The Hidden Dangers of Automatic-Payment Apps
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What are the top money headlines introduced at the start of the episode?
With your money briefing, I'm Tanya Bustos in the newsroom at The Wall Street Journal. Coming up, we're taking a look at the hidden dangers of automatic payment apps. But first, here are some money headlines. The FHA is clamping down on risky government-backed mortgages. The federal agency that insures mortgages for first-time buyers is tightening its standards. concerned it is allowing too many risky loans to be extended. The Federal Housing Administration told lenders it will begin flagging more loans as high risk. Those mortgages will now go through a more rigorous manual underwriting process. The FHA's decision to tighten underwriting could mean fewer first-time homebuyers are able to get mortgages.
Roughly 40,000 to 50,000 loans a year likely would be affected, or about 4% to 5% of the FHA's insured mortgages. Ride-hailing company Lyft is leading a parade of Silicon Valley companies to Wall Street that display an unusual quality, lots of red ink. The latest journal reporting writes that with its initial public offering expected this week, Lyft will serve as one of the biggest tests of the public market's appetite for money-losing companies. Of the five companies with the largest losses before an IPO, four of them, Groupon, Moderna, Snap, and Vonage, have performed poorly on the public markets. A fifth, Via Systems Group, went private a year ago at a fraction of its IPO value. And according to the Journal for Investors Betting on the Coming IPOs, the main appeal is rapid growth, which Lyft has made a centerpiece of its push to Wall Street.
And Venmo has a message for its users.
How is the FHA changing mortgage underwriting and who will it affect?
If you owe us money, we're coming for it. The digital transfer service operated by PayPal Holdings is ratcheting up pressure on users the company says owe it money for transactions that went awry. In a bid to curb losses on its platform, Venmo is threatening to sick debt collectors on some users who carry negative balances in their accounts. Venmo also recently amended its user agreement to give itself the power to recover money its customers owe by seizing it. from their other accounts at PayPal. Journal writes that PayPal's difficulties in trying to turn Venmo into a moneymaker show how banks and financial tech companies are having a hard time making finance faster and more convenient for customers while also earning a profit.
Coming up, automatic payment apps and the hidden dangers within them.
Automatic payment apps certainly make things easy, but in doing so, are we ignoring some very important things we need to know? Here to inform us on what we need to know in the new digital landscape is Wall Street Journal reporter Kevin McAllister. Welcome back.
Thank you so much.
In tackling how younger people are navigating through the world of finance, I mean, it's pretty much all digital. As with anything, these days, everything's automated. And you brought up something really interesting with the concept of control and what this means about how much we're really controlling our money and whether apps and automation have taken away some of that control. Are we in control of our money? A really interesting thing to think about as we continue to use tech to pay for things.
Well, yeah, and I think that that's exactly the observation that I was trying to make is that there's a real difference and a disconnect between the tools that give us so much hands-on experience with our money and the way that it used to be as well and figuring out why people feel less in touch with their money than they may have in previous generations or in years past.
And you want to feel in control of it. If there's one thing you want to be in control of, it's with your money, right? And yet, we've sort of sacrificed it to tech in a way because it is so easy.
Yeah. And what I was trying to get at is that not caring too much about every single transaction that you make is really a luxury. And it's the source of a lot of anxiety. And in the past, people... you know, have had to deal with that in multiple different steps, either at the cash register, when they get a bill in the mail, when they write a check to actually pay that.
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