MONDAY JULY 12, 2021 VOL. 186 No. 131 AMERICANBANKER.COM Follow us on Twitter @AmerBanker How lenders will spend federal 5 windfall on low-income communities Fine-tuning fees The Treasury Department is awarding $1.25 Two of the priciest rewards cards have adjusted their annual billion to 863 community development financial institutions through the Rapid fees. Will more follow? Response Program, which allows See story on page 5 and credit unions to earmark funds for mortgages and business loans in underserved markets. Page 6 Issuer January 2021 July 2021 In Plaid, European neobanks Amex Platinum $550 $695 6 find an open banking passport The San Francisco data aggregator, which J.P. Morgan Private also operates out of London, provides Reserve $595 $550 international connections between fintechs Chase Sapphire and traditional banks. Page 7 Reserve $550 $550 Mobile tech company to introduce a savings app Citi Chairman $500 $500 7 for gender transitions Bliss, which is part of a suite of apps under U.S. Altitude Reserve $400 $400 development by the mobile technology company Euphoria.LGBT, is working with Jiko to offer a tailored savings account for Source: Staff research transgender individuals preparing for their transition. Page 8

Up or down? Issuers adjust Wells Fargo hires JPMorgan’s dailybriefing 3 fees to compete for luxury 8 Bei Ling as head of HR spending Wells CEO Charlie Scharf, a former Jamie Banking regulators expected JPMorgan Chase is cutting the annual fee of Dimon protege, has surrounded himself with 1 to advance Biden agenda its top-tier card while American Express is JPMorgan Chase alumni. Ling will start in despite ‘acting’ tag raising the fee of its own premium card. Both October and join the company’s operating The Federal Housing Finance Agency banks hope to win consumers’ travel dollars committee. Page 9 recently became the third agency along with by finding the sweet spot between cost and the Office of the Comptroller of the Currency rewards. (See chart above.) Page 5 KeyCorp hires Wells Fargo and Consumer Financial Protection Bureau 9 executive to fill new ESG role without a Senate-confirmed leader. But U.S. Bank deal would double Jennifer Eastes is tasked with spearheading analysts say the appointment of interim 4 size of asset management unit and accelerating environmental, social and chiefs gives the administration even more The Minneapolis company has agreed to buy governance efforts at the Cleveland-based control over regulatory initiatives. Page 2 PFM Asset Management. Like many in the company. Page 9 industry, it is hunting for additional sources Five takeaways from the trial of noninterest income. Page 6 BofA debuts crypto 2 of ’s banker 10 research team in latest Prosecutors have rested their case against Wall Street push onetime bank CEO Stephen Calk, who created a new team allegedly approved millions of dollars in dedicated to researching cryptocurrencies, loans in exchange for a potential job in the marking Wall Street’s latest push to capitalize Trump administration. Federal Savings Bank on investors’ frenzy for digital assets. Page 9 employees have testified against Calk, whose lawyers have sought to shift blame to… Page 3 MONDAY JULY 12, 2021 AMERICANBANKER.COM PAGE 2

the [Office of the Comptroller of the Currency]. of the gate to signal a change of direction for BIDEN ADMINISTRATION She is the key counterparty required for their agencies compared to prior leadership any changes to the contract between the under Trump. Yet acting heads appointed government and Fannie and Freddie,” Seiberg during the Trump administration also Banking regu- said. “I think Treasury has a lot of influence attempted to make significant policy. over how the CFPB views policy.” Former acting Comptroller Brian Brooks, lators expect- The Biden administration is waiting for who served in the final months of the Trump Congress to vote to confirm Federal Trade administration, crafted a controversial rule Commission member Rohit Chopra to serve that would have prohibited banks from ed to advance as CFPB director. The administration has discriminating against legal industries that also struggled to find a consensus around are politically disfavored. But the agency Biden agenda a candidate to serve as comptroller of the halted the rule’s publication following Brooks’ currency. departure in January, and Hsu has signaled he Some analysts say the vacancies at the won’t revive it. despite ‘act- financial regulatory agencies stymy the Biden Some see other decisions by Hsu, who was administration’s ability to advance its policy named acting comptroller in May, as a sign ing’ tag agenda because acting directors traditionally that he intends to be more than a caretaker. haven’t used their leadership position to One of his first moves was to appoint a new By Neil Haggerty implement major policy changes. chief counsel for the OCC, former Fed official July 09, 2021 But sources close to the financial services Benjamin McDonough. More recently, he WASHINGTON — The Supreme Court’s industry say that the role of acting leaders at reorganized the OCC’s leadership structure decision last month allowing President Joe regulatory agencies has changed. so that supervision units report directly to the Biden to fire the Trump-appointed head of “Traditionally, acting [directors] were seen comptroller. the Federal Housing Finance Agency not only as caretakers,” said Meg Tahyar, co-head of “There was a little bit of surprise that resets the policy trajectory of Fannie Mae and financial institutions and fintech at Davis [Michael Hsu] quickly moved to install a new Freddie Mac’s regulator. It also meant yet Polk & Wardwell. “But today, it’s a different general counsel to the OCC,” said a financial another agency without a Senate-confirmed ballgame. It’s just all different today. We’ve services lobbyist who spoke on the condition leader. seen in the recent past ‘activist’ acting, and of anonymity. “For Hsu to kind of make that Three financial services regulators are now we’ve seen ‘caretaker’ acting.” move very quickly after being installed as led by an “acting” appointee. After Biden Jeff Naimon, a partner at Buckley, said that acting suggests one of two things. Either you’re ousted FHFA Director Mark Calabria, senior the officials appointed as acting leaders at the going to be acting for a while and expect to agency official Sandra Thompson was quickly financial regulators have the ability to advance be acting for a while, or maybe this was an named as the interim director. She