News

Americans’ Near-Record Levels of Credit Card Debt Helping Bolster Banking Industry - ABI

Americans have accumulated near-record levels of credit card debt over the past year as card companies have increased interest rates and fees, the Washington Post reported. The booming market is helping drive record banking industry profits but could become increasingly costly for consumers who do not pay off their bill every month or miss a payment, industry experts say. JPMorgan Chase, the country’s largest bank by assets, and Citigroup reported that credit card sales were up 10 percent and 5 percent, respectively, in the third quarter. Profits at Visa were up 17 percent in its most recent fiscal year, while Mastercard reported an 11 percent profit jump in its most recent quarter. To be sure, despite increasing debt loads, delinquency rates remain relatively low. About 6 percent of consumers were late on a payment this year compared with 15 percent in 2009, according to WalletHub. Consumers have yet to balk at the relatively high interest rates, industry experts say. ABI


Struggling Farmers Find Challenges Accessing Government Aid - ABI

Farmers around the country are struggling to pay for basics like groceries and electricity as farm bankruptcies rise and farm debt hits a record high, the Washington Post reported. Calls from farmers in financial crisis to state mediators have soared by 57 percent since 2015. An estimated 197,000 farmers, farmworkers, fishermen and forestry workers use the Supplemental Nutrition Assistance Program (SNAP), according to a study by the Center on Budget and Policy Priorities, but farmers say they sometimes find it difficult to qualify because of complicated rules governing self-employment income. The Trump administration has long-term plans to tighten SNAP eligibility for many. ABI


U.S. Government Sets Record for Debt Auctions - ABI

The Treasury Department auctioned seven-year notes, closing the door on a record year for sales of longer-term debt in 2019, the Wall Street Journal reported. The auction lifted the total of notes and bonds sold by the U.S. government with maturities ranging from two to 30 years to $2.55 trillion, a 26 percent increase from 2017, when Congress and President Trump agreed to massive corporate tax cuts. Aggregate demand at U.S. government debt auctions has remained stable in recent years, with investors and bond dealers submitting bids totaling more than twice the amount of notes and bonds for sale. That comes even though yields on the securities have swung from multi-year highs to multi-year lows during the period. While total demand has held steady, some of the bidders taking away the securities at auction have changed, according to Treasury data. ABI


US Supreme Court’s Ruling Favors Debt Collectors In Fair Debt Collection Practices Act Decision - JD

In a recent decision, the US Supreme Court ruled that a consumer claimant under the federal Fair Debt Collection Practices Act (“FDCPA”) has one year from the alleged violation to file suit. The one-year statute of limitations begins at the time of the alleged wrongful act, even if the consumer is unaware of the purported violation. The court did, however leave the door open for a consumer to bring suit beyond one year if the debt collector fraudulently conceals its actions. JDSupra


Fed Says Banks Cite Regulations Among Reasons for Repo Spike - ABI

A Federal Reserve survey found that many of the largest U.S. banks pointed to regulatory restrictions on their balance sheets and reduced risk appetite to explain why they stood on the sidelines during the mid-September spike in overnight funding rates instead of profiting from the excess demand for short-term lending, Bloomberg News reported. Three-fourths of primary dealers responding to the Fed’s December Senior Credit Officer Opinion Survey reported “basically no change” in secured lending from Sept. 16-18, compared with the first week in September, despite a higher lending rate. Fed officials had expected banks with excess liquidity to jump in with extra lending. After the disruption caused the Fed’s benchmark overnight interest rate to stray outside its target range, the central bank intervened by injecting funds into the repo market, eventually returning overnight rates to more normal levels. About three-fifths of those surveyed said they were “at least somewhat certain that the spike in overnight Treasury repo rates was driven by technical factors and thus would only be temporary.” ABI


Congress Passes Sweeping Overhaul of Retirement System - ABI

Congress passed the most significant changes to the nation’s retirement system in more than a decade, a move designed to help Americans save more, the Wall Street Journal reported. With the U.S. population aging and employers shifting responsibility for retirement saving to individuals, lawmakers have grown concerned that a significant portion of Americans are at risk of outliving their money. Americans between the ages of 35 and 64 face a retirement savings shortfall of $3.83 trillion, with 41 percent of households projected to run short of money in later life, according to the nonprofit Employee Benefit Research Institute. One prominent provision of the legislation passed yesterday, which President Trump is expected to sign, encourages 401(k) plans to replicate a feature of old-fashioned pensions by offering products with guaranteed income payments. The legislation also seeks to expand retirement plan coverage by making it easier for small companies to join together to offer 401(k) plans and share administrative costs. An estimated 30 percent of private-sector employees work for employers that don’t currently offer a way to save for the future. ABI


Fed Says Banks Cite Regulations Among Reasons for Repo Spike - Bloomberg

Many of the largest U.S. banks pointed to regulatory restrictions on their balance sheets and reduced risk appetite to explain why they stood on the sidelines during the mid-September spike in overnight funding rates instead of profiting from the excess demand for short-term lending, according to a Federal Reserve survey. Three-fourths of primary dealers responding to the Fed’s December Senior Credit Officer Opinion Survey reported “basically no change” in secured lending from Sept. 16-18, compared with the first week in September, despite a higher lending rate. Fed officials had expected banks with excess liquidity to jump in with extra lending. Bloomberg


Obamacare Insurance Mandate Is Struck Down by Federal Appeals Court - ABI

A federal appeals court yesterday struck down a central provision of the Affordable Care Act, ruling that the requirement that people have health insurance was unconstitutional, the New York Times reported. But the appeals panel did not invalidate the rest of the law, instead sending the case back to a federal district judge in Texas to “conduct a more searching inquiry” into which of the law’s many parts could survive without the mandate. The 2-1 decision, by a panel of the United States Court of Appeals for the Fifth Circuit in New Orleans, left the fate of the nearly decade-old health law in limbo even as access to health care has become a central issue in the presidential race. Republicans, for whom a decision to throw out the law heading into the presidential election year could have been a political nightmare, seemed relieved, while Democrats issued a flurry of statements emphasizing that the law was still in grave danger. ABI


Information on the Economic Status of Millennial Households Compared to Previous Generations - GAO

Recent research indicates that, across three key measures, economic mobility in the United States is limited. Specifically, the Millennial generation (those born between 1982 and 2000) might not have the same opportunity as previous generations had to fare better economically than their parents. According to studies GAO reviewed, the share of people making more money than their parents at the same age (absolute mobility) has declined over the last 40 years, and the chances of moving up the income distribution (relative mobility) have been flat over time. Using a third measure of economic mobility (intergenerational income elasticity), researchers have found that income in adulthood is linked to how much a person's parents made, and that between one-third and two-thirds of economic status is passed down from parents to children. This is especially true of the lowest and highest income groups. Researchers also identified race and geography as key determinants of an individual's economic mobility. GAO


More Americans worry they can’t pay off their holiday credit card debt - Yahoo Finance

The holiday shopping “ho ho ho” is about to become oh no no for millions of American consumers. The latest CompareCards Credit Card Confidence Index shows only 40% of cardholders feel “very confident” about paying off their credit cards in full. That’s down from 46% who felt very confident at this time last year. “I think that a lot of that is simple pressure to spend,” CompareCards chief industry analyst Matt Schulz told Yahoo Finance’s On the Move. “A lot of it is simply not wanting to let your kids, or your friends, your family down. So people keep spending.” Yahoo Finance