MONDAY JANUARY 11, 2021 VOL. 186 No. 6 AMERICANBANKER.COM Follow us on @AmerBanker Incoming Dem chair says 5 banking panel will put PPP perks ‘workers’ over Wall Street Sen. Sherrod Brown of Ohio signaled See story on page 2 a change in direction for the Banking Committee under Democratic control, on Lenders with less than $1B of assets get exclusive the same day he called for President Trump’s ouster after the U.S. Capitol riot. Page 5 portal access for first two days SoFi to go public via SBA plans to match some borrowers with small 6 SPAC with $8.7B valuation The deal between -based lender lenders and Social Capital Hedosophia Holdings Corp. V is latest example of a closely held firm going public by merging with a special SBA portal will have dedicated hours for smallest purpose acquisition company. Page 6 PPP lenders Amex said to face inquiry 7 into business credit Lender fees increased for loans of $50,000 or less card sales tactics American Express is reportedly under investigation by a top federal agency $15B in funds set aside for lenders with $1B or less of exploring allegations of unethical sales assets tactics by the company’s small-business sales representatives. Page 6 Source: SBA PayPal blocks group 8 that helped Trump supporters travel to D.C. dailybriefing Inside Amex’s data-driven PayPal Holdings closed an account held by 3 effort to personalize Joy In Liberty, one of the groups that paid for customer service supporters of President Donald Trump to More incentives for smaller American Express has spent years refining travel to Washington, where mobs stormed 1 lenders in next PPP round a decision-making engine that can tailor the U.S. Capitol on Wednesday. Page 7 Community banks will have access to products and services to cardholders’ needs allocated funds and at least two days of in real time. Page 3 Fed returns money to Treasury for exclusive portal access when the Small 9 terminated emergency programs Business Administration relaunches the Cathy Bessant is itching The Federal Reserve has returned about $42 Paycheck Protection Program. 4 to bring BofA’s tech billion to the U.S. Treasury, and will soon (See chart above.) Page 2 workers back to office transfer another $20 billion in excess funds ’s chief operations and connected to emergency lending facilities BBVA USA shuts technology officer says even digital experts that stopped offering new loans last month, 2 down neobank Simple benefit from in-person collaboration. She it said Thursday.Page 7 The decision to shutter the digital bank wants her 95,000-person staff to return once comes just weeks after BBVA USA announced it’s safe. Page 4 Canadian banks face it was selling itself to PNC Financial Services 10 conundrum: How to use Group for $11.6 billion. Page 3 a spare $55.5 billion After nine months of stockpiling capital to ensure they could withstand the strains of the pandemic, Canada’s biggest banks are facing a new problem: how to spend all that extra money. Page 8 MONDAY JANUARY 11, 2021 AMERICANBANKER.COM PAGE 2

The program sets aside $15 billion for Customers Bancorp in Wyomissing, Pa., PAYCHECK PROTECTION lenders with less than $1 billion of assets and which booked more than 102,000 loans PROGRAM another $15 billion for those with less than before the program shut down in August, $10 billion of assets. will make new loans and offer second draws The SBA also included an optional to borrowers still struggling with the fallout More demographic reporting section on the from the pandemic. borrower application, noting that it wants The $19 billion-asset company also plans incentives lenders to encourage borrowers to fill it out to introduce a service for banks that feel to improve “efforts to reach underserved, obligated to offer loans but want an arm’s- minority-owned, veteran-owned and length distance from a program many found for smaller women-owned businesses.” tough to navigate. PPP was the most prominent of the relief Management teams and front-line lenders in programs included in the original stimulus employees at some lenders “really didn’t package enacted to counter the coronavirus want to participate in another round because pandemic and the wave of shutdowns, it’s been the bane of their existence the past next PPP imposed by state and local governments, nine months,” said Sam Sidhu, Customers’ that followed. The program offered forgivable chief operating officer. round loans up to $10 million to businesses with “A lot of banks were concerned about the fewer than 300 employees impacted by the reputational risk of not participating in the By John Reosti and Paul Davis pandemic-related recession. new round,” Sidhu said. “We’re offering them January 07, 2021 PPP gave the economy a much-needed an elegant solution.” Lenders now have more clarity in advance boost, as SBA approved 5.2 million loans for Customers began onboarding clients, of the Paycheck Protection Program’s $525 billion from the start of April to Aug. including a $50 billion-asset bank, before the reopening. 