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Uncle Sean's Update - 12/10/21

12/10/2021

 
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Happy Friday!!!
 
Don’t forget to sign up here to have the Uncle Sean Update sent straight to your inbox.  Here is the Uncle Sean Update for 12/10/21:
 
  • November CPI came in at an annual 6.8% this week – slightly higher than expectations and the largest 12 month increase since 1982 (not a typo).  Core CPI came in at 4.9% (0.8% for November alone).  Here is the link to the BLS detailed report if you want to see the breakdown.
    • November Job Growth came in at 210,000 (lower than expectations of 573,000), but unemployment fell to 4.2%.
 
  • Saule Omarova withdraws her name from Senate consideration as nominee to lead the OCC.
 
  • The OCC doubles down on overdraft reform adding on to the CFPB report that we covered last week (Banks' Deep Dependence on Overdraft Fees)…  In a speech to Consumer Federation of America, acting Comptroller of the OCC Michael Hsu reiterated the need for overdraft reform citing income and wealth inequality (“it’s expensive to be poor”) and referring to the existing system of overdraft practices as regressive (“reverse Robin Hood”) whereas the fees are being paid by the most financially vulnerable.  Something tells me we haven’t heard the last of this topic…
 
  • Probably not inconsequential to the above (LOL), JPMorgan Chase becomes the latest large bank to provide more customer flexibility regarding overdrafts beginning in 2022:
    • Customers will have until the end of the next business day to resolve overdrafts up to $50 before incurring any fees (JPM already increased the buffer amount from $5 to $50 earlier this year, but was required to correct the account by the end of the current business day), and:
    • JPM will begin allowing early access (up to two days) to direct deposit funds.
      • As mentioned before, Uncle Sean sees “early access to direct deposit” as largely symbolic and temporary in nature as Real Time Payments (FedNow, same day ACH, RTP by The Clearing House) will eliminate ACH Risk eventually.  As such, payroll providers will not be making early payments to your bank account anymore to allow time for “clearing” – thus rendering “early access” extinct.
 
  • American Express continues their push into business banking:
    • Kabbage (Direct / Digital Bank under the American Express National Bank charter) launches Kabbage Funding to provide small business lines of credit between $1,000 and $150,000.  This complements Kabbage Checking for business that was launched in Summer of 2021 (Green Dot is the sponsor issuer for the Kabbage Debit Mastercard); and the newly announced Kabbage Payments for businesses to accept card payments featuring next-day deposits and a 2.25% transaction fee (sponsored by Fifth Third Bank, N.A.).
    • American Express National Bank is also running a rewards promotion for business checking featuring a $300 bonus for account opening (conditions apply of course) plus 1.1% APY on funds up to $500,000 (rate subject to change).  Hmmm – looks pretty darn competitive to the alternative of business overnight sweep accounts without the hassle and fee structure.
 
  • Visa launches new Global Crypto Advisory Service through their Visa Consulting & Analytics (VCA) division to help merchants and banks “advance their own crypto journey” and is currently working with UMB Bank in the U.S. 
 
  • The OCC released their Semiannual Risk Perspective report for Fall 2021 (32 pages).  Pretty much common knowledge as we navigate through the pandemic - not to mention common sense, but here are the key takeaways:
    • Elevated operational risk regarding ransomware and evolving sophistication of cyber attacks (both internal to the bank as well as third and counterparty risk).
    • Overall credit quality is seen as stable, but historically low NIM, loan demand, and dissipation of PPP fee income creates strategic pressures (I know – shocking, right?)
      • CRE and other mortgage exposures remain as an elevated concern due to expiring federal stimulus and moratorium programs.
    • And the ever present reminder to engage with your regulator regarding crypto-assets.
      • “The OCC is approaching crypto-related activities in the federal banking system very carefully with a high degree of caution and expects its supervised institutions to the do the same.”
 
