Capital One Faces Possible CFPB Action Over Savings Account Practices

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Capital One has disclosed a potential enforcement action from the Consumer Financial Protection Bureau (CFPB) related to alleged misrepresentations about its savings accounts. The bank received a notice from the CFPB earlier this month, which indicated that the federal agency might proceed with enforcement or litigation.

This development traces back to a lawsuit filed by customers in 2022, who claimed they were not adequately informed of differences in interest rates between two of the bank’s accounts. Capital One had introduced its “360 Performance Savings” account, which featured a higher interest rate compared to the pre-existing “360 Savings” account. Plaintiffs in the lawsuit argued that Capital One failed to communicate these rate differences effectively, resulting in missed earning opportunities for customers.

Capital One, however, has argued it had the contractual right to adjust interest rates at its discretion and that the information about the newer account and its benefits was accessible on its website. In response to the customer lawsuit, Capital One filed a motion to dismiss the case.

The CFPB has not commented on the matter, though the agency’s probe coincides with Capital One’s pending $35.3 billion acquisition of Discover Financial Services, a move that could significantly impact the payments sector. This acquisition is currently under regulatory review, with additional scrutiny from New York Attorney General Letitia James, who is assessing whether the deal could breach state antitrust laws. In July, Capital One pledged $265 billion toward lending, philanthropy, and investments over five years if the acquisition proceeds.

The Wall Street Journal was the first to report on Capital One’s disclosure of the CFPB’s potential enforcement action.

 

Chinese Military-Linked Institutions Develop AI Model Using Meta’s Llama for Strategic Applications

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Chinese research bodies associated with the People’s Liberation Army (PLA) have adapted Meta’s open-source AI model, Llama, for potential military use, according to several academic papers and expert analysts. A June paper by six Chinese researchers—connected to three institutions, including the PLA’s Academy of Military Science (AMS)—revealed the development of an AI tool named “ChatBIT.” Built on Meta’s Llama 13B model, ChatBIT is tailored for military intelligence gathering and operational decision-making support.

Optimized specifically for dialogue and question-answering within military contexts, ChatBIT reportedly performs better than other AI models, with capabilities about 90% of those of ChatGPT-4. However, the researchers did not specify the exact performance criteria or confirm whether the tool is operational within the military.

This development marks the first confirmed attempt by Chinese military-affiliated researchers to leverage Meta’s open-source models systematically, according to Sunny Cheung, a specialist in China’s dual-use technologies at the Jamestown Foundation. Meta’s open-source strategy, which includes guidelines barring military and nuclear use, limits enforcement options. Meta reiterated this position in response to Reuters inquiries, emphasizing that any PLA use of its models is unauthorized.

While Meta supports open innovation, the use of Llama in military contexts has reignited discussions in the U.S. about potential security risks associated with open-source models. Recently, President Joe Biden signed an executive order to monitor AI developments, balancing innovation benefits with security concerns.

The AMS-affiliated researchers, including Geng Guotong and Li Weiwei, alongside colleagues from Beijing Institute of Technology and Minzu University, suggested ChatBIT could potentially aid in strategic planning, simulation training, and command decision-making as the technology progresses. While Reuters could not confirm the model’s computational scope, the researchers cited a relatively modest dataset of 100,000 military dialogue records, prompting experts like Joelle Pineau of Meta’s AI Research division to question the depth of ChatBIT’s current capabilities.

This development arises as the U.S. finalizes rules to regulate investment in critical AI technologies in China. Pentagon officials have voiced ongoing concerns about the dual-use implications of open-source models, while some observers argue that China’s progress in indigenous AI research makes it challenging to prevent technological advances. William Hannas of Georgetown University’s Center for Security and Emerging Technology notes that extensive collaboration between top Chinese and American AI scientists has bolstered China’s AI goals.

Meanwhile, other PLA-linked studies describe further uses for Llama in fields such as airborne electronic warfare and intelligence policing. In April, PLA Daily emphasized AI’s potential to accelerate weapons development and enhance military training and simulation. These developments reflect China’s national strategy to close the technological gap with the U.S. in AI by 2030, underscoring the ongoing global debate over AI’s role in military advancement.

 

Intel’s AI Chip Sales Fail to Meet Projections Despite Optimistic Forecasts

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Intel’s (INTC.O) revenue forecast exceeded market expectations on Thursday, but the results highlighted a weak spot for the tech giant: sales of its AI-focused Gaudi chips have significantly missed targets. Initially projecting sales of over $500 million for Gaudi AI accelerator chips in 2024, Intel has now abandoned that forecast. CEO Pat Gelsinger attributed the slow sales to issues with software compatibility and the ongoing transition from Gaudi’s second to third generation.

Despite Intel’s promising overall revenue, which boosted its stock by 5% in early trading on Friday, the company’s shares are still down by over 50% for the year. Intel continues to face challenges in capitalizing on the AI market, where its main competitor, Nvidia (NVDA.O), has consistently led. After the 2022 launch of the AI tool ChatGPT, powered by Nvidia’s GPUs, Intel hoped its AI offerings could capture more market share. Gelsinger had pushed for higher projections, advocating for a $1 billion revenue goal in 2023, as Nvidia’s sales soared in comparison.

Intel faced obstacles early on in its AI strategy. In July, Gelsinger announced a “pipeline of opportunities” worth over $1 billion for Gaudi, though Reuters sources indicate Intel did not secure adequate chip supplies from contract manufacturer TSMC (2330.TW) to fulfill this target. Intel defended its high projections, stating that not all pipeline opportunities translate into revenue but emphasizing its drive for ambitious internal goals.

In 2023, Intel assured investors it had the potential to secure over $2 billion in AI-chip deals, with an expectation of generating over $500 million in AI revenue for 2024. On Thursday, however, Gelsinger confirmed that this forecast had been withdrawn, shifting focus to longer-term opportunities in AI.

Analysts expressed skepticism regarding Intel’s future in AI. Vivek Arya of Bank of America asked Intel about its AI strategy in light of potentially losing CPU market share and lacking a competitive AI product. Gelsinger replied that CPUs were increasingly significant in AI data centers and that customer interest in Gaudi remained promising, especially with the improved benchmarks of the chip’s third generation.

In the broader picture, Intel reported $13.3 billion in third-quarter revenue, surpassing analysts’ expectations, although it posted a loss of $16.6 billion due to impairment and restructuring charges. According to Michael Ashley Schulman, Chief Investment Officer of Running Point Capital, Intel’s focus on cost-cutting and growth has potential, though he noted concerns over Gelsinger’s management approach, suggesting Intel’s leadership might be overestimating its progress and market position.