Wall Street Journal
Google last week said it planned to ban advertising from payday lenders, in a bid to offer protection to its consumers from predatory loans. Oh by the way, Google is an investor in the payday lender LendUp. Google has been involved in every equity round that LendUp has staged, via its parent company's venture capital arm. LendUp has raised a total of $150 million in debt and equity, making it one of Silicon Valley's best-funded startups.
LendUp describes itself as an alternative to payday loans, because it doesn't charge early-payment penalties, nor does it roll over loans when borrowers don't pay. But LendUp does float loans with APRs that can top 600%. Thus, LendUp will no longer be able to advertise on Google, per its payday loan ad ban. "We … think it paints with too broad a brush," said LendUp CEO Sasha Orloff.
"Google is applying pressure from the outside, and we applaud them. LendUp is trying to change the system from the inside," Orloff wrote in a blog post that was previewed by the Journal.
Time to tap the brakes on the blockchain. Worldwide domination by the blockchain technology probably isn't as imminent as some believe, panelists at the MIT Sloan CIO Conference said on Wednesday.
Blockchain supposedly has all the answers for the banking, supply chain, healthcare and fine jewelry businesses. But it's not going to be easy to implement because it's not proven how the technology can be scaled, there's no way to know what its regulatory constraints will be, there aren't enough people who understand it to put into broad use, and there's a lack of standards on how to implement it. At least that's what some members of the panel believe.
Now come activist investors with a lobbying trade association. William Ackman, Carl Icahn, Daniel Loeb, and other billionaire shareholder activists have formed the Council for Investor Rights and Corporate Accountability, or Circa. They want lawmakers and the public to know that while, yes, they are personally enriched as a result of their activities, but so are the companies and the U.S. economy.
After the formation of at least two different lobbying groups to represent online marketplace lenders, and other new lobbying outfits for fintech dabblers and small-business lenders, maybe the activists felt left out.
Maria Contreras-Sweet, head of the Small Business Administration, "absolutely disagree[s]" with the contention of M&T Bank Chairman Robert Wilmers that most of the SBA's lending authority supports larger loans. "We wanted to make sure that people who had been disenfranchised and had not had access to the SBA now could," she said in a Q&A. "It is showing up. Community Advantage loans under $150,000 are up."
Another voice has risen to give support to the under-siege online marketplace lending sector. Online lenders like the troubled Lending Club "provide needed credit to millions of Americans. And recent legal developments have already begun to choke off the supply of marketplace credit to borrowers who need it most," writes Columbia Law School professor Robert Jackson.
Much of the $15 billion in loans arranged by online marketplace lenders in 2015 went toward consumers paying down higher-interest credit card debt, according to a Treasury Department report. These lenders also provide an important source of funding for consumers with lower FICO credit scores.
"For these households, the ability to pay down costly credit-card debt with cheaper marketplace loans can be the difference between financial freedom and personal economic ruin," Jackson said.
But legal challenges based on state usury laws could put an end to the valuable competition that online marketplace lenders bring to the field of credit-card loans. If the legal challenge stands, the supply of marketplace credit to borrowers with sub-650 FICO scores could dry up.
"Borrowers who cannot gain access to marketplace credit will likely choose instead higher-cost sources like credit cards with interest rates as high as 30%, making it harder to repay their debts," Jackson said.
Clif Bar has become a big supporter of a proposal to let young farmers get forgiveness on student loans. The maker of energy bars wants Congress to add young farmers to the Public Service Loan Forgiveness Program, which already allows teachers and others who work in government and nonprofits to get student loan forgiveness after 10 years of interest-only monthly payments.
It's already difficult to get young people into farming because of the inherent risks of the profession. That threatens food supply. But there are critics of the PSLF program, saying it's an arbitrary decision as to which professions get to benefit.
The four European banks subject to U.S. living will requirements are seeking an extension of the deadline for when they must file new documents. UBS, Deutsche Bank, Barclays and Credit Suisse also want to know when they'll get the results from their 2015 living wills, as the Fed is taking a long time to grade those papers. Understandably, the European banks would like to know what they did wrong in their 2015 living wills before they file their new ones.
New York Times
Banking chiefs have turned down the heat on their criticism of bank regulations, as they've come to be concerned about a backlash against the industry, according to a Breakingviews column. Lobbying by the securities and investment industry fell 8% from 2011 to 2015. And bankers are now pushing Rep. Jeb Hensarling, R-Texas, to drop his bill to repeal Dodd-Frank.