CFPB probing PayPal’s Venmo unit; will HSBC feel heat from BlackRock?

Wall Street Journal

PayPal probed

PayPal is being investigated by the Consumer Financial Protection Bureau for the way Venmo, its digital money transfer service, “treats customers who the company says owe it money for transactions that went awry. ” PayPal Friday that it received a “Civil Investigative Demand” from the CFPB “related to Venmo’s unauthorized funds transfers and collections processes, and related matters,” adding that it is cooperating with the agency.

“Venmo’s debt-collection tactics were the subject of articles in The Wall Street Journal in 2019 and 2020. The company has threatened to dispatch debt collectors on users who overdraw their accounts, even when those users are victims of scams. Venmo continued its aggressive collection efforts during the coronavirus pandemic.”

He’s Mr. SPAC

Credit Suisse, which has “weathered a spying scandal and high-profile company frauds” in addition to a $1.3 billion charge against earnings last year, “is reaping the rewards from a spree of special-purpose acquisition companies. The Swiss bank was the top underwriter of so-called blank-check firms last year and is second in early 2021.”

“Spearheading the blank-check business is head of SPACs Niron Stabinsky, who was hired in 2015 from Deutsche Bank and was among the first to bring SPACs to Wall Street 15 years ago. He and Credit Suisse have built relationships with some of the most prominent SPAC founders.”

“Niron has become Mr. SPAC,” said veteran deal maker Bill Foley, who has worked with the banker “on deals for nearly two decades.”

No dog

Dogecoin, “a cryptocurrency that began in 2013 as a joke designed to serve no real purpose,” has suddenly become a hot commodity “thanks to a flurry of tweets from Tesla CEO Elon Musk,” which has made it “suddenly worth a total of more than $6 billion.”

“Dogecoin holders can’t buy much with it and can’t easily convert it to cash. For most of its life, the virtual currency has traded for no reason other than to generate online laughs. Then came Mr. Musk. On Jan 28, he tweeted a faux “Dogue” magazine cover. The billionaire Tesla boss tweeted about it again Thursday.”

“No highs, no lows, only Doge,” Musk posted. “Dogecoin immediately shot up 80% intraday, before paring gains.”

If you see something, say something

James Freis, who joined Wirecard to oversee its legal and compliance functions shortly before it collapsed last year, said “the fintech company’s problems were larger than even its harshest outside critics might have imagined.”

“So many people could have and should have stepped up and said something,” he told the Journal.

Financial Times

Pressure from above

BlackRock “is facing calls to use its might as the world’s biggest asset manager to put pressure on HSBC to rein in its financing of the fossil fuel industry, just weeks after fund boss Larry Fink warned that climate change was an investment risk. Two of BlackRock’s British pension fund clients have urged the asset manager to support a climate resolution filed by a group of shareholders at HSBC’s annual meeting in April. The resolution asks the bank to publish a strategy around climate targets and reduce its exposure to fossil fuels.”

“The $8.7 trillion asset manager had historically outsourced its decision on how to vote at some banks because its largest shareholder was PNC. Clients are now closely watching how it will vote at HSBC after PNC sold its stake in BlackRock last May and Fink promised to put sustainability at the heart of how BlackRock invests. “

PPP, U.K. style

Individual banks in the U.K. face “the prospect of handling an expected wave of fraud and defaults alone” on small business loans after “talks to create an industry-wide debt collection service stalled. Under the government’s ‘bounce back’ loan scheme, £45 billion has been borrowed by small businesses to help them weather the pandemic.” While the loans are guaranteed by the government, banks are responsible for collecting on the debt.

“Lobby group UK Finance has been leading discussions on a shared entity — involving specialist debt-collection outsourcers — because the task was expected to be too burdensome to be handled by individual banks. But several of the U.K.’s largest lenders such as HSBC and Lloyds have soured on the idea of a centralized ‘utility,’ which has been proposed to oversee the contentious unwinding of the scheme. The National Audit Office has said taxpayers face losses of up to £26 billion because of fraud and bankruptcies in the scheme.”

The pendulum swings back

“A battle looms over subprime lending regulation under President Biden,” an FT opinion piece says. “The U.S. financial services sector enjoyed four years of restrained enforcement and supervision during Donald Trump’s presidency. Under Joe Biden, though, the pendulum is swinging back — even as Republicans try to prevent it from swinging too far. The ideological tensions are vividly illustrated by the debate over subprime lending: how far should regulation seek to protect consumers — mostly working-class Americans — from risk?”