joined substantial policy priorities. approved sort of decision with others in the Dave Uejio, acting director of the Consumer “The people who are already in place are administration, that in this sort of caretaker Financial Protection Bureau and acting fully capable of pushing the administration’s role, this was a move they wanted to make.” Comptroller of the Currency Michael Hsu. agenda forward, because they’re not just Meanwhile, Uejio, who has been serving as Without permanent heads in place, long- caretakers,” Naimon said. “They are actors.” acting CFPB director since Kathy Kraninger term policy goals such as reforming the Both Uejio and Hsu moved aggressively out resigned in January, vowed to quickly penalize Community Reinvestment Act and charting a future for Fannie and Freddie could be slowed, some observers said. But analysts say Established 1836 One State Street Plaza, 27th floor, New York, NY 10004 that the acting leaders are likely taking their Phone 212-803-8200 AmericanBanker.com cues from officials within the White House and the Treasury Department, giving the Editor in Chief Alan Kline 571.403.3846 Copy Editor Neil Cassidy 212.803.8440 administration greater power to set policy. “The most powerful financial regulator Managing Editor Dean Anason 770.621.9935 Reporters/Producers is [Treasury Secretary] Janet Yellen,” said Jaret Seiberg, managing director at Cowen Executive Editor Bonnie McGeer 212.803.8430 Laura Alix 860.836.5431, Kate Berry 562.434.5432 Washington Research Group. “I would look Miriam Cross 571.403.3834 Washington Bureau Chief Joe Adler 571.403.3832 to her for guidance as to what the regulatory Jim Dobbs 605.310.7780 agencies are going to do.” Executive Editor, Technology Yellen worked with Hsu when was Federal Penny Crosman 212.803.8673 John Heltman 571.403.3847, Allissa Kline 716.243.2679 Reserve chair. Treasury is also a key player Hannah Lang 571.403.3855 in determining the parameters around the Community Banking Editor Paul Davis 336.852.9496 John Reosti 571.403.3864, Gary Siegel 212.803.1560 government’s ownership and eventual release Contributing Editor Daniel Wolfe 212.803.8397 of Fannie and Freddie. Kevin Wack 626.486.2341 “There is a former colleague of hers running

For up to date and complete coverage go to AmericanBanker.com MONDAY JULY 12, 2021 AMERICANBANKER.COM PAGE 3 firms that didn’t provide relief to military a senior fellow at the Brookings Institution. not make this loan, because that would mean veterans during the coronavirus pandemic “Time is a precious commodity and much of it he would not get a position with the Trump and signaled a focus on racial equity when he has been wasted without nominees.” administration,” testified Anna Ivakhnik, a took the helm. But Seiberg said that the acting directors former employee at The Federal Savings Bank. “Uejio has been extraordinarily active and working at the agencies enable administration Calk, who stepped down as the $1.08 energetic in changing the agency’s direction,” to craft policy. billion-asset bank’s chairman and CEO in said Naimon. “For this administration, this is a pretty 2019, will not testify in his own defense, one At the FHFA, Thompson, a former official good situation,” said Seiberg. “You have a of his lawyers said Thursday. He faces two at the Federal Deposit Insurance Corp., is very strong Treasury secretary, who seems to felony charges — financial institution bribery already seen as a potential candidate to serve be calling the shots. And it’s hard to believe and conspiracy to commit financial institution a full five-year term at the housing finance that policies that these acting directors put in bribery. agency. place are going to be reversed by permanent Prosecutors allege that Calk approved two “Everybody thinks she’s super qualified,” nominees that the Biden administration loans to Manafort totaling $16 million in return the financial services lobbyist said. “She’s got eventually puts forward.” for assistance in snagging a senior role in the this great background, both at the FDIC and at Trump administration. Calk interviewed in FHFA. I think there’s a growing sense that she early 2017 for the under secretary of the Army may very well be the acting for an awful long CRIME AND MISCONDUCT post, but he did not ultimately get a job in the time. They may never nominate someone and administration. just let her do the job as acting. The thought What follows is a recap of key testimony being, why go through the hassle of another 5 takeaways during Calk’s trial, which could wrap up as confirmation in a 50-50 Senate where every early as next week. confirmation takes up valuable floor time?” from the Tahyar said that the numerous openings Scaramucci disclaimed knowledge of at the financial services regulators could be business ties a result of the Biden administration’s focus trial of Paul Scaramucci, a financier who was part of the on policy priorities outside of the financial “Tiger Team” interviewing candidates for top services space. Manafort’s posts in the Trump administration, testified “It’s hard to get a consensus on who to that he agreed to get Calk an interview as a nominate and there are other priorities,” said favor to Manafort. Tahyar. “The things that are happening in the banker But Manafort, who was later imprisoned on financial sector, in terms of regulatory reform financial fraud charges before being pardoned right now, are important but not urgent. We’re By Polo Rocha by then-President , never not dealing with a house on fire situation.” July 08, 2021 mentioned that he was in talks with Calk about The financial services lobbyist added that Prosecutors wrapped up their case loans, according to Scaramucci. Democrats in Congress may not want to waste Wednesday in the bribery trial of Stephen Calk, Calk also did not raise that relationship in time confirming permanent agency leaders the onetime bank CEO accused of approving his numerous conversations with Scaramucci, when other legislative priorities are more millions of dollars in loans in exchange for a who said that Calk was unusually persistent in pressing. potential job in the Trump administration. his follow-ups. “Knowing how challenging nominations During the two-week trial, prosecutors have Scaramucci testified that he would not are and how time-consuming they are and portrayed Calk as motivated by a lust for power have recommended Calk for a job interview the fact that they want to potentially do this when he approved loans to former Trump if he had known about his business