News

U.S. Income Inequality Has Never Been Greater, Census Data Shows - ABI

Income inequality in the United States has hit its highest level since the Census Bureau started tracking it more than five decades ago, according to data released yesterday, even as the nation’s poverty and unemployment rates are at historic lows, the Washington Post reported. The gulf is starkest in wealthy regions along both coasts such as New York, Connecticut, California and Washington, D.C., as well as in areas with widespread poverty, such as Puerto Rico and Louisiana. Equality was highest in Utah, Alaska and Iowa. And while the nation is in the midst of its longest economic expansion, nine states saw spikes in inequality from 2017 to 2018: Alabama, Arkansas, California, Kansas, Nebraska, New Hampshire, New Mexico, Texas and Virginia. ABI


U.S. consumers’ access to credit may be worse than previously thought: Fed study - Reuters

As many as 60 million Americans tend to have a hard time qualifying for credit cards and other loans, making it more difficult for them to recover from financial setbacks, according to a report released on Tuesday by the New York Federal Reserve.   The findings show that the number of Americans who cannot easily access loans may be twice as many as previously estimated, when people who cannot easily qualify for loans because of blemishes in their credit histories are taken into account. Reuters


Struggling Farmers See Bright Spot in Solar - ABI

U.S. farmers are embracing an alternative means of turning sunlight into revenue during a sharp downturn in crop prices: solar power, the Wall Street Journal reported. Solar panels are being installed across the Farm Belt for personal and external use on land where growers are struggling to make ends meet. The tit-for-tat tariffs applied by the U.S. and China to each other’s goods have cut demand for American crops. Futures prices for corn, soybeans and wheat are all trading around their lowest levels since 2010. Making matters worse, record spring rainfall left many farmers no time to plant a decent crop. Farmers have two options for adding solar power on their farms: lease land for energy companies to generate power to funnel electricity into the grid, as the Nielsens are doing; or install their own solar panels to cut their electricity bills. Both methods can amount to more than $1,000 a month in improved margins, according to farmers and renewable-energy advocates. ABI


Measuring the Effects of Loan Forgiveness - Inside Higher Ed

The impact of student loan forgiveness goes far beyond a reduced debt balance for borrowers, according to a new study.   Researchers from Harvard Business School, Indiana University and Georgia State University examined the effects of debt cancellation for borrowers whose private student loans were tossed out in court after their creditor, National Collegiate Student Loan Trusts, couldn’t prove the chain of title. In recent years, judges have tossed out numerous lawsuits against student borrowers because National Collegiate couldn't establish in documents that the company actually owned the debt. Inside Higher Ed


Over 200 Organizations Call for Protection From Debt Collection Industry - ValueWalk

Late yesterday, a coalition of 232 nonprofit organizations from all 50 states and the District of Columbia sent a letter to the Consumer Financial Protection Bureau (CFPB) in response to its proposal that protects abusive debt collectors more than consumers. Instead of giving the debt collection industry more weapons to harass and abuse consumers, the coalition urges the consumer bureau to limit the number of phone calls per week, require consent of the person before sending emails or text messages, allow people to opt-out of electronic messages, hold debt collection attorneys responsible for misrepresentations, and prohibit the collection of “zombie debt.” ValueWalk


Wall Street May Get $40 Billion Reprieve from Regulators - ABI

Wall Street could soon get a key victory as regulators are considering ripping up a rule that’s forced banks to set aside billions of dollars for swaps trades, Bloomberg News reported. At issue is a requirement approved during the Obama administration that’s made lenders post tens of billions in margin when engaging in derivatives transactions with their own affiliates. Industry lobbyists have long argued that the demand, which came out of the 2010 Dodd-Frank Act, is redundant and puts U.S. banks at a competitive disadvantage to overseas rivals. The Federal Deposit Insurance Corp. will hold a public meeting today to propose eliminating the margin requirement. Other agencies, including the Federal Reserve and the Office of the Comptroller of the Currency, are also expected to recommend scrapping the rule, said the people who asked not to be named the proposal hasn’t been publicly disclosed. The FDIC announced last week that its board would meet Sept. 17 to vote on a swap margin proposal without providing any further details. The margin demand, implemented in 2015, has tied up $39.4 billion, according to industry estimates. That’s prompted major swap dealers, such as Goldman Sachs Group Inc., JPMorgan Chase & Co. and Citigroup Inc., to make the rule’s elimination a lobbying priority. It would likely be months before regulators scrap the margin requirement. That’s because once the FDIC and other agencies issue their proposals, the public will have an opportunity to submit comments before a final rule could be put in place. ABI