8, but the program was dogged by funding SBA’s guidelines came out, said David Patti, The Small Business Administration issues, persistent problems with the agency’s the company’s director of communications released new guidance for PPP late E-Tran loan management system and and marketing. Wednesday, putting considerable emphasis repeated mid-course rule changes. Since the “We’re essentially putting together a white- on helping smaller lenders and borrowers. original program’s debut nine months ago, label program where we will handle end-to- The new version of the program, which the SBA has issued 23 interim final rules to end PPP processing, funding and servicing, received $285 billion in funds from the most provide clarity and address lender concerns. including forgiveness,” Sidhu said. recent stimulus package for new and existing Bankers had been bracing for the new At least one other institution, Fountainhead PPP borrowers, is expected to begin next guidance, which Congress required the SBA Commercial Capital, a nonbank SBA lender week. to produce within 10 days after the stimulus in Lake Mary, Fla., said it planned to offer a The SBA, which is administering the package became law. white-label PPP service. program with the Treasury Department, will While the guidance contains numerous “We’ll be somebody to whom other lenders grant community development financial incentives for smaller lenders, many of the can refer clients,” founder and CEO Chris institutions and minority depository biggest participants in the previous iteration Hurn said. “A lot of institutions, I expect, have institutions exclusive access to the PPP of the PPP are also eager to jump back in. PPP fatigue.” portal for at least the first two days. It said that through its online Lender Match tool it plans to connect borrowers to “small lenders Established 1836 One State Street Plaza, 27th floor, New York, NY 10004 who can aid traditionally underserved Phone 212-803-8200 AmericanBanker.com communities,” and that its portal will have dedicated hours to assist the “smallest PPP Editor in Chief Alan Kline 571.403.3846 Copy Editor Neil Cassidy 212.803.8440 lenders.” Managing Editor Dean Anason 770.621.9935 A big reason for the guidance is to help Reporters/Producers “ensure increased access to PPP for minority, Executive Editor Bonnie McGeer 212.803.8430 Laura Alix 860.836.5431, Kate Berry 562.434.5432 underserved, veteran, and women-owned Washington Bureau Chief Joe Adler 571.403.3832 business concerns,” the agency said. Executive Editor, Technology Miriam Cross 571.403.3834 An interim final rule issued by the SBA Penny Crosman 212.803.8673 Jim Dobbs 605.310.7780 increased the lender fees for loans of less than BankThink Editor Rachel Witkowski 571.403.3857 $50,000 by removing the 5% cap that existed John Heltman 571.403.3847, Allissa Kline 716.243.2679 Community Banking Editor Paul Davis 336.852.9496 previously — a move aimed at incentivizing Hannah Lang 571.403.3855 lenders to work with smaller borrowers. The Contributing Editor Daniel Wolfe 212.803.8397 John Reosti 571.403.3864, Gary Siegel 212.803.1560 window to have loans approved is set to close Digital Managing Editor on March 31. Loans made this time around Christopher Wood 212.803.8437 Jackie Stewart 571.403.3852, Kevin Wack 626.486.2341 have five-year maturities.

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PPP’s increased complexity is a big in Portland, Ore. He is now moving his family reason some lenders are backing off, said CHALLENGER BANK to Australia. John Asbury, CEO of the $19.8 billion-asset “I’m saddened for the closure but happy Atlantic Union Bankshares in Richmond, Va. for the journey and the lasting oversized While Atlantic Union — which made BBVA USA change that Simple has had on the global more than 11,000 Paycheck loans totaling banking world,” he said Thursday in an email $1.7 billion during the first phase — will shuts down to American Banker. “Customer experience keep participating, involvement in the latest matters. Great teams matter.” iteration of PPP will likely be “harder, not BBVA USA said it will be migrating Simple easier,” Asbury said. neobank customers to the its mobile app. When BBVA The fact loans are available to both new USA’s merger with PNC closes, the Simple and existing borrowers will complicate the Simple users will become PNC customers. process because “it sets up two different applications, two different workflows with By Penny Crosman differing requirements,” Asbury said. January 07, 2021 MARKETING Furthermore, “the mere fact there’s a BBVA USA, the Birmingham, Ala.-based simplified application process for loans unit of BBVA in Madrid, sent out notices to under $150,000 … while a good thing — it customers Thursday saying that its digital Inside Amex’s looks like a third work stream,” Asbury said. bank, Simple, is being shut down. He said Atlantic Union will handle upfront Simple, which was founded by Josh Reich data-driven lending but will outsource some supporting in 2009 and acquired by BBVA in 2014, roles. was the first U.S. neobank and the pioneer “We know how important this is and we of a challenger bank movement that now effort to will deliver,” Asbury said. includes a host of startups like Chime, Varo Likewise, Flushing Financial in Uniondale, and MoneyLion. personalize N.Y., aims to amp up its involvement in the BBVA USA, which has $102 billion of new version of the program. The $7.1 billion- assets, declined a request for an interview, asset company made more than 400 loans the but offered a statement saying that the bank customer first time around. has been reassessing its goals as it prepares “We do intend to be active, probably more to merge with PNC Financial