ties to infrastructure deal on the floor in July, why not campaign chairman Paul Manafort. Defense Manafort. save some time and not bother nominating attorneys have argued that Calk was unaware In an early wish list that Calk sent to people and just let the actings do the job?” the of Manafort’s financial troubles at the time the Manafort, he expressed interest in becoming financial services lobbyist said. loans were approved, and have also attacked secretary of Treasury, Commerce and Defense, Aside from the openings at FHFA, the the credibility of a key government witness. according to prosecutors. Calk later pursued OCC and the CFPB, there is an open seat The trial, held in federal court in Manhattan, the secretary of the Army post, though the job on the Federal Reserve Board of Governors has featured testimony from a top official at had already been reserved for Vincent Viola, and a vacant vice chairman position at the the Office of the Comptroller of the Currency the founder of the electronic trading firm Virtu FDIC. Some observers say that the Biden and onetime White House communications Financial, who was later nominated for the administration’s inability to fill these positions director Anthony Scaramucci. But much of the Army role but quickly withdrew. hinders its ability to enact a new regulatory drama has involved employees of the - With that job out of the picture, Calk sought agenda. based bank where Calk was chief executive, as an appointment as under secretary of the “One-eighth of the Biden presidency is defense attorneys have sought to pin blame on Army, and he interviewed with the transition over and we don’t even have nominees for the bank staffers even as lower-level employees team for the post. comptroller of the currency or the vacancy on have pointed the finger at their former boss. Calk’s lawyers, however, noted that the the Federal Reserve Board,” said Aaron Klein, “There was no way that Steve Calk would interview was just that — an interview.

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Scaramucci had less power than those closer Manafort’s loans an average risk rating. The and one issue at the trial involves the value of to Trump, such as his son-in-law Jared sign-off from the underwriting department is a the collateral that he pledged as security. Kushner and top advisor Stephen Bannon, “very inconvenient truth for the prosecution,” Schoeman, Calk’s lawyer, has argued that Calk’s lawyers stated. one defense lawyer said. the loans were not a “sweetheart deal,” since To ultimately land the job, Calk would they had appropriately high interest rates and have needed to get sign-off from top Trump Witnesses sowed doubt about the cred- valuable collateral to protect Federal Savings transition officials, as well as Trump himself, ibility of a key prosecution witness Bank if the loans were to fail. and to clear the FBI’s vetting process before Calk’s lawyers have also placed blame on He noted that Calk at one point sought to get being confirmed by the Senate. Dennis Raico, a former senior vice president Manafort to post a mansion in the Hamptons “All you had the power to do is get Mr. Calk at the bank, who they said wanted to earn a — which he characterized as Manafort’s wife’s an interview at Trump Tower … for a job you commission and helped Manafort defraud the “treasure” — as collateral. thought he was never going to get?” defense bank. Calk “didn’t think he was doing anything attorney Paul Schoeman asked Scaramucci, Raico hid information from Calk and corrupt because he thought these were great who responded affirmatively. underwriters and consistently painted loans for his bank,” Schoeman argued. Manafort in “the most glowing terms,” defense But prosecutors stated that banks are Bank staffers detailed their discomfort attorney Paul Schoeman said in his opening supposed to make loan decisions based on the with the loans statement. As a result, Manafort appeared to borrower’s creditworthiness, not the value of Federal Savings Bank employees testified be a “rock star in the world of politics” and the collateral. that they had reservations about both the “exactly the kind of big, wealthy customer Ivakhnik, Raico’s former assistant, said loans and Calk’s interest in leveraging that Steve Calk would want for his bank,” she thought it was very important for the his relationship with Manafort to land an Schoeman said. Hamptons property to be added as collateral, administration job. Raico was a key prosecution witness, who but noted that foreclosure “is not the end goal” “In my mind, the only reason [the loan] testified that it was unusual for Calk to become of a loan. wouldn’t die was because Mr. Calk wanted it as personally involved in a loan decision as he Brennan, the underwriter, testified that to continue to live,” said James Brennan, an did in Manafort’s case. “you never know how long it’s going to take underwriter at Federal Savings. Raico also stated that Calk asked him for you to foreclose.” He also cited uncertainty Prosecutors flagged an email that Brennan to call Manafort to ask if Calk was in the about the value of a property once foreclosure wrote to other bank officials, including Calk, running for Treasury secretary or secretary begins. And he flagged other underwriting after Manafort clarified that a property he of the Department of Housing and Urban concerns, such as income that Manafort owned in the Hamptons had an existing $3.5 Development. Raico said that he recorded received from sources in eastern Europe, million first mortgage. That amount was $1 the request in his notebook because it was which were later scrutinized during Manafort’s million higher than Manafort originally told “bizarre,” and ultimately did not make the call. own criminal trial. the bank, which had inquired about the issue But defense lawyers have had some success Manafort did not ultimately repay the after realizing Manafort did not own the during the trial in undermining Raico’s loans, and in 2018, a federal judge declared property “free and clear,” Brennan said. credibility. that Manafort-owned properties in Brooklyn “What the hell he just took the loan out at Under cross-examination, Ivakhnik said and the Hamptons were forfeitable to the U.S. the end of August how can he be $1,000,000 that after working with Raico, she thought that government. off!” Brennan wrote in the email. he was a “pathological liar,” while Brennan said Other red flags arose, including a sharp he did not trust that Raico provided all relevant A prosecution witness