Big Tech Pushes Back on CFPB; Highnote Raises $90Mn; Ramp Launches Treasury

Initial unemployment claims rise. CFPB fines Equifax. Big tech pushes back on CFPB’s supervisory push. SEC launches crypto taskforce. Bank of America says it’s ready for crypto. Patriot reveals regulatory action. Highnote raises $90Mn. Citi pushes back on encroaching BNPL lenders. Ramp launches Treasury. Ally sells credit card unit. TransUnion consumer credit data.

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Initial Unemployment Claims Rise

Initial unemployment claims rose slightly last week, with 223,000 new claims filed. The four-week moving average, which smooths out volatile weekly numbers, also rose modestly, hitting 213,500. Continuing claims, which serve as a proxy for those already receiving benefits who cannot find a job, climbed to 1.9Mn.

CFPB Fines Equifax $15Mn, Trade Groups Push Back on Supervision of Big Tech

Biden-era CPFB Director Chopra remained active at the consumer protection regulator through Trump’s inauguration on January 20th – and beyond. Chopra has previously said he would not resign and, as of the time of publication, President Trump has not yet removed Chopra from his role. A flurry of recent actions undertaken by the bureau include a $15Mn credit reporting agency Equifax agreed to pay to settle allegations it failed to conduct proper investigations of consumer disputes. In the consent order, the CFPB alleges Equifax ignored consumers’ documents and evidence submitted to dispute information on their credit reports and allowed previously removed inaccuracies to be reinstated. The issues led to inaccurate credit scores for hundreds of thousands of consumers, according to the order. Equifax also reported duplicate accounts for more than 50,000 consumers, the CFPB says.

Meanwhile, two trade groups that represent large tech companies are suing the CFPB in D.C. District Court, arguing the bureau does not have the authority to supervise non-bank tech companies that offer financial services products. The suit is being brought by TechNet and NetChoice, which, together, represent some of the largest companies in tech, including Apple, Google, Meta, PayPal, Amazon, Samsung, and Salesforce.

The trade groups are seeking to block the CFPB’s final rule defining larger participants in the market for payments and digital wallets as those facilitating 50Mn or more transactions per year. In their complaint, the groups argue that Dodd-Frank, which created the CFPB, requires the bureau to take a “risk-based” approach to supervision. Carl Holshouser, executive vice president of TechNet, criticized the bureau’s approach in a statement, saying, “Instead of fostering a regulatory environment that supports responsible innovation, the CFPB is undermining the very principles that make the U.S. a global leader in financial technology. By granting itself broad authority over a company's operations, even those entirely unrelated to digital payments, the CFPB goes far beyond its mandate.”

SEC Launches Crypto Taskforce

President Trump’s current acting chair of the SEC, Mark Uyeda, is wasting no time in making a sharp break from his predecessor, Gary Gensler. Uyeda is holding the acting title while Trump’s nominee, Paul Atkins, navigates the confirmation process. Uyeda has already launched a “crypto task force,” charged with “developing a comprehensive and clear regulatory framework for crypto assets.” Although announced by acting Chair Uyeda, the initiative will be led by SEC Commissioner Hester Pierce. Of the announcement, Pierce said, “We look forward to working hand-in-hand with the public to foster a regulatory environment that protects investors, facilitates capital formation, fosters market integrity, and supports innovation.”

Bank of America Says It’s Ready for Crypto

Bank of America is ready to jump into crypto payments, CEO Brian Moynihan said last week, if regulators will allow it. The news came in response to a question from New York Times Dealbook columnist Andrew Ross Sorkin in Davos last week about how the banking industry’s approach to crypto may change under President Trump. Moynihan seemed particularly interested in potential payment applications, describing crypto as “just another form of payment,” akin to Visa, Mastercard, and Apple Pay. “If the rules come in and make it a real thing that you can actually do business with, you’ll find that the banking system will come in hard on the transactional side of it,” Moynihan said in the interview.

Patriot Reveals Regulatory Action

Patriot National Bancorp, parent company to Patriot Bank, revealed in an 8-K filing that its bank subsidiary has entered into a material definitive agreement with its primary federal regulator, the OCC. According to details in the 8-K, the agreement stems from concerns over the bank’s BSA/AML compliance, including in third-party card programs, as well as over credit, liquidity, and concentration risk management. The order requires Patriot to undertake a number of efforts to strengthen its controls and remediate risks. The order also imposes elevated minimum capital requirements and deems the bank to be in “troubled condition.”

Highnote Raises $90Mn

Modern issuer-processor platform Highnote announced it has raised a $90Mn Series B. The round was led by Adams Street Partners, with participation from existing investors, including Costanoa, WestCap, Oak HC/FT, and Pinegrove Venture Partners. Highnote also announced its expansion into the merchant acquiring space, meaning the company now supports full “pay in” and “pay out” functionality for its customers on a single platform with a unified general ledger. Of the news, Highnote CEO John MacIlwaine said, “The acquiring landscape has evolved over time and represents an opportunity for next generation customers to accelerate growth through embedded acquiring in addition to embedded issuing.”

