Finance

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April 28, 2021
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Fintech Complaints to CFPB Nearly Tripled in Q1 of 2021

The Consumer Financial Protection Bureau is, by most accounts, just gearing back up. With Rohit Chopra awaiting Senate confirmation to lead the agency, the CFPB has already stepped up rulemaking and enforcement, and that’s likely to continue in the Biden administration. 

 

But the landscape looks different than the last time the head of the CFPB pledged robust enforcement, and fintech is now one of the most important areas of focus in the industry. With that in mind, I dug into the agency’s data. Here’s some of what I found:  

 

  • The volume of complaints in the fintech category rose 184 percent in the first three months of 2021 compared to the same period last year. 
  • This trend is especially prevalent in some of the newsiest companies of the year: Complaints for Robinhood and Coinbase surged in 2021. 

 

So what does this mean for CFPB enforcement? Melissa Baal Guidorizzi, former senior fintech enforcement official at the agency, said the sharp rise in complaints is a “good indicator” of where enforcement will focus going forward. 

Read more here.

 

Top Stories

  • The White House revealed a $1.8 trillion spending package focused on education and safety-net programs for families, including two years of free community college, prekindergarten for children ages 3 and 4 and paid family and medical leave for all American workers. The plan would also devote hundreds of billions of dollars to combating child poverty and providing affordable child care. (The Washington Post
  • To pay for part of the spending package, the White House said it would use tax hikes on the wealthiest Americans, including raising the top personal income tax rate to 39.6 percent for the top 1 percent of earners and increasing the capital gains rate to 39.6 percent from 20 percent for those earning $1 million or more. The plan also calls for eliminating the carried interest tax break used by private equity and hedge fund managers, in addition to increased tax audits on high earners. (Bloomberg)  
  • The Federal Reserve is likely to hold interest rates steady after the central bank’s policy-setting committee concludes its two-day meeting today. Officials will likely begin planning out when they expect to scale down the Fed’s bond purchases. (The Wall Street Journal)
  • JPMorgan Chase & Co. Chief Executive Jamie Dimon said in an internal memo that bankers should begin making arrangements to be back in the office on a rotational basis by early July. Dimon said that U.S. offices will be open beginning May 17, and that vaccines are not mandatory but that the bank strongly recommends that employees get one. (Financial Times)
 

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Events Calendar (All Times Local)

 

What Else You Need to Know

General
 

Biden CFPB pick urged to fix ‘racist policies’ at agency

Katy O’Donnell, Politico 

Rohit Chopra, President Joe Biden’s nominee to lead the Consumer Financial Protection Bureau, told lawmakers last month that racial inequality is “reinforced and exacerbated” by workplace racism. Now, complaints of pay discrimination may be one of the first big challenges he addresses at his own agency.

 

Biden administration faces heat from Democrats over delay issuing workplace safety standard

Eli Roseberg, The Washington Post

The Biden administration is more than six weeks late on a self-imposed deadline to set a workplace safety standard for the coronavirus, angering labor advocates who had hoped the White House would move quickly to fill a void left by the Trump administration. President Biden issued an executive order on his second day in office that directed the Labor Department to issue an emergency temporary standard, or ETS, by March 15, if it found one to be necessary.

 

FTC Head Says Supreme Court Ruling Puts More Than $2 Billion for Cheated Consumers at Risk

Brent Kendall, The Wall Street Journal

The Supreme Court’s recent ruling curbing the powers of the Federal Trade Commission to recover money for cheated consumers threatens 24 active court cases in which it is seeking to return more than $2 billion to the public, the agency’s top official told lawmakers Tuesday. “I cannot emphasize enough the importance of quick congressional action,” FTC Acting Chairwoman Rebecca Kelly Slaughter, a Democrat, said in testimony before a House Energy and Commerce subcommittee that held a hearing to consider a legislative response to the decision.