suggested that drop in Manafort’s credit score, an unpaid information to the bank’s underwriters. Calk’s Calk was not truthful with regulators. $300,000 credit card bill, difficulties verifying lawyers later said that Raico lied to the FBI Calk’s interactions with examiners from the Manafort’s income and the fact that Manafort about his job history and about getting a OCC have also been spotlighted during the was in default to another lender in connection master’s degree from New York University’s trial. with a property in California. business school. In one July 2018 meeting, Calk “strongly Calk’s lawyers argued that the bank’s CEO Defense attorneys also pointed to some denied” media reports about his interest in a was unaware of his staff’s grumblings about examples of Raico forwarding altered versions job in the Trump administration, according to the loan, saying that he was not looped in on of emails and withholding information from testimony by Blake Paulson, an OCC official several concerning developments. underwriters, including a negative property who attended the meeting and later led the They noted, for example, that Ivakhnik did appraisal as he waited for a new appraisal agency on an interim basis. not forward to Calk emails showing that the from a different company. The comment was significant and a bank had learned that Manafort’s credit score Prosecutors noted that Raico was not in a “bit surprising” because Calk offered the dropped below the level at which banks would position to alter other people’s emails. information voluntarily, Paulson said. typically lend. Calk also did not receive an At the start of another meeting, Calk was internal bank email that noted that Manafort The role of collateral in lending deci- “angry” because he thought the meeting was and his son-in-law, Jeffrey Yohai, appeared to sions has been a focus of testimony politically motivated, though the conversation be in default to a lender called Genesis Capital. Manafort was facing a slew of financial later became cordial, according to testimony Calk’s lawyers stated that Brennan gave problems at the time the loans were made, by OCC examiner Jack Gongaware.

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That meeting focused partly on a move travel rebounds this summer but business money,” Riley said. that Federal Savings made to enable a larger travel remains lethargic and economic trends Given ongoing COVID-19 spikes in loan to Manafort. Since the loan would have are uneven. different countries, it’s unclear when global pushed the bank over its legal lending limits to Consumers continue to be shy about using business and leisure travel will return to pre- a single borrower, the bank sold a portion of revolving credit, with some opting instead for pandemic levels. Travel rewards card issuers the loan to its holding company, a maneuver simpler installment loans from the likes of will likely continue to finesse the situation by that it had never made before. Affirm and Klarna, which have seen growing adding limited-time benefits, softening fees In response to questions from Calk’s usage over the last year while credit card and dangling incentives for card users to use lawyers, Gongaware said that another OCC receivables generally stagnated. rewards points immediately at a temporarily official determined the move did not violate “Business travel — which plays a big role higher value, Riley said. the bank’s legal lending limits. in driving spending on high-end rewards “Credit card issuers looking to retain credit cards — isn’t coming back until at existing cardholders and rebuild their least this fall, so elite credit card programs account base may need to remind consumers CREDIT CARDS face tough choices in keeping customers about the relationship value. This is especially interested,” said Wei Ke, managing partner at important as airline reward program points Simon-Kucher & Partners, a New York-based continue to pile up and stagnate, causing Up or down? consulting firm. mainstream credit card companies to juice Anxious to retain customers during the up reward benefits,” Riley said. Issuers pandemic, many luxury credit card marketers By easing the annual fee for its J.P. Morgan temporarily waived annual fees and shifted Reserve Card, Chase created an opportunity rewards categories away from travel to to send notification letters that remind adjust fees emphasize everyday spending on food and existing customers of the card’s value while entertainment, blurring differences between sweetening the deal without raising costs. to compete travel and lifestyle reward card programs, In addition to lowering the annual fee for according to Ke. its J.P. Morgan Reserve Card, Chase recently As a result, cobranded cards tied to airlines, added a $120 annual statement credit for for luxury hotels and cruise lines may face the biggest Peloton exercise bike membership, a perk challenges in recovering their momentum newly available to Chase Sapphire Reserve spending when travel broadly resumes. card users. Chase continues to give Sapphire “A lot of elite card issuers gave customers Reserve and J.P. Morgan Reserve customers By Kate Fitzgerald alternatives to travel for earning and burning 50% more value for points redeemed at July 08, 2021 points, but there were risks to that approach supermarkets and restaurants through Sept. American Express felt bullish enough because travel rewards programs have 30, 2021. about second-half spending to hike the historically been a very good way to make Through the end of this year, both Chase annual fee of its Platinum card 25% this customers stick around,” Ke said. cards’ customers may continue to earn points month, but JPMorgan Chase is taking a more The various industry disruptions portend toward a $300 travel credit card at gas stations cautious approach by trimming fees and a major credit card marketing battle in the and grocery stores, a perk not available with adding features to a top-tier credit card. months ahead, and American Express’s Chase’s lower-tier rewards cards. Defying a trend that has seen elite cards’ recent Platinum card fee hike was the Because card revenue was low during the annual fees steadily increase over the years, opening salvo, according to experts. pandemic, issuers must carefully balance Chase recently notified customers of a slight “Amex was very bold by going out with the cost of new benefits and incentives, said reduction in the annual fee for its J.P. Morgan a significant card-fee increase, but the Jessica Duncan, director