Services Group service active than we were in the first round,” said in Pittsburgh. The $457 billion-asset PNC said Flushing CEO John Buran. in November that it had agreed to buy BBVA By Miriam Cross Customers plans to tailor its white-label USA for $11.6 billion. The sale is expected to January 06, 2021 service to accommodate other lenders’ close in mid-2021. When American Express customers needs. “We’re focused on the things that make the browse reward offers through their online “If they want us to fund the loan and buy most sense for the company’s future. … As a accounts or their apps — from bonus points it back from us, that’s an option,” Sidhu said. result, today we’re accelerating some changes for booking a hotel stay to $40 back on luxury “If they want to fund the loan, but have us and stopping work on others, including the bedding — the offers they see are carefully handle forgiveness and servicing, that’s also closing of Simple,” BBVA said in its statement. curated for them. Behind the scenes, an an option. We’re flexible. The key is helping Twitter was immediately flooded with engine that Amex built itself is constantly banks help their customers.” messages from Simple customers. fine-tuning these recommendations by Buran said he was “optimistic” the Reich, an Australian software developer matching cardholders with relevant offers program’s latest round would be smoother and hedge fund quant, started what was at optimal times, such as surfacing dining than the first, which was dogged by course then called BankSimple in Brooklyn as a options when a customer lands in London. corrections, funding issues and technical “really boring, simple bank.” It provided The payments company, which is based difficulties. basic banking and budgeting on a mobile in New York, built a personalization engine “I remember during the first go-around, it app with low fees. It was a reaction to what he it calls Orchestra to shape marketing and took a lot of time to just pick apart what the considered needless complexity in American servicing interactions for every customer in program was all about,” Buran said. “Given banking. real time across the app, on the website and the fact we’ve had more experience and the Two years later, he moved the company over email. It took two and a half years to SBA has had more experience, this should go to Portland, Ore., and rebranded it Simple. conceive of and fully deploy Orchestra, but better.” (Regulators didn’t allow him to use the word by September 2020, Orchestra had rolled out “bank” in the name because the company to every card member across the U.S. didn’t have a bank charter and instead Financial services firms have taken a offered services through bank partners.) renewed interest in personalization since Reich joined BBVA when it acquired the pandemic turned most banking virtual. Simple, but left in 2018 to start a family farm But it can be a challenge for banks, which

For up to date and complete coverage go to AmericanBanker.com MONDAY JANUARY 11, 2021 AMERICANBANKER.COM PAGE 4 often have trouble consolidating data about customers that we have their backs and meet their customers across numerous interaction their needs, but also delight them and add WORKFORCE MANAGEMENT points, said Stefano Fanfarillo, partner value to their everyday life through merchant and director in personalization and digital offers and other products?” marketing at Boston Consulting Group, in an The result of this outreach is a more Cathy Bessant October interview. engaged customer base. American Express Still, research suggests that targeted reports a 5% to 25% increase in email open is itching to offers are welcomed by bank customers. A and click-through rates when card members September survey by Zafin, a cloud-based receive content via Orchestra compared with products and pricing solutions company those who receive content randomly. bring BofA’s for banks, found that 88% of respondents Orchestra addresses questions like, “What say it’s important to them that their banks did the customer just do? What can we learn tech workers personalize products and services based from that? How can we anticipate what they on their needs and behaviors. Boston might need?” said Mavromatis. Consulting Group, or BCG, calculated that for Orchestra is based on a real-time relevance back to office every $100 billion of assets a bank has, it can prediction model that forecasts both increase revenues as much as $300 million by reactively and proactively the relevance of a By Penny Crosman personalizing its customer interactions. message to a customer in a certain moment, January 07, 2021 American Express, which competes in accordance with their privacy choices and The logistical challenges of taking a with banks for high-spending or premium communications preferences. The engine 95,000-person tech team remote made 2020 customers, has embraced personalization. Its also incorporates a number of “levers” to a slog for Cathy Bessant, chief operations and new technology is a single, channel-agnostic fine-tune the experience. For example, technology officer at Bank of America. platform that makes unified marketing the minimum relevance lever would only The job got done. Now, it’s time to reverse decisions and weighs both relevance and allow Amex to show certain messages to a the process and bring people back to work — timing