Pot banking support grows; Equifax, Fair Isaac partner to sell data to banks

Wall Street Journal

Jumping on the bandwagon
Citigroup is launching a consumer payments business, “joining its biggest rivals and a host of financial-technology startups jockeying for position in the hottest corner of banking.” The new unit “will offer big merchants a suite of consumer-payment options ranging from traditional credit cards to new digital wallets to direct bank-account transfers.”

“Digital payments are rapidly growing, and there’s a need for bank-grade technology,” said Manish Kohli, Citi’s global head of payments and receivables.

But can Citi "outsmart the tech giants"?

Joining the party
Mainstream businesses, including Scotts Miracle-Gro and Constellation Brands, an alcoholic beverage company, “have joined financial firms in pressing Congress to make it easier for marijuana companies to use banks. The lobbying comes as lawmakers consider legislation to bring more pot transactions into the financial system, as businesses seek a bigger piece of the rapidly growing — and increasingly legal — cannabis market.” A House committee is slated to vote this week on a bill that would “allow banks to handle marijuana-related transactions for businesses in states that allow medical or recreational marijuana use.”

Marijuana plants grow in a greenhouse at the Los Suenos Farms facility in Avondale, Colorado.
Marijuana plants grow in a greenhouse at the Los Suenos Farms facility in Avondale, Colorado, U.S., on Thursday, Feb. 25, 2016. About 938 dispensaries, which outnumber Starbucks in Colorado, in 2015 yielded $135 million in state taxes and fees, 44 percent more than a year earlier. Yet as the market enters its third year after voters legalized retail sales in 2012, officials question whether the newfound income outweighs the escalating social costs. Photographer: Matthew Staver/Bloomberg

Concerted effort
Equifax and Fair Isaac — known for its FICO credit score — will announce Wednesday a partnership in which they will sell their consumer data to banks, “the latest attempt to feed banks’ appetite for more information on customers. Both companies already sell their services to banks, but now their sales employees will pitch each other’s services as well. Sometimes the companies will approach clients together.”

"Equifax and FICO argue that buying their services together will help lenders make underwriting decisions more quickly, especially for borrowers with thin credit histories," the paper says.

Strange bedfellows
A number of large international insurance companies are working together to create a consumer ratings service for the cybersecurity industry, “an unusual collaboration that highlights the rising dangers posed by digital hackers.” The program, which was launched by insurance firm Marsh & McLennan, “will evaluate cybersecurity software and technology sold to businesses. Marsh will collate scores from participating insurers, which will individually size up the offerings, and identify the products and services considered effective in reducing cyber risk.”

Payoff
Two whistleblowers at JPMorgan Chase won a total of $50 million for helping the Securities and Exchange Commission and the Commodity Futures Trading Commission pursue a case against the bank “for failing to disclose to clients that the bank preferred to invest their money in its own mutual funds and hedge funds.”

Financial Times

The plot thickens
About €135 billion passed through Swedbank’s “high-risk non-resident” portfolio dealing with Russian clients in Estonia over the past 10 years, according to an internal report obtained by a Swedish television station. These details "greatly expand the scope of a money laundering scandal at the Swedish lender," the paper says. The €135 billion, rivals the €200 billion that was laundered through Danske Bank’s Estonian unit. As questions arise about "when senior management became aware of the large transaction volumes," the pressure mounts on Swedbank and its CEO, Birgitte Bonnesen, who had been in charge of the bank’s Baltic region.

On Wednesday the Swedish Economic Crime Authority raided the bank’s offices as part of an investigation into “whether Swedbank broke insider information rules by disclosing to its largest shareholders that a TV program on money laundering allegations was about to be broadcast.”

Drastic measures needed
“The negative side effects” of a merger between Deutsche Bank and Commerzbank “could be substantial, creating a bank that is too systemic to fail and too complex to manage,” writes Isabel Schnabel, a member of the German Council of Economic Experts in an op-ed. “If Germany is serious about solving the problem of low bank profitability, it may have to break a taboo and allow for more fundamental structural changes in the sector.”

Split decision
A former trader at Barclays was convicted in a London court for conspiring to rig the Euribor interbank lending rate while a fellow trader was acquitted. The jury has yet to reach a verdict on a third defendant. Euribor is the average interest rate at which European banks lend to each other.

Quotable

“Do the president and I think a lot alike on a lot of things? Absolutely. That’s one of the reasons he picked me to be an economic adviser and be on the Fed, because we share a lot of the same economic philosophy. [But] I don’t think anybody can reasonably say I am a sycophant for Trump, because I’m not.” — Stephen Moore, who President Trump said he will nominate to serve on the Federal Reserve Board.

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B-to-B payments Payment processing Marijuana banking Cyber security Whistleblower AML Citigroup
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