of payments insights Reserve credit card. After Nov. 1, 2021, the Platinum card has always tended to be at the at Competiscan, a Chicago-based marketing card will cost $550 per year, down from $595, top of the spectrum in the luxury card sector,” analysis firm. with some new perks added. Ke said. “Maintaining these promotional programs The fee for the J.P. Morgan Reserve card, Other issuers — especially those with is costly for issuers so they’re structuring available only to private-banking customers, cobranded airline and hotel cards — will incentives to capture consumers looking to now matches Chase’s popular Sapphire likely tread carefully before raising fees, said switch to a new card from the one already in Reserve luxury consumer credit card, which Brian Riley, head of credit card advisory their wallet,” Duncan said. currently offers a hefty sign-up bonus at a for Mercator Advisory Group. While most price more than $100 lower than Amex’s travel card issuers’ fees have stayed steady, revamped $695-a-year Platinum card. Chase issuers may adjust them soon in response to was not available to comment on the changes. competitive and economic pressures. The diverging strategies for the highest- “A battlefield will amp up as many end mainstream credit cards from Amex cardholders whose annual fees were waived and Chase underscore complex marketing during COVID-19 face a decision on whether quandaries credit card issuers face as leisure or not airline cobrand cards are worth the

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and its sponsor, Hope Enterprise Corp., M&A CDFIs received the same amount. In recent years, appropriations to the CDFI Fund averaged around $250 million annually, U.S. Bank deal How lenders so the 2021 Rapid Response program was a significant boost. That was undoubtedly due would double will spend to the economic impacts of the coronavirus pandemic, which were especially acute in low-income minority communities, said Bob size of asset federal Rapoza, spokesperson for the CDFI Coalition, which is the lobbying group for community management windfall on development financial institutions. The CDFI Coalition expects the funds to be used in at least a couple of different unit low-income ways, according to Rapoza. For example, businesses in disadvantaged communities By Jon Prior communities still encounter difficulty in gaining access to July 08, 2021 credit, and CDFIs will use the funds to provide U.S. Bancorp has agreed to acquire PFM By Ken McCarthy flexible capital to help those businesses Asset Management, a deal that would double July 08, 2021 get back on their feet. In 2020, CDFI Fund the size of the Minneapolis company’s As they start to dig out of the financial financial assistance recipients made more advisory unit. hole the COVID-19 pandemic pushed them than 1 million loans or investments totaling With the acquisition, the amount of assets into, members of Hope Federal Credit Union more than $25.4 billion, he said. overseen by U.S. Bancorp Asset Management need, well, hope. “We also expect CDFIs to continue their will go from $160 billion to roughly $325 And it may be on the way. The Treasury efforts to improve housing and community billion, though PFM would continue to Department last month announced that it facilities in low-income communities,” operate as a separate business, U.S. Bank was awarding $1.25 billion to 863 community Rapoza said. said. development financial institutions across CDFIs financed roughly 40,000 units of Buying the Philadelphia-based PFM the country through the Rapid Response affordable housing last year, and in 2019 also would increase U.S. Bancorp’s role in Program. provided more than $3 billion for financing providing asset management advice to local CDFIs primarily operate in low-income of schools, health and other community governments. areas and are required to deploy the funds in facilities. “PFM Asset Management has a great those communities. “There is tremendous need for this reputation in the public space, and that’s a “The rapid response funds could not come assistance,” Rapoza said. testament to its talent,” Eric Thole, the head at a more important time to meet the needs According to the National Low Income of U.S. Bancorp Asset Management, said in a of our existing and future members,” said Ed Housing Coalition, the U.S. has a shortage press release Thursday. Sivak, executive vice president of policy and of 6.8 million rental housing units that are The move is representative of a larger communications for the $472 million-asset available to very-low-income renters. trend in which banks have been prioritizing Hope, which is based in Jackson, Mississippi. Hope FCU’s Sivak said the mortgage denial deals that generate noninterest income, as “They will be deployed among people and rate for Black residents earning over $150,000 borrowing rates remain near historic lows. places historically and currently overlooked is higher than the denial rate of white Nearly 37% of deals so far this year have by traditional financial institutions.” residents earning $40,000 a year, and 47.8% been for nonbank companies, like fintechs, For example, Sivak said 46% of Hope of Black households in the city of Jackson are insurers and asset management firms, members were unbanked or underbanked either unbanked or underbanked in contrast compared with 26% for all of 2019, according prior to joining the credit union. And three to only 15.5% of white households. to estimates from Raymond James. out of four members are Black in a region But it was not only credit unions that Marty Margolis, head of PFM Asset where significant racial disparities exist in benefited from the grant program. Management, said in the release that the banking and capital access. Carver Federal Savings Bank in New York $553 billion-asset U.S. Bancorp was an “A survey of our membership found 70% also received $1.8 million from the Treasury attractive buyer because of its commitment worry every day or nearly every day about Department. Those funds will be used to to “creating a diverse, inclusive and ethical debt, health care costs, job loss, paying for support grants and provide access to capital culture” for the firm’s government and housing or other bills,” Sivak said. “One of the to small businesses in the communities nonprofit clients. greatest needs among current and potential Carver serves, according to Michael Pugh, Financial terms of the deal, which is members remains access to high-quality and president and CEO of the $684 million-asset expected to close in the fourth quarter, were affordable financial services.” bank. not disclosed. The credit union received the maximum “The African American and Latinx award of $1.8 million through the program, communities experienced a significantly

