Google’s proposed move into banking with its Cache checking account “could further alarm lawmakers already anxious about the concentration of increasingly intimate personal information within a few big tech companies,” the Financial Times reports. “With Facebook running into widespread resistance to Libra, Google has said it planned to work with existing financial services providers, including its first partners Citigroup and Stanford Federal Credit Union.”
Processing Content
While Google says the target audience for the product will be “mobile-first users, the specifics of what will be offered are still being worked out,” the New York Times says. And its “initial ambitions for Cache are fairly modest. It is not seeking a banking charter — something it could have done through a new regulatory pathway intended to encourage fintech experiments — and will instead rely on its bank partners to hold and manage customers’ accounts.”
“The arrangement will give Google a potential trove of new data about spending habits, income and other details, valuable for better understanding consumers,” the Washington Post notes. “But it will probably face scrutiny as part of a broad investigation of Google from regulators and state attorneys general.”
“One big unanswered question” about Cache “concerns how customers’ transaction data will be used,” American Banker reports. “It’s a question that could resonate not only with wary consumers, but also with banks that are worried about big tech’s ambitions in financial services, as well as lawmakers and regulators concerned about the tech industry’s growing reach.”
On hold
Federal Reserve Chair Jerome Powell told Congress’s Joint Economic Committee Wednesday the Fed was unlikely to lower interest rates again after making cuts in three straight meetings since July. “We see the current stance of monetary policy as likely to remain appropriate as long as incoming information about the economy remains broadly consistent with our outlook of moderate economic growth, a strong labor market” and stable inflation, the Journal reports. “Of course, if developments emerge that cause a material reassessment of our outlook, we would respond accordingly,” he added.
“The remarks suggest that the central bank’s outlook has not changed since its last monetary policy meeting in October and that the Fed’s rate-setting committee is likely to leave its interest rate target range unchanged at 1.5% to 1.75% in December, when it next meets,” the FT says.
“Powell also used the appearance to emphasize the central bank’s freedom from the political process,” the Times reports. “Politics plays absolutely no role in our decisions,” he said. “We won’t make mistakes of character or integrity.”
"Powell’s comments came 24 hours after President Trump bashed the Fed for not slashing interest rates more,” the Post says. “Trump suggested the Fed lower interest rates so much that they would effectively be negative, a rare phenomenon that could lead banks to pay people for taking out loans. Asked about this, Powell largely dismissed the idea and said it would ‘certainly not be appropriate’ in the current economic environment.”
The chair remains hopeful for developing a joint Community Reinvestment Act plan with the Office of the Comptroller of the Currency and Federal Deposit Insurance Corp., American Banker reports.
Separately, Patrick Harker, the president of the Philadelphia Fed, said the Fed “should hold steady for a while and watch how things unfold before taking any more action.” Harker, who doesn’t have a vote on the Fed’s monetary policy committee this year, said he would have voted against the Fed’s three previous rate cuts.
Wall Street Journal
Revved up
Auto loan originations rose to $159 billion in the third quarter, “the second highest level on record,” according to a report from the Federal Reserve Bank of New York. “Auto debt now accounts for nearly 10% of overall household debt, up from about 6% when the recession ended in mid-2009.” The rise is being driven by a “decade-long economic expansion” and lower interest rates. Home loans also grew in the quarter.
New fuel efficient SUV's on a car dealers lot for sale.
Adobe Stock
Financial Times
Trader’s plea
Citigroup’s former head of European spot foreign-exchange trading told an employment tribunal in London Wednesday that senior managers at the bank “condoned the sharing of clients’ information with currency dealers at rival banks.” The trader, Rohan Ramchandani, who was acquitted of forex rigging by a New York jury last year, is pursuing an unfair dismissal claim against the bank in London, alleging the bank fired him to curry favor with regulators investigating forex rigging. He has also sued Citi in the U.S. for $112 million.
“People are buying better quality, more durable cars which last longer but they cost more. Car prices are going up, so household auto debt is increasing.” — Bronson Argyle, a professor at Brigham Young University, explaining the rise in automobile loans outstanding
The newest version of the House housing bill would make a ban on institutional investors owning some homes less harsh than the Senate version by removing a seven year mandate on selling build-to-rent homes.
The National Credit Union Administration Tuesday submitted a rule to the Office of Management and Budget stating that federal law preempts state laws on interchange, blocking an Illinois statute banning the collection of swipe fees on taxes and tips.
The Federal Financial Institutions Examination Council — whose members include federal bank regulators — issued a proposal Tuesday to overhaul the bank supervisory ratings process, the first such revision in 30 years. The proposal would reduce the weight management grades have on supervisory ratings and would require rating downgrades to be tied to explicit financial risks.
JPMorganChase's shareholders have occasionally floated proposals to make sure the bank's lobbying dollars match its public statements. At the company's annual meeting on Monday, support for one such measure was down significantly from a similar proposal in 2023.
Flagstar Bank extended Joseph Otting's employment contract by one year and granted him new stock awards. Simultaneously, the bank promoted two executives to serve as co-presidents, in a move that could be a hint at CEO succession plans.
The two fintechs will increase distribution of a 'pay by bank' option that has picked up steam in recent years as merchants and consumers seek relief from card fees.
