Walmart picks Capital One; CFPB to emphasize collaboration

Receiving Wide Coverage ...

And the winner is …: Walmart has chosen Capital One to issue its store credit card as well as its co-branded general purpose card, ending its nearly 20-year relationship with Synchrony Financial. The move “is the biggest shake-up in retail credit card partnerships since Costco dumped American Express and moved to Citigroup in 2016,” the Wall Street Journal says. “That switch is still rippling throughout the industry.” It’s also “a major blow to Synchrony, the largest U.S. store-card issuer. Walmart is one of Synchrony’s five biggest accounts, and it accounts for about 19% of Synchrony’s store-card portfolio.” Wall Street Journal, American Banker

Michael Nagle/Bloomberg

Synchrony’s stock dropped 10% on the news.

'No' to bitcoin ETF: The Securities and Exchange Commission rejected a proposal by Cameron and Tyler Winklevoss to offer a bitcoin exchange traded fund, “the latest indication that regulators are still uneasy with the volatile and largely unpoliced cryptocurrency market,” the Journal says. The SEC’s decision “underscores its mistrust of a Wild West-like market where manipulation may drive the asset’s price swings.”

The ETF would have been listed and traded on CBOE Global Markets. But the SEC said CBOE “had not put forward convincing arguments in favor of listing the Winklevoss Bitcoin Trust and dismissed its suggestion that bitcoin markets are inherently resistant to manipulation,” the Financial Times says.

Wall Street Journal

Kinder, gentler: The Consumer Finance Protection Bureau “has restarted enforcement using a more collaborative approach than in the Obama era.” Acting Director Mick Mulvaney told the paper the bureau would “emphasize negotiating with target companies to settle disputes,” rather than moving quickly to file lawsuits, and would reward companies for self-reporting problems. But he said he would “absolutely” authorize lawsuits when warranted.

For sale: Wells Fargo is looking to sell its Eastdil Secured real estate division as it “continues to shed noncore businesses.” Wells Fargo bought Eastdil, which was founded in 1967, in 1999. The unit is part of the bank’s Wells Fargo Securities division.

Moving out: The biggest drop ever in foreign purchases of American homes may “bring relief to waves of American house hunters who have struggled to compete in affluent neighborhoods with wealthy buyers from abroad.” Purchases by foreign buyers dropped 21% in the 12 months ended in March, to a total of $121 billion from $153 billion a year earlier, according to the National Association of Realtors.

“While foreigners make up a small share of the overall U.S. housing market, they are concentrated near the high end of the market and are more likely to pay in cash and bid above the asking price. That has challenged local buyers to come up with larger down payments and pay more.”

The housing market could use the help. While the homeownership rate rose to 64.3% in the second quarter, it “remains far below the peak of 69.2% in late 2004, and a full percentage point below the 50-year average. It has risen tepidly this year despite strong economic growth.”

Landmark deal: Fannie Mae sold $6 billion of adjustable-rate securities priced to the secured overnight financing rate, or SOFR, the planned replacement for Libor, which is due to be phased out in 2021. “Investor demand for the Libor-replacement proved strong enough that it could inspire other borrowers to use the new benchmark.”

We’re number three: State Street launched the exchange traded fund industry but its share of the market has shrunk to just 17.3%, down from nearly half 15 years ago, and it has falled to third place. “How State Street squandered its first-mover advantage for one of the most popular financial products ever created shows that being first can sometimes be as much of a hindrance as a head-start.”

Financial Times

Internal review: UBS is reviewing its policy for handling sexual misconduct allegations following claims by a former employee that she was raped by a coworker last September and then complained to CEO Andrea Orcel about how the bank handled the matter.

Hidden risk: The banking sector in the U.S. is “far safer now” compared to 10 years ago, and European banks “have at least improved.” But “while risk no longer sits in the banking system, it has not vanished. It grows ever clearer that risk has been moved, primarily to the pension system. This means that the long-term dangers in the financial system have become more insidious: easier to ignore but ultimately even more dangerous.”

New York Times

The voice of PayPal: PayPal CEO Dan Schulman gives a wide-ranging interview, detailing his life and why he believes the company is thriving. “When we started partnering with Visa and Mastercard and JPMorgan Chase and Citi, nobody ever thought that PayPal would be allies with those companies,” he said. But giving customers choices and avoiding unnecessary fights could be "one of the key things that catapulted PayPal’s success in recent years."

Quotable

“If I can protect consumers without filing lawsuits, why would I file lawsuits? Lawsuits are sort of the last resort.” — Acting CFPB Director Mick Mulvaney about the bureau’s more collaborative approach to enforcement.