Fed OK Holding Rates Steady; Trump’s Executive Order; Varo Names New CEO

Fed prepared to hold rates steady. Trump EO exerts more control over banking regulators. Varo names new CEO. Shift4 acquires Global Blue. Mastercard announces “One” credential. Wise lays off 300, closes Florida office.

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The Hold Steady

Minutes of the most recent FOMC meeting show officials are prepared to hold rates steady, as inflation proves more stubborn than hoped for. Economic policy uncertainty, including tariffs and the impact of immigration policy on the workforce, may also be playing a role in the decision to keep rates where they are, as both policy areas have the potential to be inflationary. The meeting minutes noted, “Participants indicated that, provided the economy remained near maximum employment, they would want to see further progress on inflation before making additional adjustments to the target range for the federal funds rate.”

In other Fed news, the central bank is undertaking its first formal review of policy strategy in five years. The question Fed officials are seeking to answer is, did the effort to support an inclusive job market recovery contribute to elevated rates of inflation? Many economists believe the answer is clearly “yes.” But Fed officials, including Fed Chair Powell, argue this analysis is based on a misunderstanding of the central bank’s strategy. Whatever the outcome of the policy review, it is likely to shape how the Fed approaches managing the economy during President Trump’s second term.

Trump EO Exerts Control Over Independent Agencies

An executive order Trump issued last week seeks to tighten the President’s control over independent agencies, including banking regulators. Per the executive order, the agencies must submit “significant” regulations for review by the Office of Management and Budget, led by recently confirmed Director Russell Vought. Vought is also the acting Director of the CFPB, pending nominee Jonathan McKernan’s confirmation. The EO gives the OMB control over the agencies’ budgets. The order also calls for the creation of “performance standards” for agency heads, which potentially could form the basis for seeking to dismiss independent agency heads. Independent agencies are prohibited from taking legal positions that disagree with Trump or his recently appointed attorney general, Pam Bondi. While the order states it does apply to the Federal Reserve, it explicitly carves out the FOMC and Fed board’s role in managing monetary policy.

Varo Names New CEO

Colin Walsh, the founder of neobank Varo, is stepping down as CEO. Varo was the first fintech to obtain a de novo bank charter, in 2020, but has struggled to get to profitability. After nearly a decade running the company, Walsh will be succeeded by Gavin Michael, who, for the past four years, has been CEO of crypto custody and trading platform Bakkt. Walsh will remain on Varo’s board of directors. Despite layoffs and reducing marketing spending, Varo still posted a net loss of about $(65)Mn last year, Fintech Business Weekly reported last week, per the bank’s call report filings. Varo remains heavily dependent on interchange, with more than half of its revenue coming from swipe fees. And while Varo has seen its lending, in the form of its Varo Advance small dollar product and Varo Believe secured card, continue to grow, it has struggled to manage credit quality, with high charge off rates. Despite spending $19 million on marketing in 2024, Varo saw its deposits increase by less than 4% in 2024, and the bank’s assets declined by about 8% vs. the end of 2023. After ending 2024 with just $60Mn in bank equity, Varo is seeking to raise an additional $55Mn in capital, Crowdfund Insider reported, based on SEC Form D filings. But, as of the time Varo filed that paperwork, it had raised less than $29Mn of its goal.

Shift4 Acquires Global Blue

Payments firm Shift4 is acquiring Global Blue for $2.5Bn, the companies announced last week. Shift4 will pay $7.50 per common share in cash, a 15% premium over Global Blue’s share price as of earlier this month. Global Blue provides payment services, currency conversion, and enables tax-free shopping for more than 400,000 luxury hospitality and retail businesses. Chinese tech firms Ant and Tencent remain significant shareholders in Global Blue, opening up the potential for additional partnerships between the firms. Shift4 president Taylor Lauber said of the deal, “This acquisition continues a bold tradition of introducing transformative capabilities to exceptional customers along with a massive embedded cross-sell opportunity.”

Mastercard Announces “One” Credential

Last week, Mastercard announced it has begun rolling out its Mastercard One credential, which enables users to dynamically select how they pay for transactions. With a single Mastercard payment instrument, users can choose to process a given transaction as debit, credit, or via installments (e.g., buy now, pay later). The capability is roughly analogous to the recently launched Visa “flexible credential.” The launch initially supports consumer cards, but Mastercard plans to extend it to small businesses as well. Mastercard is working with a number of banks and processors on the offering, including Galileo, i2c, Lithic, Marqeta, Episode Six, Wio Bank, and Adelaide Bank. Of the news, Mastercard chief product officer Jorn Lambert said, “Today’s consumers expect to be in the driver’s seat. That’s what sparked One Credential. It gives people an innovative way to pay that’s truly personalized to them. While Gen Z may be leading the way, the desire for personalization spans generations.”

Wise Closes Florida Office

International remittance and payments company Wise (formerly TransferWise) is closing up shop in Florida, FintechFutures reported last week. The London-based company is planning to close an office in Tampa as part of its plan to consolidate U.S.-based servicing teams. As part of the consolidation, about 300 staffers in the Tampa office will be terminated, a notice the company sent to the Florida Department of Commerce indicates. A Wise spokesperson said of the decision, “As our business continues to scale rapidly, we are focused on further accelerating this close collaboration across our teams, including in the Americas where we see strong growth.” Wise’s Americas operations will be run out of Austin, New York, and São Paolo.