the Wall Street newspaper

Bonus rewards

American Airlines “said it would raise $ 7.5 billion backed by its AAdvantage loyalty program to repay a loan the carrier took out from the federal government after the coronavirus pandemic decimated air travel. Delta Air Lines and United Airlines have also used their respective loyalty programs to fund land. “

“Carriers have found the cash flow to be relatively stable as their loyalty programs bring to be a rich source of collateral for financing. Airlines mainly make money from loyalty programs by selling miles to banks and retailers who then allocate them to customers who sign up for credit cards and make purchases. This means that airlines benefit from a co-branded card every pass, whether customers buy airline tickets or buy clothes. Airlines said that revenue held up better than ticket sales as demand for travel dried up last year. “

Safety first

The “apparent willingness of the Fed to provide inexhaustible financing of the US public debt” is move banks away from lending to private sector companies for the safety of buying government securities, former Fed candidate Judy Shelton writes in a Wall Street Journal op-ed. “Banking institutions have traditionally provided the pipeline that carries loanable capital to businesses and households. Yet commercial banks are increasingly choosing to reduce the share of total assets devoted to loans while increasing their holdings of treasury debt securities and government guaranteed mortgage securities, ”she writes. “The Fed’s approach which kills with kindness risks permanently tarnishing banking relations by limiting access to credit. No wonder the movement to democratize finance is increasingly pursued through non-banking institutions. “

Financial Time

Easy money?

It is not yet clear what Walmart plans to do with its fintech partnership with venture capital firm Ribbit Capital. “But one thing is almost certain: Walmart is betting that the regulatory environment has changed“says an FT editorial.” In 2007, amid a frenzy of bank lobbying, US regulators made it clear that the world’s largest retailer would not be allowed to pass through a loophole in applying for an industrial loan company charter and Walmart withdrew its application. Today, however, politicians prefer to portray big tech companies as the main threat to competition. And the banking world has changed too. There is a range of fintechs that make things happen, so banks can now see Walmart as one threat among many. ”

“I think Walmart wants to think big. They are not going to offer services as a way to encourage loyalty to their core retail business. They want to make a profit here, and that means raising capital and lending it. All of this will sooner or later bring Walmart into the orbit of US banking regulators. But if it gets approval from regulators – it’s not a given even now – the question remains whether it can make the business work. Banking is a cyclical activity where it is tempting to expand too much at the top and give up completely at the bottom. Profits can be good, but it’s never easy money.

Emergency expiration

The Federal Reserve said it “is terminate most of the remaining emergency facilities it deployed in the past year to support financial markets during the coronavirus crisis, in the latest sign that the economic recovery is accelerating. The Fed said it would allow three loan programs – the Commercial Paper Funding Facility, the Money Market Mutual Fund Liquidity Facility and the Principal Broker Credit Facility – “to expire as scheduled in the end of the month, citing low usage “.

The programs “were launched in March last year to combat the turbulent trading conditions that engulfed markets as investors rushed to hold cash. The facilities were part of a larger effort by the Fed to stabilize the financial system, which allowed the central bank to expand the reach and scale of its reach in an unprecedented way. “

The Fed also said it was extending by three months, until June 30, the liquidity facility behind the Paycheck Protection Program, American Banker reported.

New York Times

Climate enemy?

Investing in bitcoin can be all the rage in some circles, ”but according to the study you’re reading, the annual carbon emissions from the electricity needed to mine Bitcoin and process its transactions are equal to the amount emitted by all of New Zealand. . Or Argentina.

“Bitcoin uses more electricity per transaction than any other method known to mankind, and so it’s not a good thing for the climateAccording to Bill Gates.

Quotable

It is the happiest day of my life in the Senate. We had so many great things. ” – Ohio Sen. Sherrod Brown, Chairman of the Senate Banking Committee, after the passage of the $ 1.9 trillion COVID-19 stimulus package.

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