Morgan Stanley Makes $100-Million Move on Fintech Startup Affirm Inc.

Startup lender Affirm Inc. is adding debt from Morgan Stanley as it seeks to increase its loans for tickets, trips and other big online purchases as an alternative to paying with credit cards.

The Wall Street titan is furnishing a $100 million credit line for Affirm, the four-year-old San Francisco company led by PayPal co-founder Max Levchin, which was valued at $800 million in its most recent fundraising.

It is the first time Morgan Stanley has backed the lender, which has raised cash from venture-capital investors and debt from investment bank Jefferies and others.

http://www.wsj.com/articles/morgan-stanley-makes-100-million-move-on-fintech-startup-affirm-inc-1476352982

U.S. Corporate Profits Climbed as GDP Ticks Down to 1.1%

A key measure of corporate profits rose this spring for a second straight quarter alongside modest growth in the overall economy, though U.S. businesses remain under pressure from global weakness and other forces.

Corporate profits after tax, without inventory valuation and capital consumption adjustments, rose 4.9% from the prior quarter to a seasonally adjusted annual level of $1.627 trillion in the second quarter, the Commerce Department said Friday.

Profits had jumped 8.9% in the first three months of 2016, after dropping in three of the previous four quarters. Still, the trend remains weak and second-quarter profits were down 2.2% compared with a year earlier. An alternative measure, pretax profits with inventory valuation and capital consumption adjustments, declined 1.2% in the second quarter from the prior three months.

 

http://www.wsj.com/articles/u-s-corporate-profits-rise-as-gdp-ticks-down-to-1-1-1472214856

Online Lender Prosper in Talks on $5 Billion Loan-Buying Deal

Online lender Prosper Marketplace Inc. is in advanced talks with a group of investment firms to sell them roughly $5 billion worth of loans over the next two years, people familiar with the matter said.

The loans would be bought at face value, but the firms are also in discussions to receive equity warrants in Prosper as they make the purchases, the people added. The potential buyers are also talking to banks about borrowing money to support their loan purchases, and a deal could wrap up in the coming weeks, they said.

http://www.wsj.com/articles/online-lender-prosper-in-talks-on-5-billion-loan-buying-deal-1470322065?mg=id-wsj

US HOMEOWNERSHIP RATE OF 62.9 PERCENT MATCHES A 51-YEAR LOW

http://www.apnewsarchive.com/2016/US-homeownership-rate-of-62-9-percent-matches-a-51-year-low/id-7874336198a5405f8bfaa2673a56dffe

U.S. GDP Grew a Disappointing 1.2% in Second Quarter

Economic growth was well below expectations; cautious business investment offset robust consumer spending

http://www.wsj.com/articles/u-s-economy-grew-at-a-disappointing-1-2-in-2nd-quarter-1469795649

Banks’ Bet on Consumers is Getting Riskier

http://www.wsj.com/articles/banks-bet-on-consumers-is-getting-riskier-1469221959?tesla=y

 

Big banks are socking away more money to cover possible losses on consumer loans, as their executives warn the long boom in credit quality has peaked.

Lenders including J.P. Morgan Chase & Co., Wells Fargo & Co., Capital One FinancialCorp. and Discover Financial Services said on earnings calls this month that they have bolstered their reserves—in some cases for the first time in years—to prepare for an uptick in loan losses.

The higher reserves in part reflect efforts to expand loan volume. As competition for borrowers intensifies, some lenders also are lowering credit-score requirements and taking on riskier customers.

 

PayPal Signs Exclusive 12-Month Deal with Visa

http://bankinnovation.net/2016/07/paypal-signs-exclusive-12-month-deal-with-visa/

 

• Visa will get access to PayPal payment processing and Venmo, and essentially become the preferred payment type within PayPal
• PayPal will no longer steer Visa cardholders toward ACH transactions
• The deal is exclusive for 12 months
• It’s another victory for the card networks, and a blow to ACH, which lost the MCX mobile payments platform recently. It’s also a blow to payments neutrality.

U.S. GDP Growth in First Quarter Revised Up to 1.1% Rate

WASHINGTON—The U.S. economy expanded more than previously thought in the first three months of the year, but underlying trends suggest it remains vulnerable in the face of global economic turmoil.

Gross domestic product, the broadest measure of goods and services produced across the U.S., grew at a seasonally adjusted annual rate of 1.1% in the first quarter, the weakest pace in a year, the Commerce Department said Tuesday. The agency previously estimatedthe economy grew at a 0.8% pace.

The main factors behind the upward revision: The U.S. exported more goods and services than previously thought. And companies spent more than initially estimated on software and research and development.

http://www.wsj.com/articles/u-s-gdp-growth-in-first-quarter-revised-up-to-1-1-rate-1467117151

Millions of U.S. Consumers Escaping Subprime Credit

The percentage of Americans with subprime credit scores has fallen to the lowest level in more than a decade, a development that could give bank lending and the overall economy a boost.

The share of U.S. adults with credit scores that are considered “subprime” fell to 20.7% in April, the sixth consecutive year-over-year decline and the lowest level since at least 2005, when Fair Isaac Corp., or FICO, started tracking the data. The ranks of subprime borrowers swelled during the financial crisis, peaking at 25.5% in 2010 as mortgage payments, credit-card bills and other debts went unpaid.

The improving trend could bring relief to big banks, which tightened credit standards in the wake of the crisis. An increase in more-creditworthy borrowers could allow them to increase lending without lowering standards. Banks are desperate for revenue growth since the same superlow rates helping borrowers are also squeezing their own profits.

“It will have a positive impact on loan volume, loan growth and revenue,” said Morgan Whitacre, consumer client underwriting executive at Bank of America. Credit-card and auto lending would be the first type of loans to benefit.

http://www.wsj.com/articles/consumers-improving-credit-scores-give-banks-reason-to-cheer-1466587801

 

 

Walmart Canada will no longer accept Visa cards due to high fees

Walmart Canada is breaking up with Visa over high transaction fees.

The company’s Canada division will no longer accept Visa cards because the fees Visa charges to accept its branded cards are “unacceptably high,” Walmart Canada said in a statement over the weekend.

Walmart said the fees conflict with its mission of saving customers money and subsequently keeping business costs low. The change will start taking place July 18 and rolled out in phases to its more than 400 stores across Canada.

Walmart Canada said it pays more than $100 million in fees every year to accept credit cards, though it didn’t break out how much of that goes to Visa. Stores will still accept MasterCard, Discover and American Express.

http://www.usatoday.com/story/money/2016/06/13/walmart-canada-will-stop-accepting-visa-cards/85826704/

http://www.reuters.com/article/us-walmart-canada-idUSKCN0YX0N1

http://www.bloomberg.com/news/articles/2016-06-16/wal-mart-unfairly-dragging-shoppers-into-fee-spat-visa-says