Uncle Sean's Update - 7/29/22

Happy Friday!!!
 
Here is the Uncle Sean Update for 7/29/22:
 

• High five to our friends at Computer Services, Inc. (CSI) (OTCQX: CSVI) as a Premier Sponsor to the Bankers Helping Bankers platform (BHB) furthering BHB’s mission of empowering community banks!!!  It is an awesome feeling partnering with great people representing A+ firms such as CSI and IBAT as we collectively help community banks across the US thrive as the backbone of our nation’s economy.

 

• It’s Fed Week!!!  As widely expected, the FOMC unanimously voted to raise rates by 75 bps bringing the Fed Funds target range to 2.25% - 2.50%, and anticipates that ongoing increases will be appropriate.  Significant quantitative tightening also continues as previously advertised. 
  • Key points - This marks total increases of 225 bps over the last 5 months.  Chairman Powell went on to state that the  “labor market has remained extremely tight with unemployment rates near 50 year low, job vacancies near historical highs, and wage growth elevated”…  While another “unusually large” rate increase may be appropriate at the next meeting in September, it will be dependent upon the data received.  As the current interest rate increases are absorbed into the economy, It likely will become appropriate to slow the increases.  More info below in case you want to get your inner “Fed geek on” like me (I completely “dork out” even more in the Random Uncle Sean comments at the bottom with a water hammer reference)!
    • FOMC Statement
    • FOMC Implementation Note
    • Transcript of Chairman Powell's Press Conference (26 pages)
    • Press Conference Video (54 minutes)

 

• Treasure Financial (B2B fintech) partners with Grasshopper Bank as their BaaS sponsor to help businesses optimize yield on idle cash balances.  A quick look into the FedFis FinTech Analytics© database shows us that this marks Grasshopper Bank’s entrance into the realm of BaaS Sponsor Bank (by internal FedFis definition) just a few short months after FIS partnership with Treasury Prime embedded finance offering.
  • More on Grasshopper 2.0 and their “re-launch”
  • More on Treasure Financial (SOC2 certified by the way – NICE!!!)

 

• Congrats to Jim Magats, former Plaid exec of nearly two decades, is now the new CEO of MX beginning August 17.

 

• Rakuten appears to be discontinuing the Rakuten Cash Back Visa® Credit Card program (issued by Synchrony) effective September 17.

 

• Pretty sure everyone saw this one coming….  The FDIC and Federal Reserve Board issued a letter demanding Voyager Digital cease and desist from making false or misleading representations of deposit insurance status.
  • However – I was a little bit surprised to see that the FDIC issued an Advisory today to FDIC insured institutions on FDIC deposit insurance and the risks of dealing with crypto-asset companies specifically.
  • And the FDIC didn’t stop there…  They ALSO issued a Fact Sheet: What the Public Needs to Know About FDIC Deposit Insurance and Crypto Companies today to help consumers understand FDIC deposit insurance coverage and address some misconceptions from crypto companies (further extended to “any non-bank entity, including crypto custodians, exchanges, brokers, wallet providers, and neobanks”). 
    • Punchline to BaaS Sponsor Banks – make sure you know what / how your fintech partner is marketing that juicy FDIC logo and deposit insurance.

 

• Speaking of Voyager (if you listen closely you can literally hear my boss rolling his eyes as I continue to geek out a little too much and too often over this Voyager Bankruptcy case study)….  Just in case you were wondering (and in direct reference to the FDIC statements above ↑)……  It is my understanding that Voyager customers that have CASH balances at Metropolitan Commercial Bank (MCB) still can’t access their cash.  Yep I’m talking about cash held at MCB via the prepaid debit card, not the rehypothecated (I hate that word by the way – and yes, I had to triple check to make sure I spelled it right - LOL) crypto assets. 
  • Voyager froze all accounts (includes the cash held at MCB) effective July 1 and then filed Ch 11 BK on July 6.
  • Now those funds are temporarily part of the bankruptcy stay, but will likely be released after a court hearing on August 4th.  Uncle Sean is not an attorney, but my research likens this to titled property held on behalf of a third party that will be excluded from the remaining bankruptcy estate and returned to the owners.  That’s the good news.  The bad news is that these consumer cash funds have been frozen since July 1…..  Sure hope those consumers didn’t need to pay any bills or buy any food…..
    • Point is that we have an organized process when a bank fails that protects consumers and mitigates any delayed access to funds.  Not so much when a fintech fails – and FBO accounts have the potential to make the matter even messier if not managed properly. 

 

• FTX US (crypto exchange) opens up stock trading in the US as a clear competitor to Robinhood – but without the “p-word” [payment for order flow (PFOF)].  I actually downloaded the FTX.US Pro mobile app and found it to be very user friendly although I admit that I did not make any trades.

 

• Notable FinTech funding for the week:
  • Finexio (B2B Accounts Payable platform ) raised an initial raise of $14M which is part of a total $30M in Series B round at a $100M valuation.
  • Balance (e-commerce payments) raised $56M in Series B funding round.
  • Guava (fintech banking solution targeting Black SMB entrepreneurs) raised $2.4M in pre-seed funding.
  • Aptos Labs (blockchain) raised $150M in Series A round led by FTX Ventures just four months after raising $200M.
  • Nada (RE fintech platform including a home equity accessing debit card) raised $8.1M in Seed round.
  • Retool (low code app dev platform) raised $45M in C2 funding round with a $3.2B valuation.

 
 
Random Uncle Sean Stuff:

• Thinking out loud…..  In about 9-18 months, I wonder if we will end up looking back at our current macroeconomic / inflationary environment and re-confirm the term “transitory” in relation to: 1) the greater long-term impact of a pandemic induced global shutdown; 2) free money stimulus effect; 3) subsequent re-opening; and 3) the “recovery waves” that may continue to ensue for years.  Like when you drop a pebble into a pond – the closer to the epicenter, the higher the peak to trough effect.  I find myself looking at this in aggregate with what I have been referring to as the monetary policy equivalent to trying to soften a “water hammer effect” to the economy. 
  • DANG – I really need to get a hobby!!!! 😊  See what happens when they leave me unsupervised for too long!!!!  LMAO!!!!
• When Tanner Mayo and Bre Berich get married this fall, what are the odds that Tanner will refer to Bre as his ex-girlfriend after that; or maybe it’s Bre that refers to Tanner as her ex-boyfriend forevermore???  😝
• Okay – I know I used these last year, but they are even more relevant now with about a gazillion days over 100 degrees this summer and no rain to speak of….  How hot is it here in Texas???
  • It’s so hot I saw a bird pull a worm out of the ground with an oven mitt!
  • It’s so hot that Siri asked me to dip her in a glass of ice water (while Alexa watched – now it got weird)!
  • It’s so hot my chicken just laid an omelet!
  • It’s so hot that the catfish are already fried when you catch ‘em!   
  • It’s so hot that the seatbelt buckle makes a legit branding iron!
  • It’s so hot, the frozen pizza I bought was ready to eat by the time I got home!
  • Finally, you know your from Texas when you have to wear gloves in the middle of summer so you can grab the steering wheel without blistering your hands!!!!

 
 
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.