  • Better.com (mortgage lending platform) needs to do better – especially if they are going to become a publicly traded entity.  In case you missed it, here is the Better.com CEO laying off 900 employees on a mass Zoom call just a few days after receiving an advanced $750M cash infusion in an amended agreement from their acquiring SPAC (Aurora Acquisition Corp.).  As Human Resource Teams around the globe cringed in horror, Better CEO Vishal Garg ultimately apologized for the blunder and lack of respect for the employees; but the damage had been done and at least three more top communications executives have resigned since.  Not surprisingly, the SPAC merger for Better to go public is now being delayed – of course the official word is that the delay is to obtain regulatory approval of the amended merger terms….  Yeah right.
 
  • Crypto executives testified before Congress this week.  Here is the memo doc from the House of Representatives Committee on Financial Services titled Digital Assets and the Future of Finance: Understanding the Challenges and Benefits of Financial Innovation in the United States (6 pages).  Payments Dive has a good summary.  Essentially:
    • It was noted that the discussions were engaging, encouraging, and civil (which is not always the case in congressional testimony – just ask ole Mark Zuckerberg – LOL)
    • Another surprising moment is that all parties seemed to encourage the need for some level of regulation and specifically regulatory clarity.
    • However, caution was recommended citing unnecessarily onerous regulations could have the unintended consequence of pushing crypto activity underground or offshore exchanges that have little to no compliance programs.
    • There will be more to come……
      • Cryptocurrency will be back on the agenda next week in Congress when Sen. Sherrod Brown (D-OH), chairman of the Senate Banking Committee, has called for a hearing on stablecoins.
      • In the interim, we are all still patiently waiting on the Federal Reserve report on central bank digital currency due any day now.
 
  • Of course, not wanting to miss a moment to poke the SEC in the eye with a nod to Congress saying “I told you so” - Coinbase (seemingly still with a massive grudge) launched a DeFi yield product on Dai, a stablecoin that is designed to be pegged to the US Dollar.  It’s available to customers in over 70 countries – just not the U.S……
    • This comes immediately following the Congressional testimony where Coinbase reiterated that strict regulation would push crypto activity overseas…..
    • If Coinbase DeFi yield products sound familiar, it is…  Recall a few months ago where the SEC threatened to sue Coinbase over their Coinbase Lend product forcing Coinbase to abandon it – but not before the Coinbase CEO went on a public rant.
 
  • Financial Venture Studio announced the Fall 2021 Cohort of Early-stage FinTech companies that will receive “both an investment of capital from the Studio and will receive direct support through a bespoke networking program.”  Here is the lineup:
    • Copper – teen banking app
    • Telivy – cyber insurance
    • Canary – community-funded hardship benefit platform
    • Frich – personal finance app
    • Lunch Payments – instant payments for receivables
    • Ivella – banking products for couples (Split Account)
    • Varos – API driven real-time market KPIs
    • Ascend – integrated insurance payments platform
 
  • FinTech funding is still running red hot:
    • Fireblocks (crypto institutional infrastructure onramp) raised $400M in Series E at an $8B valuation.  This comes just a little over four months from their $310M Series D at a $2B valuation.
    • Nearside (SMB challenger fka Hatch) raised $58M in Series B funding
    • Stacked (SEC-registered crypto robo-advisor) raised $35M in Series A funding round
    • HomeTap (alt lender) raised $60M in capital.  HomeTap allows home owners to access debt-free capital in exchange for a share of their home’s future value.
    • Mysten Labs (crypto-asset and blockchain infrastructure start up) raised $36M in Series A funding
    • Incode Technologies (identity verification and authentication) raised $220M in Series B funding round at a $1.25B valuation in the red-hot digital identity space
    • Hummingbird (integrated AML and SAR compliance and investigation software for banks and fintechs) raised $30M in Series B
    • Majority (neo immigrant PFM and mobile app) raised $27M in Series A to further develop their advisor program, KYC initiatives (including bypassing SSN by authenticating Foreign Gov’t ID along with proof of US address), and expansion to different migrant communities  
    • Claroty (cyber-physical security for critical infrastructure) raised $400M in Series E funding
    • Tipalti (B2B mid-market cloud-based AP and accounting automation firm) raised  $270M in Series F funding round at a $8.3B valuation.  This is up from their $2B valuation at their $150M Series E round in Oct 2020.
    • TRM Labs (crypto tracing and investigation platform) $60M in Series B funding.  Valuation was not disclosed but the company stated that revenues have grown at 600% YoY since 2019.  TRM combines “cross-chain data with threat intelligence, advanced analytics, and intuitive visualizations to help organizations detect crypto fraud and financial crime.”
    • Monzo (UK digital challenger – Monzo USA is still in “waitlist” mode) raised $500M in new capital at a $4.5B valuation despite continuing and widening losses
    • Rho (neo business bank) raised $75M in Series B funding round to further invest in tech and “cover the entirety of corporate spend and cash management.”
    • Mambu (SaaS banking platform) raised $266M in Series E round at a $5.5B valuation as the company cites 120% YoY growth in 3Q2021
    • Adlumin (cybersecurity) raised $25M in Series B funding round. Adlumin is an ICBA ThinkTECH Accelerator program alumni.
                   
