Demand for workers remains high. Home prices lodge record gains. Turmoil in mortgage-backed bond market. Circle asks the Fed not to launch a CBDC. California ruling opens auto lenders to more liability. Viola Credit raises $700Mn fund. Tandym raises $60Mn for private-label card issuing. Revolut and Wise still set to hire hundreds. Online banks battle for CDs. Affirm and Stripe partner.

You’re getting Sunday’s newsletter a bit early, due to the Shavuot holiday.

New here? Subscribe here to get our newsletter each Sunday.

Employment Demand Remains Robust

Demand for workers remained robust in April. Job openings fell slightly to 11.4Mn from a March record of 11.9Mn. Turnover remained high, with 4.4Mn workers quitting their jobs.

Meanwhile, home prices have experienced their greatest surge in 35 years. The Case-Schiller Index rose 20.6% in March vs. the year prior. Inventory remains tight, which is continuing to push prices up.

Turmoil in the mortgage bond markets. Rising rates were already causing prices to drop on existing fixed-rate bonds. Now, with the Fed beginning to reduce its balance sheet, there are fears it could flood the market. Doing so could depress prices, causing yields to rise. That, in turn, would boost mortgage rates that reference the bonds as a benchmark.

Circle Asks Fed Not to Launch Digital Dollar

Circle, issuer of the USDC stablecoin, asked the Fed not to launch its own CBDC. The request came in the form of a comment letter to the Fed on the topic. Circle argued that its stablecoin already captures many of the benefits of a potential CBDC, and that the Fed’s entrance to the space would have a “chilling effect” on innovation. Circle also argued that any CBDC introduced by the Fed would quickly become obsolete, given the pace of technological innovation.

Circle argues against a CBDC overlap, to some extent, with the traditional bank sector. Circle expressed concern that the launch of a CBDC could harm the traditional banking sector by encouraging depositors to move funds into CBDCs.

California Ruling Opens Auto Lenders to Bigger Payouts, More Suits

A court ruling in California will expose auto lenders to additional risk. The decision, in the California Supreme Court, ruled that auto lenders are liable for buyers’ attorney fees in suits involving fraudulent vehicle sales. The immediate impact is bigger payouts in the suits. But the second order impact is likely to be more of said lawsuits, as the ruling makes it more economically feasible for consumers to file suits.

Viola Credit Closes $700Mn Fund

Viola Credit, an alternative asset manager, announced it has closed its latest $700Mn fund. Viola plans to use the funds to provide debt capital to non-bank fintech lenders. Competitors in the space include Victory Park Capital, Atalaya Capital, and Pollen Street Capital. Viola intends to partner with fintech platforms not only in the U.S., but also in Western Europe, Australia, and New Zealand.

Tandym Launches with $60Mn in Funding

Tandym, a new fintech focused on private-label credit card issuing, launched last week with some $60Mn in venture funding. The company’s offering is designed to help merchants recoup the expense of card processing by using interchange fees to fund merchants’ own loyalty and rewards programs. Investors backing the startup include Gradient Ventures, Google’s AI-focused venture fund, which contributed $10Mn to the round.

As Klarna and Others Cuts Jobs, Revolut and Wise Keep On Hiring

The hiring freezes and layoffs are beginning to pile up. Companies in fintech and the broader technology sector have been tightening their belts amidst swooning share prices and valuations. The fundraising environment has become more difficult, with VCs encouraging their portfolio companies to refocus on profitability instead of growth and to cut expenses in order to lengthen their runways.

But not everyone is looking to reduce headcount. Revolut, the London-headquartered neobank, still lists hundreds of open roles on its website. Wise CEO Kristo Kaarmann tweeted that, “Years of building Wise as a profitable long-term company is paying off now.” Wise lists 385 open roles on its website.

As Rates Rise, Online Banks Begin Battling for CDs

After years of rock bottom rates, yield on CDs is beginning to pick up at some online banks and credit unions. As competition begins to heat up, some are offering over-market rates now, hoping to lock in deposits at rates that will look like a bargain as the Fed continues to raise interest rates. Online banks that are looking to grow deposits are offering as much as 2.6% APY for a 5-year CD, with the overall average reaching nearly 1.7% APY. 

Image: American Banker

Affirm and Stripe Team on BNPL
Two behemoths of fintech are teaming up. Stripe and Affirm announced a partnership that will make Affirm’s BNPL offerings available through businesses that use Stripe’s payment processing. Purchases as small as $50 and as large as $30,000 are eligible to be financed through Affirm, which offers both “pay in four” and longer-term financing options.

The partnership should significantly expand Affirm’s reach, as Stripe boasts millions of merchants, from the smallest businesses to the Fortune 500.

In the News:

Litigation Leaves CFPB’s Payday Rule in Limbo (American Banker, 5/31/2022) The current payday rule, if ever enacted, would restrict lenders from making more than two unsuccessful attempts to debit a payment from a consumer’s checking account.

Responsible Financial Innovation Act: Senator Lummis’ Draft Digital Assets Bill is Now Available (Crowdfund Insider, 5/31/2022) The draft legislation aims to clarify the somewhat opaque regulatory environment for digital assets.

CFPB Presses Big Card Issuers on their Credit Reporting Practices (American Banker, 5/26/2022) A top CFPB official wrote to the CEOs of JPM, Citi, BofA, Capital One, Discover, and AmEx, saying these companies appear to have stopped regularly reporting data on cardholder payments.

The FDIC Quietly Rolled Back an Independent Review Committee, and Banks Aren’t Happy (American Banker, 5/26/2022) The FDIC disbanded an internal court for banks to challenge supervisory findings and reinstated a board-controlled committee.

Block Has Assembled the Right Pieces (Wall Street Journal, 5/31/2022) Cash App is rapidly adding ways to monetize its existing users via additional financial services, as well as helping to boost its Square seller business.

With Its IPO On Hold, What Should Chime Do Next? (Forbes, 5/31/2022) Chime should take advantage of the fact that it is very highly rated by its customers, who feel like they receive more value from them than many traditional institutions.

PayPal and Experian Invest in Home Rental Fintech Jetty (Finextra, 5/26/2022) Jetty aims to support renters and properties through its products, that include: a security deposit alternative, a flexible rent program and a modern renters insurance product.

Payoneer Partners With Optty for BNPL Offering (PYMNTS, 6/1/2022) Optty allows payment gateways to offer BNPL services the same way they would credit card or digital wallet capabilities.

FTX Talking with Goldman Sachs on Crypto Derivatives: Report (Crowdfund Insider, 6/1/2022) Goldman in discussions to “integrate some brokerage services for leveraged derivatives in the U.S.”

Bill Pay Is Digital Banking’s Neglected Product: Can it Be Revived? (The Financial Brand, 6/1/2022) Consumers say online/mobile bill pay is opaque, over-complicated.

Lighter Fare:

Taco Bell Locations are Running Out of Mexican Pizza less than Two Weeks After its Return (CNBC, 5/31/2022) Taco Bell used its partnership with Doja Cat to build hype for the item’s return to menu