when presenting offers to customers. cardmember upon login to the Amex website eventually. The timetable is uncertain, but “American Express has been able to attract if a minimum predicted probability to click is the preparatory work has begun. more wallet share onto its cards because reached. In a recent interview, Bessant — who people are loyal and see the benefits of the The platform was built in house but used topped American Banker’s Most Powerful rewards program,” said Stephen Biggar, open-source solutions such as Mockito to Women in Banking from 2017-2019 — shared director of financial institutions research at build tests, programming languages Java and her thoughts on going back to offices and Argus Research in New York. “Many banks Python, and a Spring Boot server for building what she anticipates for 2021. are trying to emulate and enhance those applications. programs and find a way to get more spend One major part of Amex’s personalization You’ve had to shift 97% of your 95,000 on their cards.” strategy is to highlight relevant merchants, employees to working from home over The company, along with Discover including both large and small businesses, the past year. Do you think some of this Financial Services in Riverwoods, Ill., has that are relevant to each customer’s interests. change will stay, that there are some an advantage that many banks do not: a But Mavromatis also emphasizes the people who will just never go back to closed-loop system that gives them direct importance of delivering these offers at the the office? relationships with their card members. most opportune times. CATHY BESSANT: We’re a company that “They know the spending history, they “If we know a card member is scheduled believes strongly in co-location for lots of service the account, they lend to you,” said to depart on a trip, we can suggest an different reasons — culture, the ability to train Biggar of Amex and Discover. “From start to Amex Centurion Lounge at the airport and and supervise, the nature of problem solving finish, they’ve got more information about recommend merchants such as hotels or and creativity. And despite the fact that I read the client than does the average bank or card- restaurants at their destinations that they articles every day about productivity being issuing institution.” would find helpful,” said Mavromatis. higher in a work-from-home environment, Determining which offers Amex should Of course, travel is off the table for many we have not found that to be true. That prioritize for cardholders is one major cardmembers right now. But Mavromatis doesn’t mean that a lot isn’t getting done, but function of Orchestra. But the platform is says the pandemic has reinforced Orchestra’s typically it’s getting done over a much longer also behind marketing messages that may ability to adapt to changing customer needs. day, which is not sustainable and not good highlight card benefits a customer is not “[We] let Orchestra figure out which offer for anyone’s health and welfare. So we will be aware of or not using, or recommend to is more relevant for which customer, let the a company that does return to co-location. customers the best way to redeem their system learn, and continue to evolve and There will be a set of people who are high points. deliver value,” he said. risk and therefore we’ll customize solutions “Enhancing the brand is my first job,” said for them. But we will try to come back to the Anthony Mavromatis, the vice-president of office. No question. global customer data science and platforms at American Express. “How do we show That will have to be challenging in your

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Bank of America tower in Charlotte, Everyone is different. I think for most of have a visible path for every young woman N.C., just getting everybody through our people, it’s motivating to be able to push in banking to believe that if she works hard the testing process and through the el- the envelope in terms of what’s new. I have enough and if she is good enough, she can be evator. found a great sense of human spirit in the a CEO, which is hard to do when there are no The logistics are complicated. I credit higher levels of Maslow’s needs hierarchy women CEOs. Andrea Smith, our chief administrative in terms of higher level intellectual needs to It is a game-changer. Once you get past the officer, with pulling off incredible logistics to produce market-leading work. first, then you have to work on it not being bring people back in places where it’s safe to the only. And so this is a very important make it happen. Are there any technologies that you’ve milestone. Our primary concern is the safety of our been leaning especially heavily on this people and their families. Nobody gets year? I’m guessing Zoom is one. invited back until the atmosphere meets our We’ve determined that we have to even be ELECTION 2020 health and safety criteria, and people are more militant than we’ve been before about comfortable. This is not a forced march. This consistency. So for example, we allow a wide is a thoughtful, safety-based approach, but at range of workflow management technologies. Incoming some point we will get back to co-location. As we’ve been adaptive, trained people, and retrained people, something that should Dem chair You mentioned that the days are much be as simple as a