Another busy week of fintech news saw Goldman Sachs reveal the extent of their losses at Marcus, JPMorgan regretting a 2021 fintech acquisition, Stripe cutting its valuation again, LendingClub laying off staff and Silvergate receiving help from the Federal Home Loan Bank of San Francisco. Here are what I consider to be the top ten fintech news stories of the past week.
Goldman Sachs Lost $3 Billion on Consumer Lending Push from The Wall Street Journal – In a filing this week ahead of their earnings report Goldman Sachs revealed more details about Marcus and the losses that have been mounting for several years. The consumer unit that launched in 2016 has never been profitable.
Jamie Dimon Calls JPMorgan’s Frank Acquisition a ‘Huge Mistake’ from Bloomberg – JPMorgan acquired the college financial-planning website Frank in 2021 but are now suing the founder, Charlie Javice, over concerns that millions of customers were fake.
Stripe’s internal valuation gets cut to $63 billion from TechCrunch – Stripe has cut its internal valuation again, this time by 11% to $63 billion. This comes six months after they reduced valuation from $95 billion to $74 billion.
LendingClub cuts 225 employees, including C-suite executive from American Banker – LendingClub has become the latest fintech company to announce a round of layoffs with 225 employees (14% of its workforce) being let go, including Chief Capital Officer, Valerie Kay.
Silvergate Received Billions in Home Loan Bank Advances To Weather Withdrawals from BlockWorks – One of the leading crypto banks, Silvergate, processed $8 billion in customer withdrawals last quarter and to help them through this stretch they received $4.3 billion in advances from the Federal Home Loan Bank of San Francisco.
Embedded Finance Will End Traditional Banking? Actually… Yes! from Forbes – Dave Birch makes the case that embedded finance will end banking as we know it as most people don’t want to “do banking” and will be happy to receive banking services from brands or where they happen to be doing business.
Tough road ahead for U.S. fintech lenders as default risk rises from Reuters – In a report this week Moody’s said that for fintech lenders “we expect profitability to be depressed for many firms and funding conditions to remain challenging”. Loan losses are rising and ABS investors are demanding higher yields for new deals.
Sam Bankman-Fried Responds to Fraud Charges: ‘I Didn’t Steal Funds’ from The New York Times – In an unusual move for someone facing a slew of federal charges Sam Bankman-Fried decided to share his thoughts publicly, claiming his innocence in a new blog post on Substack.
So Gary, are cryptocurrencies securities? from Fintech Nexus – The SEC continues to take action against crypto companies but they have still not answered the most fundamental of questions: is crypto a security or not?
Fintechs hate 36% loan rate caps. Do they have a point? from American Banker – While consumer protection advocates are probably screaming at the screen when they read a headline like this, there is a valid argument to be made here. Is it unreasonable for a consumer to pay $180 to receive a $1,500 loan to fix their car that they pay back in one month? Even though it is a 160% APR I would argue that is a reasonable cost.