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

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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

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.

MI-CQ760_CONSUM_9U_20160722160908

 

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.