Finance

The Consumer Financial Protection Bureau on Thursday issued a finalized version of a rule saying it will soon supervise nonbank firms that offer financial services likes payments and wallet apps.
That would include payments services from Apple, Google and Amazon, as well as fintech firms including PayPal and Block and peer-to-peer services Venmo and Zelle.
The most popular apps covered by the rule collectively process more than 13 billion consumer payments a year, the CFPB said.

Rohit Chopra, director of the CFPB, testifies during the Senate Banking, Housing and Urban Affairs Committee hearing titled “The Consumer Financial Protection Bureau’s Semi-Annual Report to Congress,” in the Dirksen Building on Nov. 30, 2023.
Tom Williams | Cq-roll Call, Inc. | Getty Images

The Consumer Financial Protection Bureau on Thursday issued a finalized version of a rule saying it will soon supervise nonbank firms that offer financial services likes payments and wallet apps.
Tech giants and payments firms that handle at least 50 million transactions annually will fall under the review, which is meant to ensure the newer entrants adhere to the laws that banks and credit unions abide by, the CFPB said in a release.

The CFPB said that seven nonbanks qualify for the new scrutiny. Payments services from Apple, Google and Amazon, as well as fintech firms including PayPal and Block and peer-to-peer services Venmo and Zelle are impacted by the change.
While the CFPB already had some authority over digital payment companies because of its oversight of electronic fund transfers, the new rule allows it to treat tech companies more like banks. It makes the firms subject to “proactive examinations” to ensure legal compliance, enabling it to demand records and interview employees.
“Digital payments have gone from novelty to necessity and our oversight must reflect this reality,” said CFPB Director Rohit Chopra. “The rule will help to protect consumer privacy, guard against fraud, and prevent illegal account closures.”
A year ago, the CFPB said it wanted to extend its oversight to tech and fintech companies that offer financial services but that have sidestepped more scrutiny by partnering with banks. Americans are increasingly using payment apps as de facto bank accounts, storing cash and making everyday purchases through their mobile phones.
The most popular apps covered by the rule collectively process more than 13 billion consumer payments a year, and have gained “particularly strong adoption” among low- and middle-income users, the CFPB said Thursday.

“What began as a convenient alternative to cash has evolved into a critical financial tool, processing over a trillion dollars in payments between consumers and their friends, families, and businesses,” the regulator said.
The initial proposal would’ve subjected companies that process at least 5 million transactions annually to some of the same examinations that the CFPB conducts on banks and credit unions. That threshold got raised to 50 million transactions in the final rule, limiting the expanded powers from roughly 17 companies to just seven, the agency said Thursday.
Payment apps that only work at a particular retailer, like Starbucks, are excluded from the rule.
The new CFPB rule is one of the rare instances where the U.S. banking industry publicly supported the regulator’s actions; banks have long felt that tech firms making inroads in financial services ought to be more scrutinized.
The rule “marks an important step forward for the CFPB to regularly ensure that non-bank market participants actually comply with their obligations to consumers,” Lindsey Johnson, president of the Consumer Bankers Association, said in an email.
The CFPB said the rule will take effect 30 days after its publication in the Federal Register.
It is not known whether the incoming Trump administration will decide to change or kill the new rule, but it is possible that expanded oversight of tech companies aligns with future CFPB leadership.

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“I am gravely concerned that the rise of tariffs puts us on a slippery slope towards crony capitalism,” billionaire investor Ken Griffin said at the Economic Club of New York.
The Citadel founder said domestic companies could enjoy a short-term benefit of having their competitors taken away.
Longer term, however, it does more harm to corporate America and the economy as companies lose competitiveness and productivity, he said.

Ken Griffin, chief executive officer and founder of Citadel Advisors LLC, speaks during an Economic Club of New York event in New York, US, on Thursday, Nov. 21, 2024.
Yuki Iwamura | Bloomberg | Getty Images

Citadel CEO Ken Griffin issued a warning against the steep tariffs President-elect Donald Trump vowed to implement, saying crony capitalism could be a consequence.
“I am gravely concerned that the rise of tariffs puts us on a slippery slope towards crony capitalism,” the billionaire investor said Thursday at the Economic Club of New York.

The Citadel founder said domestic companies could enjoy a short-term benefit of having their competitors taken away. Longer term, however, it does more harm to corporate America and the economy as companies lose competitiveness and productivity, he said.
Crony capitalism is an economic system marked by close, mutually advantageous relationships between business leaders and government officials.
“Those same companies that enjoy that momentary sugar rush of having their competitors removed from the battlefield soon become complacent, soon take for granted their newfound economic superiority, and frankly, they become less competitive on both the world stage and less competitive at meeting the needs of the American consumer,” Griffin said at the event.
Trump made universal tariffs a core tenet of his economic campaign pitch, floating a 20% levy on all imports from all countries with a specifically harsh 60% rate for Chinese goods.
The protectionist trade policy could make production of goods more expensive and raise consumer prices, just as the world recovers from pandemic-era inflation spikes.