Citi Battles Encroaching BNPL Lenders

Card behemoth Citi has slowly but steadily been battling encroaching buy now, pay later lenders. The bank launched Citi Pay installment loans in 2023, joining a broader suite of point-of-sale-originated credit options that it offers under the Citi Pay umbrella. Nearly 200 merchants, including early adopters like PODS and LG, offer shoppers financing through Citi Pay. But BNPL is primarily a distribution game, and competitors in the space, like Affirm and Klarna, haven’t been standing idly by. Both Affirm and Klarna have launched card products, design to appeal to heavy BNPL users, that enable shoppers to use BNPL at nearly any merchant. Both have also capitalized on Apple’s abrupt retreat from Apple Pay Later, with Affirm and Klarna now available via Apple Pay. Klarna chose to sunset its own checkout product, in favor of partnering with acquirers that include Stripe, Adyen, and Worldpay, boosting the number of merchants able to offer Klarna financing to their users by more than 100,000.

Ramp Launches Treasury

The great feature convergence in the fintech business banking space seems set to continue. Ramp, which, to date, has been focused on the corporate card and expense management space, launched Ramp Treasury last week, giving companies another option to manage their cash. Most Ramp users, company cofounder and CEO Eric Glyman told TechCrunch, had linked accounts to the service where they were earning 0% interest. Ramp Treasury is intended to work alongside companies’ existing bank accounts, rather than replace them, Glyman said. Ramp Treasury allows companies to earn higher yields on balances held as cash or in money market funds. Ramp is partnering with First Internet Bank of Indiana and Apex on the offering.

Ally Sells Credit Card Unit

Ally Financial has reached a deal to offload its credit card business, the bank announced last week. CardWorks and its bank subsidiary, Merrick Bank, will pick up Ally’s card business for an undisclosed amount. The news comes after CEO Michael Rhodes indicated the bank was evaluating strategic alternatives, as the card business wasn’t part of its core focus. As of the end of 2024, Ally’s card business had 1.3Mn active cardholders with a total of $2.3Bn in outstanding receivables, the bank said. Dan Pillemer, CardWorks CEO, described the acquisition as “an exciting step in the expansion of our near-prime credit card business.”

TransUnion Consumer Credit Data Shows Rebound in Fintech Originations

TransUnion just released its monthly credit snapshot, with its data showing a rebound in below prime fintech unsecured personal loan “UPL” originations.

After many months of YoY declines, October's (lag due to reporting time) fintech subprime UPL originations turned positive in a big way. Fintechs pursued more aggressive growth from ‘21-1H22, expanding credit access to more consumers. Starting in mid-'22, many fintech UPL lenders tightened credit substantially. Up until this point, lower credit risk tiers had yet to see origination volumes return, but in October, below prime tiers posted over 100% YoY growth in originations.

Turning to the rest of TransUnion’s report, in December, 60+ DPDs increased (MoM) across all products, with Auto +5bps, Bankcard +4bps, UPL +4bps and Mortgage +3bps. This marks the 5th month of 60+ DPD increases for UPLs after 5 straight months of declines. While UPL 60+ DPDs rose MoM, on a YoY basis, 60+ DPDs improved, down (33)bps. Mortgage 60+ DPDs were up +26bps YoY and Auto 60+ DPDs up +6bps.

Looking at bankcard, 90+ DPDs were up +5bps MoM, but improved on a YoY basis, down (3)bps. Q1 2024 vintage DPDs are underperforming all Q1 2018-2023 vintages. Average bankcard balance per consumer increased +2.6% MoM, to $6,580.

October fintech UPL originations rose for most risk tiers (MoM), with super prime +12.9%, prime plus +12.4%, prime +9.7% and near prime 9.0%. Subprime (4.8)% was the only risk tier lower MoM. On a YoY basis, originations at all risk tiers were up substantially with super prime originations +43.8%, prime plus +38.1%, prime +66.3%, near prime +116.9% and subprime +149.0% from October 2023.

Credit union originations were all higher on a MoM basis with super prime +9.2%, prime plus +6.7%, prime +6.6%, near prime +16.8% and subprime +34.2%. On a YoY basis, originations at all risk tiers grew, with super prime was +16.8%, prime plus +1.7%, prime +0.5%, near prime +0.8% and subprime +4.1% from October 2023.

Finance companies’ UPL originations grew MoM for super prime +18.4%, prime plus +1.1%, below prime +2.6% and subprime +9.3%, while prime (2.5)% was lower. On a YoY basis, originations were up for prime plus +4.7%, prime +4.8%, near prime +6.8% and subprime +12.3%, while super prime (5.1)% was lower.

Banks reported MoM growth for super prime +9.6%, prime plus +7.4%, prime +5.6%, and near prime +3.5%, while subprime was down (8.0)%. Bank originations were lower than October 2023 levels for prime plus (4.3)%, prime (10.9)%, near prime (12.3)% and subprime (18.4)%, while super prime was +14.8% higher.