Uncle Sean’s Update 12/11/20

• CDC moratorium on evictions for nonpayment of rent is set to expire on 12/31.  There are some proposals being kicked around right now, but congress has proven that they just can’t get their shit oops I mean “stuff” together (the current $908B bill that recently stalled had about $21B in rental assistance included).  This could potentially impact multi-family loans on bank balance sheets next year as landlords may not be able to service their debt due to lack of funds from rental payments. https://abcnews.go.com/US/eviction-crisis-looms-millions-rely-federal-moratorium-expiring/story?id=74589282

• Congress passed the Anti-Money Laundering Act of 2020 this week (part of the broader NDAA bill).  End result is it will hopefully help lower bank compliance costs and alleviate the burden of collecting beneficial ownership information when corporations apply for bank accounts.  Now all U.S. corporations will have to register the identity of their beneficial owners in a Financial Crimes Enforcement Network (FinCEN) database – https://www.bankingdive.com/news/anti-money-laundering-fincen/591894/

• BaaS – We continue to add more fintech companies (One VIP, Grain, Immediate, DailyPay and more), but no new additions to Sponsor Banks (still at 70)
  • We added a new Direct Bank this week (Harq Bank – a division of Iroquois Federal Savings & Loan) which brings our total up to 78

• Gohenry (UK Challenger Bank) is coming to America and just raised $40M – https://www.bankingdive.com/news/gohenry-us-expansion-funding-Alex-Zivoder/591811/.  This is a PFM Ap targeting kids which is a great concept, but the space is starting to get a little crowded (Jasby, Greenlight, Copper, Indigo, Numoola to name a few).  They are partnering with Community Federal Savings Bank who also sponsors Greenlight.

• Crypto is still buzzing!  This gets really deep really quick, but the punch line is we are starting to track this internally as a separate list from “normal” bank de novo activity.  Basically, the SEC and the OCC are driving a lot of regulatory changes for crypto firms in order to provide custody services for digital assets, and we are starting to see a lot of applications for bank charters (and conversions from Trust to OCC National Charters) – https://www.nasdaq.com/articles/us-lawmakers-ask-sec-to-clarify-broker-dealer-rules-2020-12-09
  • BitPay has applied for a national bank charter with the OCC –  https://www.pymnts.com/news/banking/2020/bitpay-seeks-united-states-bank-license/
  • Paxos applied for OCC conversion from New York Trust to National Bank Charter – https://www.nasdaq.com/articles/paxos-becomes-latest-crypto-firm-to-file-for-federal-bank-charter-2020-12-09
  • Anchorage applied for OCC conversion from Trust to National Bank Charter – https://www.coindesk.com/custodian-anchorage-seeks-charter-from-crypto-friendly-us-bank-regulator-occ
  • Two Ocean and Kraken recently were awarded Wyoming Bank charters – actually Special Purpose Depository Institution (SPDI) charters.

• Betterment CEO and Founder Jon Stein steps down as Sarah Kirshbaum Levy takes the reins –  https://www.thinkadvisor.com/2020/12/08/betterment-ceo-and-founder-jon-stein-resigns/

• CFPB is making some noise:
  • LendUp was sued by the CFPB for violating the Military Lending Act (MLA).  Hey Grace – remember this is the company that “helps” (cough cough) underbanked individuals by granting short-term 60 day credit for roughly 250% APR (that is not a typo).
    • The MLA puts a cap of 36% APR on credit terms for active-duty service members and their covered dependents.  “The Bureau alleges that since October 2016, LendUp has made over 4,000 single-payment or installment loans to over 1,200 covered borrowers in violation of the MLA.” https://www.consumerfinance.gov/about-us/newsroom/consumer-financial-protection-bureau-sues-lendup-loans-llc-allegedly-violating-military-lending-act/
    • I did not know there was such a law, and I am not usually a proponent of big government or stringent regulations – but in this case, I am grateful the CFPB is watching over our active-duty service members.  And during the week of December 7th nonetheless – shame on you LendUp.

• Earned Wage Access (EWA) got some clarification from the CFPB.  Basically if you are dealing with the payroll provider with no recourse to the employee then you are not establishing credit (and not susceptible to Reg Z Truth in Lending requirements) – this includes companies such as PayActiv, DailyPay, Immediate, and Even.  However, if you are dealing directly with the employee, then you are establishing credit.  This points more towards the dreaded term “payday lender”, and includes companies such as Brigit, Dave, and Earnin.  Here is the more lengthy description – https://www.jdsupra.com/legalnews/cfpb-issues-advisory-opinion-on-earned-40259/

• We lost Chuck Yeager this week.  A celebration of life at 97 years – Godspeed Brigadier General, Charles “Chuck” Yeager.  AP News published a great article about him; and is definitely worth reading – https://apnews.com/article/chuch-yeager-dies-at-97-air-force-f027e8960916cbd8094ab9f05ec2cbf2

• IPO frenzy that still has me scratching my head (my inner Alan Greenspan is mumbling “irrational exuberance”)….
  • Doordash IPO (NYSE: DASH) – initiated at $102 per share ($39B valuation); opened at $182; and closed the week out at $175 – https://finance.yahoo.com/quote/DASH?p=DASH&.tsrc=fin-srch
  • AirBNB IPO (NASDAQ: ABNB) – initiated at $68 per share ($47B valuation); opened at $146; and closed the week out at $139.25 – https://finance.yahoo.com/quote/ABNB?p=ABNB&.tsrc=fin-srch

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And……  Here is the part that everyone has been waiting for (you can stop scrolling down now)….

 
Random Uncle Sean Stuff:

• My daughter passed her driving test!!!!  There goes the neighborhood (and my car insurance bill)!
• Cedar pollen is on the rise here in the Texas Hill Country – oh dear God….
• I grilled avocado the other day – served it on a hamburger and it was fantastic!
• Me and Dave got grounded once when I was around 5 or so because he convinced me to eat some Roly-polies / pill bugs.  He said they taste like French Fries….  They didn’t by the way….
  • Our parents grounded Dave because he should have known better (he is 9+ years older than me); and they just didn’t appreciate the sibling humor involved.  They grounded me because…  well…  I guess they were just utterly dumbfounded that I was that stupid.  LOL!!!!
• Patrick, we have a couple of years to prep – Paris 2024 here we come baby (insert Rocky theme music here)!!!!  https://www.espn.com/olympics/story/_/id/30470282/breakdancing-gets-olympic-status-debut-paris-games-2024

  
Have a GREAT WEEKEND and stay safe!!!

Uncle Sean