Rising from the ashes While global stocks have been sinking, bitcoin has been rebounding sharply, rising past $8,000 on Tuesday. That’s up from below $6,000 as recently as last week and $3,500 early this year. “Investors point to increasing institutional support. Facebook is building a cryptocurrency-based payments system on the back of its social network in what would most likely be the most mainstream application yet of cryptocurrency.” The company is also easing restrictions on cryptocurrency and blockchain-related ads. “Meanwhile, a new project backed by the owner of the New York Stock Exchange, called Bakkt, said on Monday it would start testing bitcoin futures this summer, after earlier delays.”
A pile of golden coins - bitcoin cryptocurrency, realistic 3d illustration
Artur Kamalov/eranicle - stock.adobe.com
Credit card blues Credit card delinquencies are rising, especially among young people, hurting their credit scores and potentially making it more difficult for them to get bigger loans in the future. About 8.1% of card balances held by 18-to-29-year-olds were past due by 90 days or more in the first quarter, the largest percentage in eight years, according to the Federal Reserve Bank of New York. “Interest rates on those credit cards are also moving up, further squeezing struggling borrowers. Rates on credit-card accounts where interest is charged hit 16.91% in the first quarter of the year, the highest rate since at least 1994.”
Riding to the rescue come Sen. Bernie Sanders and Rep. Alexandria Ocasio-Cortez, who last week proposed capping interest rates on consumer loans at 15% while “applying their familiar analytical skills to the economics,” the paper’s editorial board derisively notes. They also “want to kill payday lending,” which “would simply push people who need short-term cash toward pawnbrokers or organized crime.” And that’s not all: they also want the U.S. Postal Service to get into the banking business. “The word ‘boondoggle’ can’t do this plan justice,” the paper opines. “This plan won’t get through the current Congress, but it’s another sign of the Democratic times.”
Passage to India Citigroup is partnering with Paytm, the big Indian mobile-payments startup, to issue the company’s first physical credit card. “The Citi deal is the latest example of upstart financial players and technology firms partnering with banks to move into more traditional card payments — an indication both of the upstarts’ expanding clout and also of their need to find ways to generate revenue beyond often free digital transfers.” However, “it remains to be seen how widely credit cards will be embraced in India. Only about 4% of adults over age 25 in India had a credit card as of 2017.”
Financial Times
Land of opportunity Goldman Sachs, which earlier this week said it had applied for a banking license in Japan, is also seeking one in South Africa “as part of an expansion of its business in Africa’s most industrial nation.”
“We see tremendous opportunity to better serve local and global clients investing in South Africa and the wider region,” said Richard Gnodde, CEO of Goldman Sachs International.
Looking for evidence German authorities raided 11 German banks, including Deutsche Bank, “looking for evidence of suspected tax fraud by clients of a former Deutsche Bank offshore unit.” The bank said it was cooperating with the probe but “stressed that the investigations are not directed against it, but against certain individuals.”
Washington Post
Overdraft rule examined The Consumer Financial Protection Bureau is reviewing a 10-year-old rule that “limits banks’ ability to charge overdraft fees without customers’ permission. The move opens the door to a potential overhaul of regulations that the [bureau] previously said saved consumers money but which the banking industry has argued needs an update.” The review is part of the CFPB's appraisal of regulation's impact on small business.
Elsewhere
Cross-border bid Italy’s UniCredit has retained JPMorgan Chase and Germany’s former deputy finance minister in preparation for a potential bid for Commerzbank. “Although it is unclear whether and when a bid could be made, UniCredit has long been interested in expanding in Germany,” Reuters reports. Such a deal also “could allow UniCredit to pivot away from its struggling domestic market.”
Quotable
“The rate at which credit card balances become delinquent has been rising and that has coincided with an increase in younger borrowers entering the credit card market.” — Andrew Haughwout, senior vice president at the New York Fed
The 2020 case, in which the Securities and Exchange Commission tried to hold Ripple accountable to securities law, offers little clarity for the regulation of crypto tokens.
Credit risk transfers, which gained traction in 2022 and 2023 as banks sought to manage their capital levels, may now become a solution for lenders looking to reduce their exposure to commercial real estate loans.
Research from American Banker finds banks are top AI users and plan to stay at the top for the future. But can rising costs hurt chances for positive results?
Federal Reserve Gov. Michael Barr said global supply chain disruptions and inflation caused by tariffs could weigh heaviest on small businesses, especially those with little access to credit.
The fintech's CEO told analysts during Thursday's earnings call that generative AI was taking search by storm and that investors "should absolutely expect us to have an answer for that."