For up to date and complete coverage go to AmericanBanker.com MONDAY JULY 12, 2021 AMERICANBANKER.COM PAGE 7 unfavorable financial impact because of the said in the press release. “These funds will fintechs looking to reach the U.S. and other pandemic,” he said. “Many businesses have allow us to further enhance our commitment international markets. closed or are struggling to survive. The capital to provide access to financial solutions that Plaid is connected to more than 12,000 will enable Carver to help those businesses meet people where they are.” banks in North America, Europe and the potentially recover.” Olson said the trade group reached out to U.K., according to Keith Grose, head of Carver has received several awards several credit unions in North Dakota and international at Plaid. U.K. This has helped from other programs with the CDFI Fund, South Dakota where it believed the grants the San Francisco-based technology firm Pugh said. Namely, it was granted the Bank would provide some needed community win open banking business from several Enterprise Award, which allowed Carver assistance, however the institutions either neobanks that are expanding internationally, to continue its commitment of reinvesting did not qualify or didn’t pursue the grant including the U.K.’s Cleo, Monzo and Revolut, approximately 80 cents of all dollars on opportunities. and Germany’s N26. deposit in the community through small- “I’m not sure why more of our credit unions Plaid also provides its APIs to U.K.-based business lending, financial education and are not taking advantage of the opportunities. payment card aggregator Curve, which plans workforce development programs. My assumption is the application process and to enter the U.S. and is expanding across About 20% of CDFIs are headquartered limited staff and resources in smaller credit Europe. Plaid’s U.S. location and connections in “persistent poverty counties” and about unions is preventing them from applying for to major U.S. financial institutions has helped 40% are headquartered in “majority-minority the grants,” Olson said. it win open banking contracts from U.K. and areas,” Treasury Secretary Janet Yellen said But it might not have been for lack of effort. European fintechs, Grose said. in a press release. “[The] questions ‘who CUNA Mutual spokesperson Rachel By providing application programming can access credit and capital and who can’t’ Strauch-Nelson said in early summer 2020 interfaces (APIs) for onboarding and linking are at the root of many long-term structural that the organization teamed up with Inclusiv, to customers’ existing bank accounts, Plaid problems in our economy,” she said. a trade group that advocates for credit unions supports financial services such as transfers The Native American population has also that serve low- and moderate-income people and account aggregation for fintechs that been hit hard, even before the coronavirus and communities, to increase the number of rely on consumers’ existing bank accounts. landed in the U.S. credit unions with the CDFI certification and The APIs are standardized, meaning users The $9 million-asset Lakota Federal Credit to push for increased funding for the CDFI of Cleo’s budgeting and savings app for Union on the Pine Ridge Indian Reservation Fund. example, have consistent experience in both in Kyle, South Dakota, was another grant The CMG/Inclusiv project was launched the U.K. and the U.S, according to Grose. recipient, according to Jeff Olson, president as one way to help underserved communities The Payment Services Directive 2 (PSD2) and CEO of the Dakota Credit Union access capital and in anticipation that mandates open banking in Europe, though Association. additional funds could be approved by market forces are spurring open banking Lakota Federal operates in a “very Congress in 2020 and beyond, she said. in other countries such as the U.S. Open economically distressed” area, and is one banking has grown quickly in the U.K. About of four credit unions that specifically serve four million consumer and business open Native American communities in the APIs banking payments were made in the U.K. Dakotas, Olson said. in 2020, according to the Open Banking “The credit union is trying to provide home Implementation Entity, a U.K. standards mortgages to members on the reservation, In Plaid, body. but due to the tribunal governance situation Plaid began providing PSD2 open and members not being able to personally European banking-compliant APIs in Europe two years own land, the process has been challenging ago, and is currently live in four EU countries for them,” he said. plus the U.K., where it connects to 90 British Greylock Federal Credit Union in neobanks financial institutions. Other firms offering Pittsfield, Massachusetts, was also awarded open banking technology in the U.K. and EU $1.82 million through the Rapid Response find an open include Yapily, Token, TrueLayer, and Tink. Program. In June 2021 Visa announced plans to buy The $1.5 billion-asset Greylock said in Tink after abandoning its bid to purchase a press release that it will use the capital banking Plaid, which faced pushback from the U.S. infusion to help stabilize local households Department of Justice. and businesses affected by the pandemic. passport Since there is significant regional variance It will also leverage the funds to support in financial services regulations and wealth-building activities by increasing By Robin Arnfield consumer needs, Plaid has a ‘think globally, regional home ownership, supporting more July 08, 2021 act locally’ approach, Grose said. Plaid small businesses and designing new financial After regulatory pressure scuttled tailors its products in accordance with local products. Visa’s deal to acquire Plaid, the account regulations for customers in each country “Greylock’s vision is to help our community aggregator is using data sharing connections as it expands. “Europe is more than just a thrive,” John Bissell, its president and CEO, to thousands of banks to attract European hub for Plaid, and we have plans to expand