 
Fiscal Policy
 

Biden’s Plan Would Eliminate Private Equity’s Coveted Tax Break

Sabrina Wilmer and Melissa Karsh, Bloomberg

Private equity’s most lucrative tax break is in peril once more. Included in President Joe Biden’s plan to fund an ambitious expansion in social spending, released Wednesday, is a call on Congress to abolish the preferential treatment given to a key method of compensation for private equity managers.

 

Did Emergency PPP Loans Work? Nearly $800 Billion Later, We Still Don’t Know

Scott Horsley, NPR

When the pandemic hit last year, Andrew Leckie, who runs half a dozen restaurants and a catering company in Edmonds, Wash., was forced to lay off more than 200 employees. Demand for his oysters and craft cocktails had dried up and his businesses were in trouble until a program intended to provide loans to small businesses like his came to his rescue.

 

What’s in Biden’s $1.8 trillion American Families Plan?

Rachel Siegel, The Washington Post

The Biden administration revealed a $1.8 trillion spending and tax proposal that puts hundreds of billions of dollars toward child care, paid family and medical leave, tuition-free community college and a slew of other initiatives. Details of the package, called the “American Families Plan,” come before Biden’s joint address to Congress on Wednesday. 

 

How Biden Would ‘Step Up’ Taxes on Inheritances

Allyson Versprille, Bloomberg

Taxing wealth as it passes from generation to generation is an issue that stokes passions on both sides of the U.S. political divide. President Joe Biden is reinvigorating the debate with a plan to target a tax break that benefits recipients of inherited property.

 

Democrats are among the doubters of Biden’s plan to tax the rich

James Politi et al, Financial Times

Lawmakers in affluent districts are set to push back given the party has built up a wealthy support base.

 
Economy and Monetary Policy
 

The Fed’s patient approach could be tested soon.

Jeanna Smialek, The New York Times

The Federal Reserve is expected to keep its monetary policy in crisis mode when it concludes its latest meeting on Wednesday, even as the economy improves. The question now is how long it will take for the recovery to progress enough to inspire the central bank to change course.

 

As Economy Rebounds, Manufacturers Face New Hurdles

Nelson D. Schwartz, The New York Times

Matt Guse would hire a dozen machinists — if only he could find them. The owner of MRS Machining, a maker of precision metal parts in rural Augusta, Wis., Mr. Guse finds business is rebounding so quickly as the pandemic’s effect eases that his 47-worker shop is short-handed.

 
Banking
 

Citi Says Revlon Accountability Review Found No Clawbacks Needed

Jennifer Surane, Bloomberg

Citigroup Inc. said a full review conducted after the lender mistakenly sent $900 million to a group of investment firms concluded the bank didn’t need to claw back any pay from executives. The company made its employment and compensation decisions based on recommendations in a “full accountability review” by an outside law firm, Chairman John Dugan said during the firm’s annual meeting on Tuesday.

 

US Senate probes Credit Suisse after allegations of tax settlement breach

Owen Walker, Financial Times

Finance committee chair writes to bank’s chief after ex-employees claim violations of 2014 deal.

 

Justice Dept. Asked to Examine Whether Swiss Bank Kept Helping Tax Dodgers

Katie Benner, The New York Times

The chairman of the Senate finance panel asked Attorney General Merrick B. Garland on Tuesday for information about whether Credit Suisse continued to help rich Americans defraud the I.R.S. even after it signed a settlement agreement with the Justice Department vowing to stop the practice. At issue is a retired professor named Dan Horsky, whom Credit Suisse helped to evade tax payments on $200 million in assets.

 

Credit Suisse: plotting a comeback after ‘costly mistakes’ took it to the brink

Owen Walker and Stephen Morris, Financial Times

New chair António Horta-Osório will look to overhaul bank’s risk management culture after the Greensill and Archegos failures.