workflow management longer for everybody at your organiza- tool gets in the way of adaptability. So we’re tion. How have you managed to main- thinking a lot more about narrowing a wide says banking tain work-life balance, if you have? range of tools down to one, so that we can In the beginning, I didn’t. I don’t think continue to be responsive. panel will put anyone did who was involved in the fundamental equipping of a 200,000-person Are there any changes that you’ve seen company to work remotely. Also, we had a within your company, in the industry ‘workers’ over number of things thrown at us, such as the or among your customers during the need to be completely responsive and ready pandemic that you expect will contin- Wall Street for implementing government programs ue throughout this year? and literally writing code before the final I believe digital adoption is permanent. By Neil Haggerty regulations were actually issued. That makes We have record-setting levels of people January 07, 2021 for a long day. And I think we’ve lost a sense using our digital and electronic channels WASHINGTON — Sen. Sherrod Brown, of boundaries. [Before the pandemic] you to conduct every element of their business, D-Ohio, pledged to focus on “workers” and would never have heard me on the phone, if their investing, their savings, including all the “their families” when he becomes chairman I could avoid it, at eight o’clock at night, and way up to our large institutional customers. of the Senate Banking Committee, on the now it’s routine. That takes a toll. The other thing I expect to persist is a same day he called for President Trump’s hypersensitivity on flawless delivery as our removal. What would you say have been the big- customer adoption of digital grows. Even the Brown released a statement Thursday gest challenges for the tech team? slightest blip in performance is magnified congratulating Sens.-elect Raphael Warnock There has been a challenge of trying to in terms of importance, first of all because and Jon Ossoff, whose victories in Tuesday’s ascertain how best to reach out to clients and people are under a tremendous amount Georgia runoffs cemented a Democratic customers, when in many of our business of stress. And second of all, because the Senate majority. segments they prefer individual interaction tolerance for a failure to deliver brilliantly is “For too long, the Senate Banking and and face-to-face. How to make that same much lower. Housing Committee has only delivered feeling of closeness happen virtually has for Wall Street — under new Democratic been an important part of the work that I read that you cried when you heard leadership, we’re going to get to work for we’ve done. And I think more than anything Jane Fraser was going to become the everyone else, and put workers, and their else, getting people comfortable with the CEO of Citigroup this year. Do you families, and what matters to their lives at the natural day to day of connectivity virtually, think things are changing for women center of everything we do,” Brown said. how to stay human, how to stay focused, how in this industry? On Twitter, Brown also called for Trump’s to continue to be empathetic when there’s Well, you know I’m a crier anyway. I put ouster, blaming the president for inciting the camera contact, but not so much eye contact, my head on my desk and I cried because violent protests Wednesday that breached those have been some of the big challenges. Beth Mooney at Key was really the pioneer the U.S. Capitol and delayed Congress’s for women CEOs in the top 25 financial certification of President-elect Joe Biden’s Is it hard for people on your team to institutions in the . Jane is the victory. carve out focus and time for innovation first woman to break into the top five. And “Domestic terrorists attacked our seat of when, as you said, the regular workday that’s incredibly important. And the reason government, at the behest of the President has gotten so much longer? I was emotional is because I felt finally we of the United States,” Brown said in his

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Twitter post. “The cabinet and the vice about the dearth of opportunities for recent president should immediately invoke the college graduates unable to refinance their COMPLIANCE 25thAmendment to remove him from office, expensive federal student loans even though to prevent him from doing more damage they had well-paying jobs. between now and Inauguration Day.” SoFi then sought to capitalize on its Amex said to Industry observers and analysts have customer base of young, highly paid white- predicted that Democratic Senate control collar professionals — the company calls face inquiry likely means the Banking Committee will them “members” — by offering them other focus more on protecting consumers, financial products. combating climate-related risks to the “SoFi’s innovative, member-first platform into business financial system and expanding access to the has demystified financial services for financial system. millions of Americans,” Palihapitiya said credit card “We have a lot of work to do to recover from Thursday in a statement. “Additionally, the this pandemic, address systemic racism, fight acceleration of cross-buying by existing SoFi climate change, and create an economy that members has created a virtuous cycle of sales tactics