For up to date and complete coverage go to AmericanBanker.com MONDAY JULY 12, 2021 AMERICANBANKER.COM PAGE 8 quickly across the continent. Our vision is banking app and make a manual payment by are to their transition-related goals. to ultimately build a global and inclusive retyping the payee name, account details and Bliss partnered with Jiko, in Berkeley, ecosystem,” Grose said. “In the U.S., we’re at a amount. This is tedious and error-prone.” California, to provide banking services. Jiko point where banks are starting to expose their Business usage of open banking payments bought a Minnesota bank last fall and thus APIs even without regulation.” is developing slowly in the EU because of API has its own banking charter. Plaid has data-sharing agreements with quality issues, according to Iana Dimitrova, After customers onboard, they will see the majority of the top-10 U.S. financial CEO of London-based OpenPayd. a menu of medical, social and legal goals institutions, and its Plaid Exchange is used Europe’s PSD2 regulations requiring the relating to transition and estimated costs, by hundreds of smaller U.S. banks to share creation of open banking APIs focused on the with or without insurance. As they save, account data with fintechs through APIs. development of APIs for European consumer Bliss will track their progress toward meeting In May 2021, Plaid and U.S. Bank agreed to retail banks, Dimitrova said. Consequently, targets, such as paying for a new passport. share bank customers’ account data through in some parts of Europe open banking The app will sweep deposits into an an API. payments APIs for consumer applications are account at Jiko Securities and invest the A key challenge in Continental Europe is more advanced than for business use cases. money in Treasury bills, which have low the quality of open banking APIs, which varies “For some larger enterprises, the APIs volatility. Anthony says that feature is key for across the EU. While some EU members such necessary for open banking payments aren’t an expense as important as a transition. as Ireland and the Netherlands are making available yet in Europe,” said Dimitrova. “Yet When Bliss launches, Anthony hopes that positive strides to drive open banking there still exists a huge opportunity for open customers will be able to make both one-time adoption, other European countries are banking in the B2B payments space.” and recurring contributions. A debit card far behind, according to data compiled by is also in the works. It will be printed with Yapily. Plaid connects to PSD2-compliant the customer’s preferred name and provide APIs in Europe, Grose said. “So if we find that FINTECH interchange revenue for the company. a bank has poor open banking APIs, we work “Finance has had a hostile relationship with EU regulators and policymakers to help with my community,” said Anthony. “A lot of the bank improve its APIs.” Mobile tech that stems from the fact that my community Plaid also hopes to gain traction from a has incongruent identification documents, so growing demand for open banking-driven company to sometimes a driver’s license will accurately small business payments, where adoption reflect my identity but doesn’t align with my in the U.K. is ahead of the EU, creating an birth certificate.” addressable market. introduce a She noted that she is starting to see “We’re seeing a large and growing segment movement among financial institutions, but of businesses using open banking for B2B savings app it is still a patchwork system. payments in the U.K.,” said Grose. “Open Bliss will rely on the customer’s legal name banking-based invoice payments offer for know-your-customer checks, but address significant savings for businesses compared for gender them by their chosen name in the app. LGBT to accepting card payments.” challenger bank Daylight operates similarly. Businesses pay a single flat fee for an open transitions Mastercard recently announced that it will banking payment, Grose said. If a company white-label its True Name program, which sends £10,000 to another business, it costs By Miriam Cross allows transgender and nonbinary customers 20 pence for an instant transfer via the U.K.’s July 08, 2021 to use their preferred name on payment Faster Payments scheme as opposed to 1-3% Euphoria.LGBT, a mobile app development cards. BMO Harris Bank, and for paying with cards. “Also, card payments company that has received funding from Republic Bank all offer the card company’s take several days to clear, so instant payments Chelsea Clinton, is adding a savings app True Name service. help the biller with their cash flow,” Grose called Bliss to its lineup this fall. The app fits into Euphoria.LGBT’s larger said. The goal of Bliss is to help transgender goal of getting individuals through their British B2B banking provider GoSolo, individuals save for their transition costs, transition more quickly. Three other apps which uses Plaid’s APIs, reports that open which Euphoria.LGBT CEO and founder have been released so far, including one banking has reduced the manual work Robbi Katherine Anthony says average that provides resources to people about the required to process payments. Contractors $150,000 in the U.S. and encompass medical, process of transition and another that serves who are GoSolo clients use the technology to legal and social expenses, such as buying new as a marketplace for artists. Bliss and a fifth email invoices with an embedded payment clothes. app are expected to launch later this year, link and receive immediate payment, “Bliss’s big differentiator is it understands with a sixth coming in 2022. according to Dima Pimakhov, GoSolo’s CEO. the complexity that is gender transition and Austin, Texas-based Euphoria.LGBT does “There’s no need to enter any payment details helps assign a financial plan to that,” Anthony not disclose how many users it has, but says as these are pre-populated in the payment,” said. Unlike a regular savings account, Bliss that one in 50 transgender individuals in the said Primakhov. “Traditionally, when a client will help its users come up with a budget for U.S. use its technology. receives an invoice, they have to open their this endeavor and visualize how close they

