read.New York goes Up in Smoke (Canadian wildfires, not Cheech & Chong- LOL)… 😷Congratulations to OU Softball Team for winning their 3rd straight National Championship and ending the season with a 61-1 record which is now the highest final winning percentage (.984) in Division I history, surpassing UCLA’s 1992 squad that finished 54-2 (.964). WOW!!!!You can stop scrolling now – LOL!!!! Here are the Dad Jokes:Mr. Peanut’s last words were, “bye honey, I’ll be back in a Jif….” 😊I wonder if clouds look down at us and say, “hey look – that one is shaped like an idiot!”They say money can’t buy happiness…. So just send it all to me and I will test that theory once and for all.The easiest way to quit being vegan is cold turkey…… 🦃🍗😆🤣
Have a GREAT weekend and please stay safe!!!
Uncle Sean
Sometimes known as Sean Mayo – contact me directly for scope and pricing of custom reports / analysis projects at smayo@fedfis.com | 214-604-6961 – or you can contact FedFis Sales Team at 512-960-0911 | info@fedfis.com #FedFisHasTheData FedFis
FedFis, LLC disclaimer – The views and opinions of Uncle Sean are of his own and may not necessarily represent the views, endorsements, and/or opinions of FedFis, LLC – we all know he’s a little bit different; but that’s why we love him.
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