Fed Holds Rates Steady; Wells Fargo Exits Consent Order; X Partners with Visa
Cole Gottlieb, Research Analyst
Fed holds rates steady. Consumer confidence slips. Wells Fargo exits CFPB consent order. Clutch, Method announce fundraises. Abrigo, Circle make acquisitions. X selects Visa Direct for X Money. Trump Media announces crypto play.
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Fed Hold Rates Steady
Fed officials held rates steady at their meeting last week, with Fed Chair Powell indicating the central bank is in no rush to cut rates. Powell noted that the economy remains robust and argued that elevated rates are not restraining the economy as much as they had been previously, saying, “We do not need to be in a hurry to adjust our policy stance.” The FOMC voted unanimously to keep rates where they are, which is notable, as recent meetings have seen diverging points of view on whether or not to cut rates. President Trump, however, didn’t seem to be pleased with the news, taking to his social media platform to criticize Powell, writing, “Because Jay Powell and the Fed failed to stop the problem they created with Inflation, I will do it.” Meanwhile, U.S. consumer confidence dropped, hitting a four-month low. The Conference Board’s gauge dropped 5.4 points to 104.1, with respondents reflecting lower optimism about the job market and the economy in general.
Wells Fargo Exits CFPB Consent Order
Wells Fargo has put at least one of its regulatory issues behind it. The bank has exited a consent order it entered into with the Consumer Financial Protection Bureau, stemming from issues in its auto and mortgage lending businesses and its consumer deposit accounts. The 2022 CFPB order required the bank to remediate compliance issues, reimburse impacted consumers more than $2Bn, and pay a $1.7Bn to the CFPB. The 2022 order was separate from the “fake accounts” scandal that has plagued the bank, which resulted in a $1.95Tr cap on the aggregate assets Wells Fargo can hold.
Clutch Raises $65Mn Series B
Clutch, a technology provider that aims to help “turn credit unions into fintechs,” announced it has raised a $65Mn Series B. The round was led by Alkeon Capital Management, with participation from TruStage Ventures, Peterson Partners, and Andreessen Horowitz. Clutch’s solutions, which include loan origination and deposit account onboarding, are used by more than 135 credit unions. The company said it plans to use the fresh capital to continue its investments in AI capabilities and in expanding its platform, including through partnerships. Chief Product Officer Chris Coleman said, “We strongly believe that we can best serve the credit union movement by partnering with the existing technology providers and thereby leveraging the investments our credit union clients have already made.”
Method Announces Series B
Method Financial, a consumer-permissioned data connectivity platform, announced it has raised a $41.5Mn Series B. The round was led by Emergence Capital, with participation from Y Combinator, Andreessen Horowitz, Avra, and Samsung Next. Method enables financial institutions to access consumer liability data and to make payments into consumer accounts. Method claims to have integrations with over 15,000 institutions. A key use case Method plans to build out now that it has secured additional financing is an end-to-end, automated loan refinance platform. Method also plans to develop “deeper card network integrations” to enable its customers to “make digital engagement solutions more rewarding.”
Abrigo Acquires Integrated Financial Solutions
Abrigo, a credit risk and lending solutions company, has acquired Integrated Financial Solutions, including subsidiary IFSLeaseWorks, for an undisclosed sum. IFSLeaseWorks provides a cloud-based loan and lease origination platform, including credit decisioning and transaction structuring. Abrigo historically has offered consumer, construction, commercial, and small business lending solutions to some 2,400 financial institutions. IFS is Abrigo’s latest acquisition, following previous acquisitions of TPG Software and Valuant, both of which are also in the risk management and compliance space.
Circle Acquires Hashnote
Circle, the issuer of the USDC stablecoin, announced it has acquired Hashnote, the issuer of tokenized treasury and money market fund USYC. According to its press release, Circle intends to fully integrate USYC with USDC, which, the company says, “will enable USYC to emerge as a preferred form of yield-bearing collateral on crypto exchanges.” As of earlier this month, slightly over $1.5Bn was held via USYC. Concurrently, Circle also announced a strategic partnership with trading firm DRW. Don Wilson, founder and CEO of DRW, said of the partnership, “I am excited to partner with Circle in its quest to make this a reality. By utilizing the Canton blockchain, which offers configurable privacy, for USDC, and acquiring Hashnote, which issues USYC, Circle unites the key elements necessary to enable 24/7 collateral and variation margin movement across both crypto and traditional markets.”
X Selects Visa for X Money
X, formerly known as Twitter, announced it will work with Visa to power capabilities of its forthcoming X Money service. X Money, which CEO Linda Yaccarino describes as an “everything app,” is slated to launch later this year. The company is in the process of securing the state-issued money transmitter licenses necessary to offer certain financial products and services. X will leverage Visa’s Visa Direct capability for instant funding into X’s wallet and for peer-to-peer payments via debit card, the company said last week.
Trump Media Announce Crypto Play
Trump Media and Technology Group, the publicly traded parent company of Truth Social, announced plans to expand into financial services, including crypto. Trump and his family have other crypto-related ventures, including World Liberty Financial, and the recently launched $TRUMP and $MELANIA “memecoins.” Now, Trump Media plans to launch Truth.Fi, a financial technology brand, which will offer traditional and crypto investments, the company said in a brief statement.
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