Receiving Wide Coverage ...
Pandit's Adventures in Fintech: Vikram Pandit has taken a stake in money transfer startup TransferWise. The ousted Citigroup executive has made a number of ventures in the fintech space since he left Citi in 2012, the Wall Street Journal says, including in marketplace lending startup Orchard Platform and student lending platform CommonBond. The exact value of his investment was not disclosed. TransferWise allows users to send and receive money at lower costs than banks’ money transfer services. Internet transfers account for about 5% of the $529 billion global remittances market, the Financial Times says. Pandit joined a rockstar lineup of venture capitalists invested in the same round, including Andreessen Horowitz, Sir Richard Branson and funds led by Peter Thiel. That round brought the London startup’s valuation to $1 billion.
Wall Street Journal
Do arbitration agreements do more help or harm to consumers? The Consumer Financial Protection Bureau is expected to propose new rules Wednesday that would expand individual borrowers’ rights to sue banks and credit card companies but block companies from using arbitration clauses to avoid class actions in consumer contracts for credit cards, checking and deposit accounts, prepaid cards and money transfer services, among other financial products. But while the proposal could substantially relieve consumers and “bring about much-needed changes in business practices," CFPB Director Richard Cordray says (in American Banker’s take on this story), it still has some potential for consumer harm.
Fifth Third Bancorp. in Cincinnati has agreed to settle charges related to about 1,400 defective mortgages it failed to report as such. The company admitted violations and voluntarily disclosed the reporting failures to the Department of Housing and Urban Development. The $85 million deal covers federal losses on about 500 defaulted loans originated between 2003 and 2013, for which HUD has paid insurance claims, and indemnifies the department for any losses it suffered from the other 900 defective potentially defaulted loans. Fifth Third is one of a number of banks whose lending and loan servicing practices before the financial crisis have been investigated.
New York Times
Morgan Stanley has hired Credit Suisse head of tech Anthony Armstrong. According to an internal memo, Armstrong, who leads technology for Credit Suisse’s Americas group, will move to Morgan Stanley in three months to co-lead its global technology M&A group alongside current head Mike Wyatt.
Bloomberg: A number of financial institutions penned a letter to House Financial Services chairman and ranking member, respectively, Jeb Hensarling and Maxine Waters, pressing the significance of a CFPB oversight commission. The banking industry fought the establishment of the CFPB and opposed Elizabeth Warren’s leadership – neither of which went the way of the industry. Now, Barry Ritholtz is pressing for a five-member oversight commission to “hobble the agency by giving oversight to a five-member board.” Ritholtz says it may only strengthen the hand of Elizabeth Warren.