The Multibillion-Dollar Industry Getting Wealthy Kids Into the Ivies
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and why banks say the U.S. Treasury Department's proposal to modernize anti-money laundering rules might not work. The banks and the banking industry groups that represent them have written to FinCEN and the other regulators to say that their proposal is a big miss. Plus, how the FTC is making it easier to cancel those pesky recurring subscriptions.

It's Wednesday, October 16th. I'm Tracy Hunt for The Wall Street Journal. This is the p.m. edition of What's News, the top headlines and business stories that move the world today. Let's begin with more bank earnings reports. Morgan Stanley today posted quarterly earnings that beat Wall Street expectations.

Profit rose 32% to more than $3 billion. And the bank's wealth management unit broke a four-year streak of year-over-year declines. Net new assets surged 79% from a year ago to nearly $64 billion. That's the first increase in more than a year. Morgan Stanley is the latest big American bank to beat Wall Street expectations, due in large part to a strengthening deal-making environment.

The Federal Reserve's recent interest rate cut combined with improving CEO confidence and pent-up demand to execute on deals are seen as a positive for deals, helping to boost investment banking revenue in the third quarter for Goldman Sachs, JPMorgan Chase, Citigroup, and others.

In U.S. markets, gains by banks and airlines helped the S&P 500 rise half a percent today, despite a pullback in many of the big tech stocks. The Dow gained 0.8 percent, or about 337 points, and the tech-heavy Nasdaq Composite added 0.3 percent. Federal campaign filings show that crypto enthusiasts sent another $7.5 million in digital currencies to former President Donald Trump's campaign between July and the end of September.

The numbers show more Trump supporters are parting with their crypto holdings to support the GOP nominee, who has increasingly embraced cryptocurrencies. In the second quarter, Trump's campaign garnered $3 million in crypto donations. Democratic presidential candidate Kamala Harris also voiced her support for digital assets in recent weeks.

Getting into an Ivy League school in the U.S. is now much harder than it was two generations ago, and wealthy families are willing to spend hundreds of thousands of dollars on college consulting services to give their kids an edge. Crimson education has come to dominate an elite slice of this growing market.

and private equity has taken notice. According to PitchBook, Crimson is now valued at about half a billion dollars, attracting investment from venture capital giants like Tiger Management, Icehouse Ventures, and others.

Doug Belkin is a higher education reporter for The Wall Street Journal, and he joins us now. Doug, how big is this college counseling industry? Like, what kind of money are we talking about? It's about a $3 billion a year industry now. There's about 10,000 college consultants in the country right now. In 1990, there were fewer than 100. So the industry has really grown very quickly.

Let's talk a little bit more about the hedge funds involved. Like how much money is private equity and other investors putting behind this industry? This Crimson outfit is really, if not the biggest, it's certainly one of the biggest in the country. And they have $75 million in backing right now. Venture capitals are attracted to these because they're

The supply and demand curve for seats at these elite universities is good if you're an investor. You know, they're not building more freshman seats at Harvard and Yale, but there are more and more kids who are trying to get in, which makes them more valuable. And so people are willing to pay more money to compete for one. So the investors who are investing in these companies believe that these things are only going to grow. Doug Belkin covers higher education for The Wall Street Journal.

Coming up, the Treasury Department has released proposals for anti-money laundering rules, and the banks aren't happy with them. That's after the break.

And Intel V Pro today.

No product can be absolutely secure. Become an IT hero at intel.com slash IT heroes. Anti-money laundering programs are expensive, but the cost of failing to maintain them can also be high. Just last week, TD Bank agreed to pay $3 billion in penalties and limit its U.S. growth for failing to properly monitor and prevent cash deposits by drug-connected criminals.

When lawmakers passed legislation intended to modernize the U.S.'s anti-money laundering rules, many banks hoped the changes would make complying with the rules less burdensome. But proposals from the U.S. Treasury Department's Financial Crimes Enforcement Network, aimed at keeping dirty money out of the financial system, have faced criticism from industry groups. Joining us now to discuss all this is Wall Street Journal reporter Dylan Tokar.

