This is the web version of The Ledger, Fortune’s weekly newsletter covering financial technology and cryptocurrency. Sign up here to get it free in your inbox.
Robinhood did something it’s never done before this month: the popular stock trading app stepped into politics, with a $500,000 donation to the NAACP Legal Defense Fund. I asked co-CEO Vlad Tenev about the donation, and he said it is an acknowledgment by Robinhood—which has long favored feel-good marketing gloss over real-world actions—of the urgency of civil rights issues in the wake of George Floyd’s death.
Robinhood’s decision also reinforces the widely-shared feeling that “something is different” right now. You can see it in the diversity and duration of recent protests, and in how corporate leaders are approaching hard questions about race.
Our boss at Fortune, Alan Murray, says the reaction of CEOs to George Floyd’s murder marks a sea-change from 1992, when the police beating of black motorist Rodney King touched off unrest across the country. As a business reporter back then, he found companies scrambling to have nothing to do with the controversy. Today, Alan says many CEOs are looking to lead on civil rights issues—a task that’s become more urgent in light of a dysfunctional political system in the U.S.
When it comes to banks, fintech companies and other pillars of the financial system, it remains to be seen just how much leadership they will show. Donations and statements decrying racism are commendable but they also risk diverting attention from harder questions about systemic discrimination in finance. These include how to address the legacy of mortgage redlining, which deprived many black families of an opportunity to build intergenerational wealth, and access to financial services today.
If you doubt there are disparities, think about the financial decisions that preoccupy many of us—what credit cards have the best rewards or which stock-buying app has the nicest interface—versus what is top of mind for communities of color. A recent McKinsey report, for instance, found that African-American communities have much less access to basic financial services like banking, but are overserved by expensive payday lenders. McKinsey argued that costs the average black American $40,000 over their lifetime, contributing to the country’s racial wealth gap.
This has led us to devote our next Brainstorm Finance conversation, which will be held online on June 17, to the experience of “banking while black.” We will be asking executives from banks, big fintech companies and startups about what the finance industry can do differently to ensure finance is fair and open to everyone. There are lots of other pressing questions in the world of finance right now—the improbable stock market rally, the risk of inflation, the future of crypto—but the most important one is about civil rights. Something is different now, and we should discuss it. Please reach out if you would like an invitation.
Jeff John Roberts
DECENTRALIZED NEWS
Credits
Square makes Juneteenth, the June 19 celebration of the end of U.S. slavery, a permanent company holiday ... More than 1/4 of institutional investors hold Bitcoin, Fidelity finds ... Cross River, banker to many fintechs, made 105,000 small business PPP loans averaging just $44,000 ... U.S. Marshals hiring a contractor to handle seized crypto ... Ben Mezrich's book on the Winklevoss Twins will become a movie ... Crypto stablecoin Tether doubled issuance in six months ... The U.K.'s post-Brexit carbon market could make polluting more expensive ... Moody's economist says the recession is over.
Debits
Young white families earn more than twice as much as black families ... "Rogue payment processor" Madera Merchant Services banned by FTC after helping scammers ... Wells Fargo shuts off Zelle payments app in Venezuela, where it is widely used ... Coinbase aims to sell blockchain snooping software to DEA, IRS ... Pentagon wargames asked how to fight Zoomers using Bitcoin ... South Korea won't arrest Samsung head on financial fraud charges ... Automatic background checks flag the wrong renters ... Ethereum user accidentally (?) pays $2.5M transaction fee to send $133.
BUBBLE-O-METER
+70%
The minimum single-day stock appreciation seen Monday, June 8 for a half-dozen companies in or nearing bankruptcy. That included J.C. Penney (up more than 200%), Hertz Rent-a-Car (up over 70%), Whiting Petroleum (up over 200%), and Chesapeake Energy (up over 440%). The rally is bizarre, to say the least, since equity is usually rendered valueless in bankruptcy.
Though it's hard to pin down a clear cause, much speculation has focused on the surge of amateur retail investors, particularly those buying the stocks through Robinhood, which has seen huge increases in volume on these trades. Another possible nexus is r/wallstreetbets, a reddit forum populated by self-proclaimed degenerate gamblers who often tout high-risk stocks, creating what VC Max Fiege recently referred to as "decentralized pump and dumps."
The thesis of this pile-in, at least according to Jim Cramer's speculation, was simply that someone else would come along to buy the stock at a higher price: the well-named "greater fool" theory. It worked ... for a bit. Most of the above stocks were slumping back down to earth by early Wednesday.
FOMO NO MO'
After the Shanghai meeting, Mr. Kiwan said, Mr. Low told him that China Communications planned to wire billions of yuan to Al Waseet, as payment to Mr. Low for helping the company win contracts in Malaysia. Mr. Kiwan said Mr. Low told him that a share would go to Sheikh Sabah.
Just one of a complex chain of transactions reportedly engineered by Jo Low, the now-notorious mastermind of the $4.5 billion 1MDB heist, to hide assets from the U.S. Justice Department. According to a painstaking chronicle in the Wall Street Journal, Low's financial engineering heavily featured Kuwaiti royals, and exploited contracts that were part of China's "Belt and Road" initiative. The new details come primarily from Bachar Kiwan, former head of a Kuwait-based publishing and media company that was used to transfer - read 'launder' - $200 million worth of Chinese yuan. Kiwan says he refused to be party to the transaction and later fled the country for France.
Low is apparently still at large. His most recent known location was, of all places, Wuhan, China.
THE LEDGER'S LATEST
Insurance redlining is real, and it will hurt neighborhoods hit by looting - Jeff John Roberts
For small business owners, bankruptcy could also mean losing their home - David Z. Morris
GoFundMe donations for elderly Buffalo man injured by police soar after baseless Trump tweet - Jeff John Roberts
This is what people mean when they say they want to defund the police - Nicole Goodkind
NASDAQ tops 10,000 for the first time - but have we gone too far? - Anne Sraders
Americans who don't file taxes have until October 15 to sign up for stimulus checks - Rey Mashayeki
How fans of Korean boy band BTS raised $1 million for Black Lives Matter - Karen Yuan
MEMES AND MUMBLES
This edition of The Ledger was curated by David Z. Morris. Contact him at david.morris@fortune.com.