works for everyone, no matter who they are, compounding growth, diversified revenue where they live, or what kind of work they do,” and high profitability.” By Kate Fitzgerald Brown said. SoFi is set to generate about $1 billion of January 07, 2021 adjusted net revenue in 2021, the company American Express is reportedly under said, without providing specifics. investigation by a top federal agency M&A SPACs raised a record $78 billion in the exploring allegations of unethical sales tactics U.S. last year, according to data compiled by the company’s small-business credit card by Bloomberg, as financiers and startup sales representatives. SoFi to founders sought a quicker way to go public The Office of the Comptroller of the than the traditionally cumbersome process Currency is reviewing claims that some Amex go public of initial public offerings. employees misled small-business owners Some 1.8 million people have used a SoFi when signing them up for cards, according to service, the company said. In October, SoFi The Wall Street Journal. via SPAC received preliminary approval from the The review seeks proof that some small- Office of the Comptroller of the Currency business owners were tricked into signing with $8.7B for a national bank charter, a move that if for cards they didn’t want, in addition to finalized would reduce its cost of funds. receiving cards with fees and rates they didn’t The transaction is expected to provide expect. A civil investigation is underway valuation as much as $2.4 billion in cash proceeds, involving cards issued to businesses that which includes $1.2 billion through a private previously had an Amex card cobranded with By Bloomberg News investment in public equity, or PIPE. Investors Costco, the Journal said. January 07, 2021 include funds managed by BlackRock, T. Amex lost the Costco card business to Social Finance Inc., the online lender Rowe Price Associates, Coatue Management Citigroup in June 2016. Questions surround known as SoFi that gained popularity by and Healthcare of Ontario Pension Plan. whether Amex employees failed to keep refinancing student loans, agreed to go records of all sales calls and whether they public by merging with a special purpose improperly obtained customers’ personal acquisition company in a transaction that information to sign people up for cards, said values the at around $8.7 billion. the Journal in its report, which previously The deal between the San Francisco- looked into shady Amex business practices based lender and Social Capital Hedosophia within the past year. Holdings Corp. V, a blank-check company “We have robust compliance policies founded by former Facebook executive and controls in place, and do not tolerate , marks the latest misconduct,” Amex said in a statement to example of a growing trend in which closely PaymentsSource. The OCC said it would not held firms go public by merging with a SPAC. comment on supervisory matters pertaining SoFi, which weathered a workplace to specific banks. sexual-harassment scandal that forced out The timing of the federal investigation is its founder and first chief executive, Mike tough for Amex, which has been hammered Cagney, has long been viewed as a financial- on other fronts during the pandemic. It is a technology company destined to go public. key issuer of travel-and-entertainment credit Its early years endeared it to some federal cards, and its spending volume collapsed last officials in Washington who had worried year as consumers were forced to stay home.

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Amex’s dipped briefly on Thursday after the Journal’s publication of its article. PAYMENTS FEDERAL RESERVE Consumer advocates are closely watching for companies that could be operating under unusual conditions or duress during the PayPal blocks Fed returns pandemic. “I think many companies are so large that group that money to one hand doesn’t always know what the other is doing and that can result in some unfortunate issues,” Linda Sherry, director of helped Trump Treasury for national priorities at Consumer Action, said in an interview with PaymentsSource. supporters terminated The nonprofit organization has paid close attention to the credit card industry for years, where merchants have complained about travel to D.C. emergency burdensome interchange rates. “We’ve heard for years that from different By Bloomberg News programs business entities that American Express cards January 07, 2021 are some of the most expensive they can PayPal Holdings closed an account held By Bloomberg News accept,” Sherry said. by Joy In Liberty, one of the groups that paid January 07, 2021 But American Expresss’s business practices for supporters of President Trump to travel to The Federal Reserve has returned about haven’t been a recent focus for Consumer Washington, where mobs stormed the U.S. $42 billion to the U.S. Treasury, and will soon Action, which is based in Washington. Capitol on Wednesday. transfer another $20 billion in excess funds “We also hear that Amex has a great small- The account was shut because it violated connected to emergency lending facilities business program that helps entrepreneurs PayPal’s acceptable-use policy, according to that stopped offering new loans last month, get feet coming through the door,” Sherry an emailed statement Thursday. the central bank said