Last week and early this week, we featured two "Link of the Day" briefs on Robinhood, a "fin-tech" brokerage (but not a bank) that announced an ill-defined "Checking&Savings" account with an outrageously high 3% yield. (See "Robinhood Stealing Millennial's Cash" and "SIPC Concerns About Robinhood.") Since their splash, however, the company has withdrawn the offer after a barrage of regulatory scrutiny and media criticism. Forbes.com, which has been leading the coverage, tells us in their latest update, "Robinhood's Misstep A Cautionary Tale For Other Fintechs," that, "With the Federal Reserve in interest rate raising mode and with most traditional banks still offering low rates on their checking and savings products, the fintechs are trying to respond. But sometimes those efforts to give consumers a better return on their money can backfire, hurting the reputation of the entire sector."

They explain, "That was the case for mobile trading app Robinhood, which last week garnered a lot of attention when announcing checking and savings products that came with an interest rate of 3%.... Touting the full protection of the Securities Investor Protection Corporation, or SIPC, Robinhood stood out as an innovator that was blowing past traditional banks. But the glory was short-lived. It quickly had to retreat, removing all mention of its checking and savings accounts after its products ran afoul of regulators with president and CEO of SIPC Stephen Harbeck saying he had 'serious concerns.' The misstep, says at least one rival, serves as a cautionary tale for other fintechs that want to disrupt the traditional banking industry but move too quickly to get ahead of the competition."

In a blog entry entitled, "A Letter From Our Founders," Baiju Bhatt and Vlad Tenev write, "We're excited and humbled by the response to yesterday's announcement of Robinhood's cash management program launching in 2019. However, we realize the announcement may have caused some confusion. As a licensed broker-dealer, we're highly regulated and take clear communication very seriously. We plan to work closely with regulators as we prepare to launch our cash management program, and we're revamping our marketing materials, including the name."

It adds, "Our promise is unwavering -- we always put our customers first -- whether it's deciding which features to build, keeping your cash and securities protected, or offering products that allow everyone to participate in and benefit from the financial system. Stay tuned for updates."

Investors' Business Daily covered the news in "Robinhood's New 'Checking & Savings' Bounced In Embarrassing Snafu," which says, "The Robinhood app is rebranding its new checking and savings service after a brokerage industry group said it does not insure such accounts and warned of risks to investors. On Friday, the Securities Investor Protection Corp. (SIPC) pushed back on Robinhood's claim that its new, no-fee checking and savings service will be SIPC insured."

They continue, "SIPC CEO Stephen Harbeck told Bloomberg his member-funded nonprofit only protects money used for the purchase of securities. It doesn't insure checking and savings accounts. Late Friday, Robinhood issued a mea culpa that "the announcement may have caused some confusion." It also promised to revamp and rebrand the new service, which launched with fanfare a day earlier. Now it has yanked the webpage promoting the "Robinhood Checking & Savings" product with its industry-beating 3% annual interest rate. In its place is a "Cash Management" webpage, with a terse "coming soon" message."

Bloomberg updated its coverage with "The fintech way: Robinhood Checking moved fast and broke." The commentary explains, "On Thursday, Robinhood Financial LLC announced a new product called 'Robinhood Checking & Savings,' which would allow anyone to open a deposit account with no-fee ATM access, a debit card, insurance from the Securities Investor Protection Corp. and a 3% interest rate. Robinhood is not a bank, so it can't issue checking or savings accounts, and anyway the SIPC doesn't insure checking and savings accounts, so it was all a bit weird. I assumed, perhaps foolishly, that Robinhood, uh, has some lawyers, and that they had thought about this and figured out a way to do it legally."

This piece states, "For instance, Robinhood can't issue a 'checking account,' or a 'savings account,' since those are things only banks can do, but 'checking & savings' is technically neither of those things and so perhaps it falls into a gray area. 'A magic ampersand,' I called it. Well, no. By Friday afternoon the head of the SIPC had told reporters that SIPC would not insure the accounts, and had reported Robinhood to the Securities and Exchange Commission. And by Friday evening Robinhood Checking & Savings was no more."

In other news, the Investment Company Institute's latest weekly "Money Market Fund Assets" report shows an increase in money fund assets this week after a huge jump last week. (Money funds saw big outflows on 12/4, then giant inflows 12/6, around the Bush Memorial Holiday.) The prior week showed ICI's MMF series with its biggest gain in over 10 years as funds broke above the $3.0 trillion level for the first time since early 2010. MMF assets have increased noticeably in 8 of the last 9 weeks. Retail assets jumped in the latest week while Inst assets declined. Overall assets are now up $171 billion, or 6.0%, YTD, and they've increased by $189 billion, or 6.7%, over 52 weeks. Retail MMFs have increased by $130 billion, or 12.9%, while Inst MMFs are up $40 billion, or 2.2%, YTD. Over 52 weeks, Retail money funds have gained $138 billion, or 13.7%, while Inst money funds are up $51 billion, or 2.8%.

ICI writes, "Total money market fund assets increased by $5.60 billion to $3.01 trillion for the week ended Wednesday, December 19, the Investment Company Institute reported today. Among taxable money market funds, government funds increased by $6.72 billion and prime funds decreased by $2.88 billion. Tax-exempt money market funds increased by $1.75 billion." Total Government MMF assets, which include Treasury funds too, stand at $2.305 trillion (76.6% of all money funds), while Total Prime MMFs stand at $559.5 billion (18.6%). Tax Exempt MMFs total $143.5 billion, or 4.8%.

They explain, "Assets of retail money market funds increased by $16.09 billion to $1.14 trillion. Among retail funds, government money market fund assets increased by $9.66 billion to $673.73 billion, prime money market fund assets increased by $4.80 billion to $335.48 billion, and tax-exempt fund assets increased by $1.63 billion to $134.87 billion." Retail assets account for over a third of total assets, or 38.0%, and Government Retail assets make up 58.9% of all Retail MMFs.

ICI's release adds, "Assets of institutional money market funds decreased by $10.49 billion to $1.86 trillion. Among institutional funds, government money market fund assets decreased by $2.94 billion to $1.63 trillion, prime money market fund assets decreased by $7.68 billion to $223.99 billion, and tax-exempt fund assets increased by $125 million to $8.64 billion." Institutional assets account for 62.0% of all MMF assets, with Government Inst assets making up 87.5% of all Institutional MMFs.

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