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and William Daley, vice chairman of public Eastes is a former Army reservist with C-SUITE affairs. more than 16 years of experience in Earlier in her career, Ling worked at PNC sustainability work, KeyBank said. She was Financial Services Group as deputy head of most recently the ESG reporting director Wells human resources and in the HR and global at Wells Fargo, where she worked with finance departments at Merrill Lynch. investors, raters and rankers and led the Fargo hires development of the San Francisco-based company’s ESG and climate disclosures. JPMorgan’s ESG Bei Ling as KeyCorp hires CRYPTOCURRENCIES head of HR Wells Fargo BofA debuts crypto By Polo Rocha executive to July 08, 2021 Wells Fargo is adding another onetime fill new ESG research team JPMorgan Chase executive to its operating committee — this time as its new head of in latest Wall human resources. role Bei Ling, who will join the $1.9 trillion- asset bank in October, will succeed Kleber By Allissa Kline Street push Santos, the company’s head of diverse July 08, 2021 segments, representation and inclusion. KeyBank has hired a corporate By Santos has held the HR role on an interim sustainability expert away from Wells Fargo July 08, 2021 basis. to help the Cleveland-based company Bank of America created a new team Wells Fargo’s prior HR head, David accelerate its environmental, social and dedicated to researching cryptocurrencies, Galloreese, who joined the bank in 2018, governance work. marking Wall Street’s latest push to capitalize left in April to join Figma, a digital design Jennifer Eastes is now the head of ESG on investors’ frenzy for digital assets. company. at KeyBank, the banking arm of the $176.2 Alkesh Shah will lead the effort, which Ling will report to Wells CEO Charlie billion-asset KeyCorp. She reports to Eric will also cover technologies tied to digital Scharf, who said in a press release that Fiala, head of corporate responsibility at the currencies, and report to Michael Maras, she will help the bank “build a world-class bank. who leads fixed-income, currencies and culture and foster an inclusive environment Eastes, who started last month in the commodities research globally, according to attract, develop, engage, and retain the newly created role, is in charge of developing to an internal memo seen by Bloomberg. best talent.” and implementing KeyBank’s ESG strategy. A spokeswoman for the firm confirmed Ling has spent the last eight years Those responsibilities include the expansion the contents of the memo, declining to at JPMorgan. She served most recently of relevant disclosures and an increase in comment further. as the company’s global head of Talent efforts in the environment realm. “Cryptocurrencies and digital assets Development and Total Rewards, as well “Jennifer brings to KeyBank a strong constitute one of the fastest growing as the head of human resources for its record of helping companies build data- emerging technology ecosystems,” Candace commercial bank. focused and quantifiable ESG leadership,” Browning, head of global research for Bank Scharf, a former protege of JPMorgan Fiala said in a press release. of America, said in the memo. “We are Chase CEO Jamie Dimon, has surrounded In its first ESG report, published in May, uniquely positioned to provide thought himself at Wells Fargo with numerous KeyBank said it expects to improve its leadership due to our strong industry former JPMorgan executives. existing disclosures, evaluate opportunities research analysis, market-leading global Those hires include Scott Powell, chief to reduce its carbon footprint and improve payments platform and our blockchain operating officer; Michael Santamassimo, the measurement and management of expertise.” chief financial officer; Barry Sommers, CEO climate-related risks. Banks have been increasingly of wealth and investment management; The bank also said it plans to start making looking to expand into the wild world of Michael Weinbach, CEO of consumer two additional ESG disclosures — one for cryptocurrencies, with many pushing to lending; Lester Owens, head of operations; the Sustainability Accounting Standards offer wealth management products or Michael Lipsitz, chief regulatory and policy Board and another for the Financial Stability custody services for the asset class. Some affairs executive; Michael Cleary, head of Board’s Task Force on Climate-related banks, including JPMorgan Chase and sales practices management and oversight; Financial Disclosures. Goldman Sachs Group, have begun offering

For up to date and complete coverage go to AmericanBanker.com MONDAY JULY 12, 2021 AMERICANBANKER.COM PAGE 10 crypto-futures trading. and last year it agreed to divest a $10 billion Shah joined Bank of America in 2013 private student-loan book. after stints at Morgan Stanley and Lehman Last year, Wells Fargo said it would Brothers Holdings and previously led Bank temporarily stop accepting applications of America’s global technology specialist for home equity lines of credit, following a team. Mamta Jain and Andrew Moss will similar move by rival JPMorgan Chase. That also join the lender’s research arm as part of move was part of the lender’s navigation the changes and continue to report to Shah, of the economic impact of COVID-19, a Browning said in the memo. company spokesman said at the time. The bank, which issues loans for new and used car purchases, also told hundreds GROWTH STRATEGIES of independent auto dealerships that it was dropping them as customers, CNBC reported at the time. In shift to The decision on lines of credit was cards, Wells reported earlier Thursday by CNBC.q © 2021 Arizent and American Banker. Fargo shutting All rights reserved. personal credit lines

By Bloomberg News July 08, 2021 Wells Fargo said it’s shutting down all existing personal lines of credit and will no longer offer the product to its customers. “In an effort to simplify our product offerings, we’ve made the decision to no longer offer personal lines of credit as we feel we can better meet the borrowing needs of our customers through credit card and personal loan products,” the bank said in an emailed statement. “We realize change can be inconvenient, especially when customer credit may be impacted.” The portfolio is part of Wells Fargo’s broader personal lending book, which was $5 billion at the end of March. The breakdown of personal loans versus lines of credit within that portfolio couldn’t be learned immediately. The bank said it’s been providing existing customers with 60-day notices their accounts will be closed, with a fixed rate and minimum payment for their remaining balances. Under Chief Executive Charlie Scharf, Wells Fargo has been exiting businesses deemed inessential with the goal of simplifying operations and improving profitability after years of scandals. Earlier this year, the bank agreed to sell its asset management and corporate-trust units,

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