Goldman nabs GM credit card; did banks make any money on PPP loans?

Receiving Wide Coverage …

In the driver’s seat

Goldman Sachs “is buying General Motors’ credit card business for about $2.5 billion, a deal that furthers the Wall Street giant’s push into Main Street lending.” The bank, “a newcomer to the credit card space, won the bidding over Barclays, people familiar with the matter said, handing the Wall Street firm more than a million GM cardholders and their roughly $8.5 billion in annual spending.”

Goldman and Capital One, “which has issued GM’s card since 2012 and still has about a year left on its contract, have agreed on the outline of a deal, including the purchase price,” the Journal said. “It is the second win in the credit card sector for Goldman, which launched its first credit card last year with Apple Inc. and is on the hunt for other deals in co-branded cards.”

The portfolio has about $2.5 billion in outstandings, or about what Goldman is paying, the Financial Times said.

Money for nothing

“Banks collected at least $13 billion in fees on Paycheck Protection Program loans, but the largest lenders say costs wiped out most of what they took in,” the New York Times reports. “The banks that were the largest lenders under the PPP, handing out government-backed loans and collecting a fee from taxpayers for their trouble, now say their expenses were so high that they expect to make next to nothing on the loans.

“Some banks say their profits will be eaten up by the costs they incurred to make the program work, including all-nighters and rushed technology projects during four frenzied months of lockdowns and business closures. Others, including many smaller lenders, expect the revenue from the program to pad their profits.”

Separately, two government watchdog agencies told Congress Thursday that the Treasury Department and Small Business Administration “have not yet forgiven any of the 5.2 million PPP loans issued to small businesses and need to do more to combat fraud,” the Washington Post reported.

Crypto AML charges

The co-founders of BitMEX, “one of the world’s largest exchanges for trading cryptocurrency derivatives, have been charged with violating U.S. anti-money-laundering rules as American authorities ramp up enforcement in one of the world’s least regulated markets,” the Wall Street Journal reported. Samuel Reed, BitMEX’s chief technology officer, “was arrested in Massachusetts on Thursday,” while executives Arthur Hayes, Benjamin Delo and Gregory Dwyer remain at large.”

“BitMEX has received more than $11 billion in bitcoin deposits from accounts with U.S. connections since 2014 and has earned more than $1 billion in fees, the Commodity Futures Trading Commission alleged in its own civil lawsuit filed Thursday.”

“The charges are the latest in a years-long effort by the U.S. to crack down on a cryptocurrency market that was once largely unregulated but has moved more and more under the purview of governments,” the Financial Times said.

“BitMEX is far from the first cryptocurrency company to be suspected of facilitating criminal activity. But it is the largest and most established exchange to face criminal charges,” the New York Times said. “Prosecutors said BitMEX had taken few steps to limit customers even after being informed that the exchange was being used by hackers to launder stolen money, and by people in countries under sanctions, like Iran.”

Wall Street Journal

Going public

Caliber Home Loans, “one of the largest U.S. mortgage lenders, is preparing for an initial public offering that could value the company at more than $2 billion. Caliber is owned by private-equity firm Lone Star Funds and run by Sanjiv Das, a former executive at First Data and Citigroup.” It would be at least the third large mortgage lender to go public in recent weeks, following Quicken Loans’ parent and United Wholesale Mortgage.

Exodus

American banks doing business in Europe are “speeding up the movement of people and assets from the U.K. to the continent before a Brexit transition period ends Dec. 31. Hundreds of employees at banks including JPMorgan Chase, Goldman Sachs and Morgan Stanley are moving to Frankfurt, Paris and other European hubs before the transition period ends.”

“Accounting firm Ernst & Young estimates £1.2 trillion ($1.5 trillion) in bank assets are heading to continental Europe from the U.K., up from a projection of $1.3 trillion at the end of 2019. JPMorgan is moving around $230 billion in assets from the U.K. to its German operation, to support its trading and European client servicing there. U.S. banks in London say they are also transferring European clients on to new EU contracts one by one.”

Financial Times

You’ve been warned

This week’s $920 million fine against JPMorgan Chase for spoofing is a “blunt warning to banks to clamp down on high-speed financial market manipulation or risk blockbuster fines and criminal convictions for staff,” the FT says. “The size of the fine reflects regulators’ dissatisfaction with JPMorgan, one of the world’s largest financial institutions. But the settlement has also sent a message that spoofing is as serious a liability to banks as rate-rigging, corruption or money-laundering scandals.”

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