Americans are piling on credit card debt, despite recession warnings - NBS

One analyst’s estimate this week that “real” debt could be nearly 2000 percent of GDP attracted plenty of attention, but analysts who study consumer spending habits say there’s a real debt risk much closer to home: The amount and pace at which American consumers are racking up credit card debt. “As far as American's finances are concerned, the current situation is not too encouraging,” said Jill Gonzalez, senior analyst at personal finance platform WalletHub. “We started the year owing more than $1 trillion in credit card debt, and although we paid off a large chunk in the first quarter, that could be a sign that more debt will be taken on by consumers." NBC

5th Circuit holds FHFA structure unconstitutional. Boost for Supreme Court challenge to CFPB? - Reut

(Reuters) - The en banc 5th U.S. Circuit Court of Appeals ruled Friday that the structure of the Federal Housing Finance Agency is unconstitutional under separation of powers doctrine because the agency’s lone director is insufficiently accountable to the president. The 5th Circuit’s ruling arguably creates a split in the federal circuits over the constitutionality of independent agencies headed by directors who can’t be removed without good cause. Both the 9th and D.C. Circuits, as you may recall, have found the structure of the Consumer Financial Protection Bureau, which parallels the FHFA’s structure in most regards, to be constitutional. Reuters

Student loan forgiveness program has denied 99 percent of applications despite $700 million from Con

The vast majority of applications for a student loan forgiveness program are still being rejected, even after Congress set aside $700 million to temporarily expand it, according to a federal report. The Government Accountability Office said Thursday that the Education Department has created a "confusing and inefficient" process that could cause borrowers to miss out on the program. It urged the agency to simplify the application process. ABC

Trade Uncertainty Likely to Cut U.S. Growth by More than 1 Percent, Fed Research Says - ABI

Uncertainty over trade policy is likely to reduce U.S. economic output by more than 1 percent through early 2020, new research from Federal Reserve economists suggests, the Wall Street Journal reported. The study is among the first by central-bank researchers to attempt to quantify the effects of the recent escalation of trade-policy uncertainty during the Trump administration. President Trump has imposed several rounds of tariffs on China, prompting retaliatory measures by Beijing, as part of broader trade negotiations. He imposed tariffs on steel and aluminum imports last year. In May, months after concluding a new trade agreement with Canada and Mexico, Trump threatened to hit Mexico with new tariffs to curb migration at the U.S.-Mexico border. He has also threatened to impose tariffs on Europe. “The rise in [trade policy uncertainty] in 2018 and 2019 has gone hand in hand with a slowdown in world industrial production and global trade,” said the research, which was posted online on Wednesday by the Fed’s board of governors. American Bankruptcy Institute

Trump Fannie-Freddie Plan Urges Ending Decade of U.S. Rule - ABI

The Trump administration laid out its vision for releasing Fannie Mae and Freddie Mac from more than a decade of federal control, issuing a long-awaited plan that marks the government’s boldest step yet toward closing one of the final chapters of the 2008 financial crisis, Bloomberg News reported. The proposal released yesterday by the Treasury Department suggests dozens of reforms to protect Fannie and Freddie from another housing crash, shrinking their dominant market shares and creating new competitors to the companies that backstop about $5 trillion of home loans. Yet, it is only an initial step in what still would be a long and arduous road to freeing the companies from the government’s grip. While Treasury has outlined broad goals, some of the trickiest questions about how to fix Fannie and Freddie remain unanswered. In a sign of the long process ahead, Treasury acknowledged that specific details involved in releasing the companies, such as determining how they will raise capital to weather an economic calamity, still need to be negotiated across multiple government agencies. American Bankruptcy Institute

Mobile-first Gen Z doesn’t fear credit cards, debt - PaymentsSource

As Gen Z starts entering adulthood, financial institutions are beginning to ask what the new generation wants in terms of lending, and how will they choose to access it? For the executives who’ve been busy serving up financial products to millennials, there is an additional question on everyone’s mind — will this new generation be as slow to adopt credit cards and personal loans as millennials, or is it going to be different? PaymentsSource

Fed Lines Up Another Quarter-Point Rate Cut - ABI

Federal Reserve officials are gearing up to reduce interest rates at their next policy meeting in two weeks, most likely by a quarter-percentage point, as the trade war between the U.S. and China darkens the global economic outlook, the Wall Street Journal reported. The idea of an aggressive half-point cut to battle the slowdown hasn’t gained much support inside the central bank, according to interviews with officials and their public speeches. While market-determined interest rates have tumbled, signaling a dimmer outlook for growth and inflation, many Fed officials believe that the 10-year U.S. expansion can continue at a modest pace and inflation will gradually rise to their 2 percent target. An important update on the labor market Friday, plus new readings on retail sales and inflation next week, could reshape officials’ outlook. American Bankruptcy Institute

Trump Administration Sets Higher Hurdles for Defrauded Students to Erase Debt - ABI

Students who say they were defrauded by colleges and want their education loans erased will have a tougher time seeking forgiveness under newly issued regulations from the Trump administration, the Washington Post reported. A 1995 law known as “borrower defense to repayment” gives the Education Department authority to cancel the federal debt of students whose colleges misled them about graduation or job placement rates to get them to enroll. The Obama administration updated the regulation to shift more of the cost of forgiveness onto schools, after the closure of for-profit giant Corinthian Colleges ushered in a flood of claims. The Trump administration on Friday finalized its rewrite of the Obama-era rules, after two years of trying to delay and then scuttle the regulations. Those efforts have spawned lawsuits, with the courts forcing the Trump administration to implement the 2016 rules and process a backlog of applications for debt relief. Still, more than 180,000 borrowers await answers. The Trump administration estimates the rules will save the federal government $11 billion over 10 years — loan payments that would have gone uncollected under existing rules. The regulations also hand a victory to for-profit colleges that derided the Obama rules as harmful to their programs. Most borrowers who seek relief from debt attended for-profit campuses. American Bankruptcy Institute

Fed Beige Book reports modest growth during the summer, despite trade uncertainty - Fox Business

The U.S. economy expanded at a modest pace from June through August, despite looming concerns about the U.S.-China trade war, according to the Federal Reserve's Beige Book.  Almost all of the Fed’s 12 districts reported modest growth over the past few months, the Fed said in its region-by-region roundup of anecdotal information known as the Beige Book. The report, prepared by the Federal Reserve Bank of St. Louis, was based on information collected through Aug. 23. Fox Business

Banks fire up their mortgage machine for a refinancing boom - Pittsburgh Post-Gazette

Lenders thought it was time to shrink their mortgage businesses. Now they’re finding they were wrong. With rates for home loans sinking to their lowest levels since late 2016, Wells Fargo, the biggest mortgage lender in the U.S., has boosted staffing for the business by about 10% this year and plans to keep hiring. Bank of America is hiring in areas including sales, processing and underwriting. The mortgage industry has added almost 5,000 employees since March, a 1.5% gain, according to the Bureau of Labor Statistics. It’s a stark reversal from a year ago, when the Federal Reserve was hiking interest rates and banks were cutting thousands of jobs. Pittsburgh Post-Gazette