“Now you’re going to find the halls of Washington really filled with the special interest groups and the lobbyists as people look for continued higher and higher tariffs to keep away foreign competition, and to protect inefficient American businesses that have failed to meet the needs of the American consumer,” Griffin said.
At the same event, Griffin also said he’s not focused on taking Citadel Securities public in the foreseeable future. Citadel is a market maker founded by Griffin in 2002.
“We’re focused on building the business, on investing in our future. And we do believe that there are benefits to being private during this period of very, very rapid growth,” he said. More

Democrats spent much of the presidential-election campaign calling Donald Trump a fascist. Mr Trump is hardly known for his conciliatory nature. So few American politicos expect there to be much bipartisanship in his second term. Yet in one place there is already a flicker of cross-aisle agreement: a proposal to cap interest rates on credit-card repayments at 10% has won the support of both Mr Trump and Bernie Sanders, perhaps the most prominent left-wing Democrat. More

Almost two years have passed since OpenAI released GPT-3.5 to great fanfare. Bill Gates, co-founder of Microsoft, compared the technology’s arrival to his first encounter with the graphical user interface—a breakthrough that reshaped personal computing—in the 1980s. Others predicted that generative artificial intelligence (ai) would rapidly transform economies around the world, leaving many millions unemployed. Yet despite the hype and the worries, ai’s impact has been muted thus far. According to America’s Census Bureau, only 6% of businesses use AI to produce goods and services. Output and labour-productivity growth, meanwhile, remain far below the soaring heights of the computer age in the 1990s. More

Spare a thought for the analysts, bankers and fund managers who make a living from European shares. If your salary depends on talking up the stockmarkets of the continent that invented them, you have learned to live with disappointment. For much of the past two decades, you could have pointed out that European stocks were cheaper, relative to earnings, than American stocks. You could have reasonably argued that this portended better investment returns and less risk of crashes. And for all that time you would have been utterly, gloriously wrong. More

China is famous, even infamous, for hard graft. Prodigious amounts of toil and elbow grease helped the country become the workshop of the world. More than 175m migrant workers labour in cities far from home, often leaving their children in the care of relatives. And the sacrifices are not confined to the poor. Even some of China’s more sophisticated firms are known for their “996” office culture, encouraging unfortunate employees to work from 9am to 9pm, six days a week. More

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Chinese tech company Baidu on Thursday reported better-than-expected revenue and profit for the third quarter.
Baidu noted a 12% surge in its non-online marketing revenue to the equivalent of $1.1 billion, mainly driven by its artificial intelligence cloud business.

Baidu on Nov. 12, 2024, unveiled a pair of glasses with a built-in AI assistant, putting up a Chinese rival to the Meta Ray-Bans that have proven a rare success in AI-powered hardware. 
Bloomberg | Bloomberg | Getty Images

BEIJING — Chinese tech giant Baidu on Thursday posted a 3% annual drop in third-quarter revenue, nevertheless beating market expectations amid AI cloud growth.
The revenue print came in at $4.78 billion for the quarter ending on Sept. 30. Net income for the period rose by 14% to $1.09 billion.

Baidu noted a 12% surge in its non-online marketing revenue to the equivalent of $1.1 billion, mainly driven by its artificial intelligence cloud business.
The company’s U.S.-traded shares fell nearly 4% in premarket trading following the release of its results.
Here’s what analysts expected the company to report for the quarter, according to LSEG estimates:

Revenue: $4.63 billion
Net income: $857.17 million

Baidu had reported revenue of 34.45 billion yuan ($4.75 billion) and net income of 6.68 billion yuan for the third quarter of 2023.
Beijing-based Baidu operates one of the major web browser search engines in China, along with a frequently used maps app. The company also sells cloud computing services. Online marketing drives a significant portion of the firm’s revenue.

The growth in the AI cloud business offset “ongoing weakness” in Baidu’s online marketing stream, CEO Robin Li said in the earnings release, also commenting on the performance of the company’s Ernie generative AI model and chatbot.
“Our strong AI capabilities are gaining broader market recognition, as evidenced by increasing adoption of Ernie,” he said.
Baidu has promoted its Ernie chatbot as a local alternative to OpenAI’s ChatGPT, which isn’t available in China. Ernie bot now has 430 million users, and programs access its underlying AI model around 1.5 billion times a day, more than double the 600 million rate in August, Baidu said last week.
“Despite the near-term pressures, we remain steadfast in our AI-focused strategy and are confident in our long-term trajectory,” Li said Thursday. “As we further scale AI, we are emboldened to find how it can drive innovations and create value for consumers, enterprises and society at large.”
The company this month also announced that its Xiaodu AI Glasses will begin sales in the first half of next year. The wearable has at least one camera and uses Ernie’s AI capabilities and Baidu’s maps and search functions. While Baidu hasn’t revealed a price, the product is widely expected to be a Chinese alternative to Meta’s popular Ray-Ban smart glasses.
Baidu announced a management rotation last month, with Junjie He, previously head of the mobile ecosystem group, becoming the company’s interim Chief Financial Officer, while former CFO Rong Luo assumed leadership of the mobile division.
“AI Cloud continued to show healthy and sustainable development in the third quarter,” he said in the earnings release. “Meanwhile, Apollo Go continued to make operational strides, underpinning our confidence in the validity of the fully autonomous ride hailing business model.”
Apollo Go, which operates Baidu’s robotaxi business, reported a 20% year-on-year surge in rides in the third quarter. The average number of rides a month rose to 329,333 during the third quarter, up from 287,500 in the first half of the year, according to CNBC calculations. More