So Dylan, what are these proposals? For decades, we've had a system of laws in place in the U.S. to prevent money laundering. I saw an estimate recently that financial institutions in the U.S. and Canada spent some $61 billion on financial crimes compliance last year.

And as a result of these laws, banks and financial institutions file something like 4 million suspicious activity reports a year. But there's just very little feedback from the government about how they are using these reports. And so to do something about that, Congress passed this law in 2021 called the Anti-Money Laundering Act. So FinCEN to implement the requirements of the Anti-Money Laundering Act, they're

They adopted some of that language that lawmakers used when they wrote the legislation. And the proposal really does two key things. One, it requires the banks conduct an assessment that identifies the risks facing their institution. It also requires them, this is the second thing, to work in specific national priorities into the systems.

So these are things that law enforcement priorities, something like human trafficking, weapons of mass destruction, proliferation, corruption. There's a whole slew of things. So that sounds great, right? But, you know, banks didn't like this.

So why don't they like it?

And they really want to help law enforcement. But, you know, there's this whole examination process. And it's not just FinCEN, but there's, you know, a whole slew of banking regulators. And so what banks feel that this new proposal by FinCEN does is simply create more things for them to be examined on. Dylan Tokar is a reporter covering corporate crime and regulatory policy for The Wall Street Journal. ♪

Lebanese state media says Israeli airstrikes hit a municipal building in southern Lebanon, killing the city's mayor and at least 15 others. Israel says the air raid was targeting Hezbollah. The Lebanese prime minister condemned the attack. Israel said it struck dozens of targets in and around the southern Lebanese city of Nabatieh, including weapons storage units and Hezbollah militants. Israel's military declined to say whether the mayor was the target of the strikes.

Getting out of a subscription or gym membership can be like navigating a maze, but a new rule might make it easier. The U.S. Federal Trade Commission today mandated that businesses give consumers an easy way out, one as simple as it was to sign up. Journal reporter Dave Michaels says this click-to-cancel rule is supposed to make the process of dumping unwanted recurring bills easy.

But many businesses don't like it. This rule says that when a company signs you up for a recurring subscription or a membership...

that at the end of that term, you have to be told that there's an easy way to cancel the subscription. Companies don't want to make it too easy to cancel. They introduce some friction in that process to make sure that a customer that they have a relationship with, that they're getting value from, can't just cut the tie too easily. There's an array of businesses that believe that

The commission has gone too far here. Companies such as publishers do say that –

This kind of requirement could lead consumers to cancel when they don't mean to. And that furthermore, states already have laws where they believe consumers need more protection in order to cancel subscriptions or memberships. Dow Jones, which publishes the Wall Street Journal, is a member of the News Media Alliance, an association that opposed this rule.

And finally, when you're speaking with Siri or Alexa or chat GBT, should you be polite?

A recent survey shows Americans are split on how to treat AI and chatbots. Nearly half of the 2,000 Americans surveyed by Talker Research thought it was important to mind your manners, but around 27% agreed it was okay to be rude with or even shout at bots. WSJ reporter Pratika Rana told our tech news briefing podcast that kindness can pay off.

because AI is trained to mimic human behavior. If you're impolite or if you're rude or derogatory, the AI might just shut down

It might not give you answers. It might give you inefficient or incorrect answers, which then again isn't solving for your final outcome. In fact, Microsoft has a blog post in which it says, just like humans, AI can't always be the bigger person. So remember to be polite to it. If you're going to be sassy with it, expect some sass back. And you can hear more on this story at our Tech News Briefing podcast.

And that's what's news for this Wednesday afternoon. Today's show was produced by Anthony Bansi and Pierre Bien-Aimé with supervising producer Michael Cosmitas. I'm Tracy Hunt for The Wall Street Journal. We'll be back with a new show tomorrow morning. Thanks for listening.

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