Thursday in documents said. “PayPal carefully reviews accounts to posted on its website. The company’s model relies on expanding ensure our services are used in line with our The transfers will fulfill the promise made its business card portfolio, but it also needs long-standing policy,” the company said. by Fed Chair Jerome Powell on Nov. 20 to those businesses to stick around, analysts “We do not allow PayPal services to be used comply with Treasury Secretary Steven point out. to promote hate, violence or other forms of Mnuchin’s controversial demand that the “The small-business credit card industry intolerance.” programs be terminated. is highly competitive and the whole The move came after hordes of Trump The Treasury committed $195 billion from purpose of selling a card is to expand the supporters broke through police lines and its Exchange Stabilization Fund to provide relationship,” Brian Riley, head of credit into the Capitol, interrupting congressional a backstop for the four programs and had advisory at Mercator Advisory Group, told debates over the certification of President- transferred $102.5 billion to the Fed. The PaymentsSource. “There might be some elect Joe Biden’s Electoral College votes and programs are retaining about $40 billion to bad apples at the company, but Amex is forcing lawmakers into hiding. protect against potential losses on the credits engineered for the business credit card to be Joy In Liberty shared stories on its website the programs extended before their closure. a foothold to using the company’s full range of people who used funds the group raised The four programs are the Term Asset- of treasury, deposit and payment services.” to travel to the U.S. capital this week, saying Backed Securities Loan Facility, the Regulators would likely be looking to it has provided more than $30,000 “to Municipal Liquidity Facility, the primary and determine whether any unethical practices deserving patriots.” The website also offers secondary corporate credit facilities, and were widespread, said Ali Raza, senior vice tools to research the QAnon conspiracy the Main Street Lending Program. All except president of FSS Technologies USA. theory, which claims that Trump is battling a Main Street were closed on Dec. 31. The “Federal agencies would focus on any deep state ring of child-sex traffickers. termination of Main Street was delayed until misleading or deceptive communications, Joy In Liberty didn’t immediately respond Jan. 8 to allow time to finish processing a late including whether small businesses were to requests for comment. surge of loan applications. promised anything in return,” Raza said. PayPal Chief Executive Dan Schulman called Wednesday’s events “disturbing” in an earlier statement, saying it violated “the very foundation” of American democracy. “Now, more than ever, we need to foster an environment of inclusion and healing, where we listen to each other, respect each other and keep our country as a beacon for democracy,” Schulman said.

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of the border. Toronto-Dominion Bank CEO to 5% of their shares outstanding on an CAPITAL Bharat Masrani said last month that he is annualized basis this year if regulators allow “very open to acquisitions” and sees them as repurchases in a similar manner to what a way to accelerate its U.S. growth. Similarly, the U.S. Federal Reserve permitted late last Canadian Royal Bank CEO Dave McKay said last month year for American banks, according to a that his bank is “looking to scale” in the U.S. Bloomberg Intelligence study. banks face and will “continue to look for opportunities.” Dividend increases could be a similarly rapid way to put the money to work, once ‘Do something’ regulators allow for them. So far, Canadian conundrum: While Toronto-Dominion is “under the officials have opened the door only to special most pressure to ‘do something’” on the dividends under “exceptional circumstances.” How to use a acquisition front, the time is favorable for Canadian banks to take over smaller U.S. banks, National Bank of Canada analyst SBA spare $55.5 Gabriel Dechaine wrote in a Dec. 16 note to clients. Banks have excess capital, interest billion rates are low and organic growth prospects Biden picks are weak, he said. By Bloomberg News “The current environment is likely as good January 08, 2021 as any to do a deal,” Dechaine said. After nine months of stockpiling capital to The capital hoard was built up last year to ensure they could withstand the strains of the protect against a possible wave of defaults official Isabel pandemic, Canada’s biggest banks are facing resulting from economic shutdowns to fight a new problem: how to spend all that extra the spread of COVID-19. In March, Canadian Guzman to money. regulators told banks to halt share buybacks Canada’s six largest banks were sitting and dividend increases. on C$70.4 billion ($55.5 billion) more in Investors initially welcomed the capital head SBA Common Equity Tier 1 capital than required buildups because they reduced the likelihood by regulators, as of Oct. 31. CET1 capital is the banks would be forced to raise more money, By Bloomberg News stash of securities meant to serve as a bank’s which would dilute shareholders’ equity, January 07, 2021 first line of defense in a financial crisis. Aiken said. It also ensured their dividends