NY Gov. Hochul signs medical-debt bill, PayPal ex-CEO will exit board

December 15, 2023 2:19 PM

New York Gov. Kathy Hochul signs a law banning medical debt on credit reports; PayPal's former CEO Dan Schulman will exit the board; community banks boost small-business loan approvals; and more in the weekly banking news roundup.

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NY Gov. Hochul signs law banning medical debt on credit reports

New York Governor Kathy Hochul signed a bill this week banning medical debt from being collected by credit-reporting agencies or included in a consumer's credit report. New York joins Colorado as the second state to enact such a ban. New York's actions come just three months after the Consumer Financial Protection Bureau barred all medical debt from being reported to the three credit bureaus. "I'm signing a bill that bans hospitals, health care providers and ambulances from reporting medical debt to your credit agencies," Hochul, a Democrat, said at the bill-signing ceremony in New York City on Dec. 14. Hochul's actions come amid efforts by the Biden administration to aid consumers by eliminating medical debt from credit reports, helping to boost credit scores. Consumers will still owe the debts, however, and debt collectors will still pursue them through letters and lawsuits. In September, the CFPB proposed making changes to the Fair Credit Reporting Act to bar Equifax, Experian and TransUnion from reporting medical debts, which the CFPB claims are often inaccurate or not owed. — Kate Berry

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JPMorgan Chase opens 529 college savings plans to debit card contributions

The first example of a bank and acquirer enabling consumers to contribute funds to 529 college savings plans via debit cards is available through JPMorgan Chase, according to a press release. Powered by J.P. Payments, the integration adds convenience to a process that previously relied on checks or electronic funds transfers, making it easier for friends and families to contribute to anyone's 529 college savings plan. The program rolled out recently through the state of Utah's college savings plan website, my529, enabling contributions to plans from any signature-based debit card, the nearly $4 trillion-asset JPMorgan said. —Kate Fitzgerald

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Community banks boost small-business loan approvals

Small-business loan approvals by community banks increased again last month. Banks under $10 billion of assets approved 19.7% of such loans in November. That was up from 19.5% in October and marked a fifth-consecutive monthly increase, according to the latest Biz2Credit Small Business Lending Index. "It remains a positive that small banks have started to become more of an option for business owners searching for capital," said Rohit Arora, CEO of Biz2Credit. The small-business loan approval rate among banks with more than $10 billion of assets stalled last month at 13%. The rate among credit unions ticked down to 19.7% in November from 19.8% in October. —Jim Dobbs

Wells Fargo, UnidosUS to partner on lowering Latino unbanked rate

Wells Fargo and the Latino civil rights group UnidosUS are teaming up to reduce the amount of unbanked Latinos in the country. The pair will launch an awareness campaign for Bank On accounts, a low- or no-fee account that has no overdraft capabilities. Some 9.3% of Latinos are unbanked, according to the Federal Deposit Insurance Corp. UnidosUS says major barriers include high fees in bank accounts, minimum balance requirements and an overall lack of trust in the system. For years, banks have worked with the Cities for Financial Empowerment Fund to develop low-cost accounts aimed at lower-income individuals and those without bank accounts. While national unbanked rates have fallen to historic lows, people of color are still disproportionately represented in those figures, according to FDIC data. "The Latino unbanked consumer segment is one with a lot of potential to grow financially," UnidosUS senior vice president Eric Rodriguez said in a news release. —Polo Rocha

PayPal’s former CEO Dan Schulman to exit board at end of year

Dan Schulman, former chief executive officer of PayPal, will leave the payments giant's board at the end of the year, earlier than previously planned. The San Jose, California-based company had said in August that Schulman, 65, would remain on the board until its next annual shareholder meeting in May. The announcement was made when Alex Chriss was named CEO in August. Chriss has shaken up PayPal's leadership structure since taking the helm.

"With Alex Chriss and his leadership team in place, I leave the board with full confidence that PayPal is in excellent hands for its next chapter of growth and success," Schulman said Thursday in a statement. "It has been a great honor to lead the PayPal community, and I look forward to seeing where Alex will take the company next." —Paige Smith, Bloomberg News

Ex-First Republic engineer gets two years’ prison for cloud hack

A former First Republic Bank cloud engineer in San Francisco was sentenced to two years in prison for vandalizing the company's computer network after he was fired in 2020.

Miklos Daniel Brody logged into the bank's network without authorization, using his company-issued laptop, which he had failed to return, the evening he was fired after the company accused him of having pornography on his computer, according to court records.

"Brody deleted the bank's code repositories, ran a malicious script to delete logs, left taunts within the bank's code for former colleagues and impersonated other bank employees by opening sessions in their names," according to a statement Monday by the U.S. attorney's office in San Francisco. U.S. District Judge William Orrick ordered him to pay $529,266.37 in restitution as part of his sentence. — Robert Burnson, Bloomberg News

Wells Fargo hires senior banker Fred Terrell from Centerbridge

Wells Fargo is hiring veteran investment banker Frederick Terrell from Centerbridge Partners, as the San Francisco-based lender continues building out its advisory business.

Terrell will join Wells Fargo's corporate and investment bank as vice chairman in January, according to a statement reviewed by Bloomberg News. He will be based in Los Angeles.

"With 40 years of experience in banking, private investment and corporate governance, he will bring to our clients an in-depth, enterprise level perspective on the opportunities and issues facing their businesses," Jon Weiss, chief executive officer of the corporate and investment bank, said in a statement.

Terrell has been with Centerbridge since 2020. Prior to that he spent eight years at Credit Suisse and founded and ran the private equity firm Provender Capital Group from 1997 to 2009. He started his investment banking career in the early 1980s at First Boston. — Matthew Monks and Hannah Levitt, Bloomberg News

Mexican fintech Kapital raises financing led by Tribe Capital

Financial technology firm Kapital raised funding in a round led by Tribe Capital to fuel expansion in Mexico and elsewhere in Latin America.

Kapital, which combines banking and tech on its platform, raised $40 million in equity and $125 million in debt in a series B financing, Co-founder and Chief Executive Officer Rene Saul said in an interview. Investors including Cervin Ventures, Tru Arrow, MS&AD Ventures and Alumni Ventures also participated in the deal, he said.

The company hasn't disclosed its valuation in the financing.

Based in Mexico City, Kapital serves small and midsize businesses that don't usually have access to financial services in Latin America. Its products include loans and credit cards and it's expanding into payroll and benefits services. — By Crystal Tse, Bloomberg News

FDIC sells stake in commercial property loans from failed Signature Bank

A joint venture that includes Blackstone and Canada Pension Plan Investment Board has won a stake in a nearly $17 billion portfolio of commercial property loans from the failed Signature Bank.

The companies are also partnering with funds affiliated with Rialto Capital to acquire a 20% stake in the venture for $1.2 billion, according to a statement Thursday. The Federal Deposit Insurance Corp. is maintaining an 80% stake in the venture and providing financing equal to 50% of the value.

The FDIC has been trying to offload roughly $33 billion of real estate loans from Signature after the bank collapsed earlier this year. That also includes loans backed by rent-stabilized or rent-controlled apartments mostly in New York City, which aren't part of the Blackstone deal. The FDIC said it expects to announce results for those transactions soon. —Natalie Wong, Bloomberg News