  • Lastly, we celebrate the life and patriotism of Bob Dole who passed away on Sunday at the age of 98.  A decorated U.S. Army WWII veteran and American Statesman with a sharp wit and even sharper sense of humor.  AP News has a good tribute, but I would encourage all to visit robertdole.org and read his amazing biography and take a look at his life in pictures – particularly his post-political career where he remained busier than ever as a patriot and philanthropist.
 
 
Random Uncle Sean Stuff:
  • 15 days until Christmas Day!!!!!!!!  Surely ole Saint Nick wasn’t watching all year long, right?  Asking for a friend…  😊
  • The College Football Playoff Selection Committee announced the final Top 25 Rankings going into Bowl Season with the Playoff Semifinal schedule as:
    • #4 Cincinnati vs. #1 Alabama in the Goodyear Cotton Bowl Classic on Dec. 31 @ 2:30 PM CST
    • #3 Georgia vs. #2 Michigan in the Capital One Orange Bowl on Dec. 31 @ 6:30 PM CST
    • Check out CBS Sports for a complete schedule of all 42 Bowl Games that start next Friday!
  • This is the time of year where everyone and their dogs make predictions for 2022…..  Forget about it – Uncle Sean doesn’t do predictions (other than to predict that I won’t do predictions)!  But what I will do for the rest of this year is look back and highlight the Top 21 Dad Jokes and crazy Uncle Sean moments (according to me) that I posted for 2021.  Five each week going forward with six for New Year’s Eve!  Here we go:
    • #21.  If Apple makes a car……   Do you think it will have ‘windows’???
    • #20.  What did 50 Cent do when he got hungry?  58!
    • #19.  Aunt Patty yelled from the other room, “Do you ever get a shooting pain across your body like someone’s got a voodoo doll of you and they’re stabbing it?”  I said, “No….”  She responded: “How about now?”
    • #18.  Spring-time allergies in the Texas Hill Country are so bad, local drug dealers are busy converting Meth back into Sudafed!!!
    • #17.  Not a Dad Joke, but a Funny Uncle Sean Moment nonetheless from last March - Looking back at one year of Covid-19 this month, here are a few notable terms / phrases that I was pleasantly ignorant of before the pandemic began:  Virtual Happy Hour, Anti-Masker, Social Distancing, Quarantini (I actually like that one), Covidiots, Amazon Spendemic, Coronacut (when your wife shaves your head), and TP Hoarders.  Remember when Corona was just a beer?  Wearing a mask in the bank lobby is now normal and required…  And my personal favorite – Covid-19 gave me 20 (as in pounds gained)!!!!
 
 
Have a GREAT weekend and please stay safe!!!
 
Uncle Sean
 
 
Sometimes known as Sean Mayo – contact me directly for scope and pricing of custom reports / analysis projects at smayo@fedfis.com | 214-604-6961 – or you can contact FedFis Sales Team at 512-960-0911 | info@fedfis.com #FedFisHasTheData FedFis
 
FedFis, LLC disclaimer – The views and opinions of Uncle Sean are of his own and may not necessarily represent the views, endorsements, and/or opinions of FedFis, LLC – we all know he’s a little bit different; but that’s why we love him.

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