Biden Picks California Official Isabel While excess capital may be reassuring were safe, a key concern for Canadian Guzman to Head SBA during a global pandemic, it also threatens to investors, he said, with banks in the country President-elect Joe Biden picked California become a drag on the banks’ return on equity, tending to have higher yields than their U.S. official Isabel Casillas Guzman to lead the a key metric for investors, as COVID-19 counterparts. Small Business Administration, according to vaccines are distributed and the economy people familiar with the decision. recovers. The challenge banks face is making Extra capital Guzman served as a deputy chief of staff compelling arguments that they have the best The result is that Canada’s six largest banks and senior adviser to the administrator at the plan for putting that money to work — and reported a combined C$262 billion in CET1 SBA during the Obama administration, and earning a higher valuation for it. capital as of Oct. 31, accounting for 12.3% of has run her own small businesses. “What investors are looking for now is their risk-weighted assets. Regulators require Since April 2019 she’s been director of where is growth going to come from — top that ratio to be just 9%, meaning the banks California’s Office of the Small Business line and bottom line?” analyst John are carrying about C$70.4 billion more than Advocate, part of that state’s Governor’s Office Aiken said in an interview. “Deployment mandated. of Business and Economic Development. of capital can definitely aid that, as well as Many banks internally target a ratio of Before working at the SBA Guzman was a improve the dampening impact that this around 11%, and the Big Six still have an extra director of strategic initiatives at ProAmerica higher level of capital is having on return on C$27.8 billion in CET1 capital beyond that Bank, a commercial bank that served small equity.” level. and mid-sized businesses, according to Investors may get some answers on how In addition to acquisitions, share buybacks her LinkedIn biography. ProAmerica was the companies plan to deploy that capital could be a quick way to deploy the capital acquired by Pacific Commerce Bancorp in on Monday, when their chief executive once they’re allowed again. Canadian 2018. officers are scheduled to speak at Royal Bank regulators will want some time, though, to Guzman is a graduate of the Wharton of Canada’s annual Canadian Bank CEO see how severe credit losses are, Aiken said. School of Business at the University of Conference. The earliest they’d let repurchases resume Pennsylvania. Among the most intriguing possibilities for would be this summer, he said, though the She’s the first Latina named to a cabinet- investors is that the banks will use that dry fall is more likely. level post by Biden, adding to the diversity of a powder for acquisitions, particularly south The Canadian banks could buy back 2% team he’s pledged would “look like America.”

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Her nomination will require Senate she wrote. confirmation. “My thoughts and prayers are with law The president-elect has already chosen enforcement and others in public service three Hispanic men: Alejandro Mayorkas who continue to perform their duties and as secretary of homeland security, Xavier keep all of us safe,” Kraninger said. Becerra as secretary of health and human Brooks added, “In the midst of the current services, and Miguel Cardona as secretary of unrest, OCC leadership and staff remain on education. the job.” “We do so not because we condone the events of the past 24 hours but because our CFPB agency’s mission is an apolitical one on which millions of Americans depend,” Brooks wrote. “We continue to focus on ensuring the CFPB, OCC federal banking system operates in a safe, sound, and fair manner, uninterrupted by leaders election results, natural disasters, or global conflict.”q condemn © 2021 Arizent and American Banker. Capitol riot All rights reserved.

By Brendan Pedersen and Kate Berry January 07, 2021 WASHINGTON — Two federal bank regulators condemned the riot at the U.S. Capitol Wednesday that was incited by President Trump. In messages to the staffs of their respective agencies, acting Comptroller of the Currency Brian Brooks and Consumer Financial Protection Bureau Director Kathy Kraninger each denounced the violence perpetrated by the president’s supporters, who had overwhelmed local law enforcement and breached the Capitol building as lawmakers met to certify the results of the 2020 election. “Yesterday, we witnessed one of the ugliest moments in recent history,” Brooks said in a memo to staff of the OCC sent Thursday morning. “Violence and wanton lawlessness cannot be condoned.” “This is clearly an act of domestic terrorism and violence that is reprehensible,” Kraninger wrote in her own memo to CFPB staff Wednesday evening. “I imagine I speak for all of us in saying I never could have imagined seeing the events earlier today at the U.S. Capitol.” Brooks and Kraninger each stressed that the week’s events would not interfere with their agencies’ work. The CFPB’s staff was already under a “mandatory telework posture” on Wednesday, Kraninger wrote in the memo, which was obtained by American Banker. That order was extended through Thursday,

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