Trump administration asks Supreme Court to take up challenge to consumer bureau - The Hill

The Trump administration and Consumer Financial Protection Bureau (CFPB) on Tuesday asked the Supreme Court to take up a lawsuit challenging the agency’s constitutionality. Top Justice Department and CFPB attorneys argued in a brief filed Tuesday that the structure of the powerful financial watchdog infringes on the president’s executive authority. The lawyers urged the Supreme Court to take up a case that could have potentially fatal implications for the CFPB, halting or weakening its efforts to police the financial sector. The Hill


Trump Says He Is Planning a ‘Very Substantial’ Middle Class Tax Cut in Next Year - The Hill

President Trump on Thursday said that he planned to announce a middle class tax cut in the next year, The Hill reported. “It will be a very substantial tax cut for middle income folks who work so hard,” Trump said. He added that the tax cut would be “very, very inspirational” but did not provide additional details. The comments come a day after the White House said that the president would not reduce capital gains taxes "at this time." Trump last month said in a tweet that he would approve a "major middle income tax cut" if Republicans keep the Senate and presidency and take back the House in next year's elections. He also did not elaborate on this proposal, which came days after adviser Larry Kudlow said Thursday that the administration was looking at a "tax cuts 2.0" package for long-term improvement but not near-term cuts. Ahead of last year's midterm elections, Trump suggested to reporters that his administration was working on a middle class tax cut. But lawmakers said they were unaware of such an effort, and no such bill ever came to fruition. The Hill


Top Democrat Attempts to Block Trump from Paying Farm Bailout Money, Setting up Battle over Trade Wa

House Appropriations Committee Chair Nita Lowey (D-N.Y.) is proposing to block the White House request over its farm bailout program, potentially imperiling President Trump’s ability to direct payments to thousands of farmers, the Washington Post reported. A key Republican responded by attacking the Democrat’s move, saying it could threaten passage of a key bill needed to avoid a government shutdown. The bailout has emerged as one of several unresolved issues that lawmakers still need to sort out in order to meet a deadline by the end of this month. The bailout program was created last year amid complaints from agriculture groups that China had stopped purchasing their crops in retaliation for new tariffs that the White House imposed on Chinese imports. Trump has ordered that billions of dollars in taxpayer funds be paid directly to farmers as a way to offset their losses. The bailout hadn’t needed congressional approval up to this point, but now the timing of the payments is tied to congressional approval. The Department of Agriculture is planning to spend upwards of $28 billion in payments over two years, but the Depression-era program Trump is using for the program has a $30 billion borrowing limit that they are expected to hit this year before the completion of a second round of payments. ABI


Treasury Secretary Mnuchin Details Plans for Fannie, Freddie - ABI

Treasury Secretary Steven Mnuchin said yesterday that the Trump administration plans to require Fannie Mae and Freddie Mac to begin paying a fee for support from the Treasury Department in exchange for a change to the mortgage-finance companies’ status that will allow them to retain their earnings, the Wall Street Journal reported. Mnuchin, testifying before Senate lawmakers, said he hopes to quickly reach a deal with the regulator of Fannie and Freddie, the Federal Housing Finance Agency, to amend the terms of the firms’ government bailout agreements that would end an existing sweep of nearly all their profits to the Treasury. The change is seen as the first major step toward privatizing the companies after 11 years under government control. “We would allow a significant amount of capital to be accumulated, but in return for that make sure that the taxpayers are compensated for the ongoing Treasury support,” Mnuchin told the Senate Banking Committee, repeating key points of an administration report released Thursday. Fannie and Freddie don’t make loans but instead buy them from lenders and package them into securities that are sold to other investors. Figuring out how to refashion the companies remains the largest single piece of unfinished business from the financial crisis. The government assumed control of the firms in 2008 during the height of the crisis to prevent their failure, which officials’ feared would trigger a broader collapse in the housing market. ABI