 

Deutsche Bank Avoids Archegos Meltdown, Reports Profit Surge

Patricia Kowsmann, The Wall Street Journal

Deutsche Bank AG reported its strongest quarter in seven years thanks to activity at its investment bank, while the lender escaped the implosion of Archegos Capital Management that badly hit some rivals. The news sent Deutsche Bank shares up more than 7% on Wednesday, close to their highest level for the year.

 

Deutsche Bank Sees Remote Work for Up to Three Days a Week

Jeff Black and Daniel Schaefer, Bloomberg

Deutsche Bank AG is working on plans to allow staff to work from home up to three days a week, as it considers one of the most flexible return-to-office policies among large international banks. The Frankfurt-based lender is “moving to provide our employees some additional flexibility in hybrid working models,” Chief Financial Officer James von Moltke said in an interview on Bloomberg Television Wednesday.

 
Financial Products and Investments
 

U.S. watchdog mulls guidance to curb SPAC projections, liability shield -sources

Anirban Sen et al., Reuters

The U.S. securities regulator is considering new guidance to rein in growth projections made by listed blank-check companies, and clarify when they qualify for certain legal protections, according to three people with knowledge of the discussions.

 

Visa emerging from pandemic ‘storm’ as spending volumes recover

Noor Hussain, Reuters

Visa Inc (V.N) is emerging from the COVID-19 pandemic, its top boss said on Tuesday, as a surge in online shopping helped the world’s biggest payment processor beat Wall Street estimates for quarterly profit and counter sluggish travel spending.

 
Housing and GSEs
 

The Pandemic Changed Where Americans Live

Arian Campo-Flores et al., The Wall Street Journal

The pandemic has spurred a burst of mobility that is accelerating changes in where and how Americans live. Some young people are leaving cities earlier than is typical, while some older people are speeding up retirement moves.

 

Rent Crisis Spirals for Landlords Awaiting $47 Billion in Relief

Prashant Gopal and Noah Buhayar, Bloomberg

More than a year since Covid-19 lockdowns put millions of apartment dwellers out of work, almost $47 billion in U.S. government rent relief is hitting the streets. For many landlords, it’s coming much too slowly.

 

U.S. Home Prices Continued to Climb in February

Nicole Friedman, The Wall Street Journal

Home-price growth accelerated to a new 15-year high in February, as homebuying demand remained strong and the number of homes for sale held near a record low. The S&P CoreLogic Case-Shiller National Home Price Index, which measures average home prices in major metropolitan areas across the nation, rose 12% in the year that ended in February, up from an 11.2% annual rate the prior month.

 
Financial Technology
 

Ant IPO-Approval Process Under Investigation by Beijing

Lingling Wei, The Wall Street Journal

Beijing is investigating how Jack Ma won speedy approvals for his Ant Group Co.’s stock listing last year, according to people with knowledge of the matter, signaling that state actors are getting embroiled in the crackdown on the tech billionaire. The central-government investigation, which started early this year, focuses on regulators who greenlighted the initial public offering, local officials who advocated it and big state firms that stood to gain from it.

 

Robinhood Has a Customer Service Problem

Peter Rudegeair, The Wall Street Journal

Trading on Robinhood Markets Inc. takes seconds. Getting an account problem fixed can take weeks. Robinhood is wading through a flood of customer-service requests stemming from the trading app’s soaring popularity and its January decision to curb trading in highflying stocks including GameStop Inc. 

 
Opinions, Editorials and Perspectives
 

A Tax Break for the Rich to Bail Out Profligate States

Tomas J. Philipson, The Wall Street Journal

Seventeen House Democrats from New York wrote their leaders April 13 threatening “to oppose any tax legislation that does not include a full repeal of the SALT limitation.” That’s an acronym for state and local taxes, only $10,000 of which are deductible on an individual tax return under the Tax Cuts and Jobs Act of 2017. The White House has signaled its openness to abolishing the cap.

 

The Republican Party Is Failing in Too Many Ways

Peter Suderman, The New York Times

Have you heard about the Republican arguments against President Biden’s economic plans? Me neither.

 






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