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If cracks are forming in the US economy, banks didn’t get the memo - CNN

New York (CNN Business) If a recession is brewing in the United States economy, it will come as a surprise to the nation's largest banks.   Big banks are hauling in fat profits, driven not by the ebbs and flows of fickle financial markets, but by strength in the real economy. Specifically, they're cashing in on steady growth in spending and borrowing from American households — the main driver of the US economy.


Financial Watchdog Shifts From Enforcer to Educator - ABI

A federal regulator set up after the financial crisis to be a watchdog over the financial industry is shifting its mission from enforcement to consumer education, the Wall Street Journal reported. Under the leadership of Kathy Kraninger, a Trump appointee who took over the agency seven months ago, the Consumer Financial Protection Bureau has increased its focus on financial literacy. The CFPB continues to boost spending on consumer education and engagement this year, after raising such spending by 76 percent during the fiscal year ended Sept. 30, 2018, to $77.8 million, nearly twice the level from two years earlier when Obama officials still ran the bureau. The shift was apparent when the CFPB showcased its work under Kraninger in June, leading with a program it created to help consumers build emergency savings called “Start Small, Save Up.” The CFPB also plans to roll out soon a saving “boot camp,” a series of videos and booklets to teach consumers how to save, CFPB officials said.


Wall Street Banks Bailing on Troubled U.S. Farm Sector - ABI

After years of falling farm income and an intensifying U.S.-China trade war — JPMorgan and other Wall Street banks are heading for the exits, according to a Reuters analysis of the farm-loan holdings they reported to the Federal Deposit Insurance Corp. (FDIC). Total U.S. farm debt is on track to rise to $427 billion this year, up from an inflation-adjusted $317 billion a decade earlier and approaching levels seen in the 1980s farm crisis, according to the U.S. Department of Agriculture. The agricultural loan portfolios of the nation’s top 30 banks fell by $3.9 billion, to $18.3 billion, between their peak in December 2015 and March 2019, the Reuters analysis showed, a 17.5 percent decline. The retreat from agricultural lending by the nation’s biggest banks, which has not been previously reported, comes as shrinking cash flow is pushing some farmers to retire early and others to declare bankruptcy, according to farm economists, legal experts, and a review of hundreds of lawsuits filed in federal and state courts.


Broken Promises: Teachers Sue U.S. Over Student Loans That Weren’t Forgiven - NPR

Debbie Baker thought she qualified for a federal program that helps teachers such as her, as well as nurses, police officers, librarians and others. The Department of Education program forgives their federal student loans if they make their payments for 10 years and work in public service. For 10 years, Baker, who was a public school teacher in Tulsa, Okla., checked in with loan servicing companies and was told she was on track. "I said, 'I'm qualifying for public service loan forgiveness,' and they said, 'OK, great,' " she says.


SEC Offers Companies Facing Enforcement a Package Deal - ABI

Banks, asset managers and public companies could find it easier to settle regulatory enforcement actions without damaging other parts of their business, the Wall Street Journal reported. The Securities and Exchange Commission said on Wednesday that a company can now negotiate a penalty while at the same time seeking the waivers needed to limit the consequences of its alleged misconduct. Wall Street banks such as Wells Fargo & Co. and Citigroup Inc. have often needed such disciplinary waivers to exclude business activities from automatic bars that are triggered when they settle enforcement actions. The most important of such waivers affect Wall Street’s ability to use fundraising methods that avoid regulatory red tape. For example, a bank or hedge-fund manager that settles an enforcement action without a waiver can lose the right to easily raise money in the private markets. Another waiver is needed to continue managing mutual funds if a bank or asset manager settles certain civil or criminal enforcement actions.


HAVEN Act Included in National Defense Authorization Act, Passes Senate - ABI

ABI's Veterans' Affairs Task Force has learned that the HAVEN Act was included as an amendment to S. 1790, the National Defense Authorization Act for Fiscal Year 2020 (NDAA), which passed the Senate last Friday. The HAVEN Act excludes VA and DoD disability payments made to veterans or their dependent survivors from the monthly income calculation used for bankruptcy means test. The NDAA is the military budget bill that is proposed and passed annually. The House has not yet acted on the NDAA, but Rep. Lucy McBath (D-Ga.), the bill’s lead sponsor in the House, has offered the HAVEN Act as an amendment to the House version of the NDAA (H.R. 2500) for consideration.


Big Farms Find Easy Ways Around Trump Trade Aid Limits - ABI

When President Donald Trump’s administration announced a $12 billion aid package for farmers struggling under the financial strain of his trade dispute with China, the payments were capped. But many large farming operations had no trouble finding legal ways around them, the Associated Press reported. The government paid out nearly $2.8 million to a Missouri soybean-growing operation registered as three entities at the same address. More than $900,000 went to five other farm businesses, in Indiana, Illinois, Tennessee and two in Texas. Three other farming operations collected more than $800,000. Sixteen more collected over $700,000, and more than 3,000 recipients collected more than the $125,000 cap. Recipients who spoke to AP defended the payouts, saying they didn’t cover their losses from the trade war, and they were legally entitled to them. U.S. Department of Agriculture rules let farms file claims for multiple family members or other partners who meet the department’s definition of being “actively engaged in farming.” But critics including Sen. Charles Grassley, an Iowa Republican who has long fought for subsidy limits, say it is the latest example of how loopholes in federal farm subsidy programs allow large farms to collect far more than the supposed caps on that aid. Grassley said that some of the nation’s largest farms are receiving huge subsidies “through underhanded legal tricks. They’re getting richer off the backs of taxpayers while young and beginning farmers are priced out of the profession. This needs to end. The Department of Agriculture needs to re-evaluate its rules for awarding federal funds and conduct more thorough oversight of where it’s funneling taxpayer dollars.” USDA officials defended the program, saying they believe its rules are being followed and that the department has procedures in place to audit recipients.


Borrowing for College Just Got Slightly Cheaper - The Washington Post

Starting Monday, the government will charge families less to borrow money for college as newly lowered interest rates on federal student loans take effect, the Washington Post reported. The annual rate change is pegged to the Treasury Department’s auction of 10-year notes in early May. Based on the rate of the note, plus a fixed margin, the interest on student loans can rise or fall from one year to the next. And for the past two years, rates have climbed. This year, families will get a reprieve. For the 2019-2020 academic year, undergraduate students will pay 4.53 percent in interest on new Stafford loans, down from 5.05 percent. Graduate students will see the interest rate on new Direct loans decline from 6.6 percent to 6.08 percent. And parents who take on federal debt to help their children pursue a degree can expect to pay 7.08 percent instead of 7.60 percent. There is no telling whether interest rates will continue to decline or rise, but Congress set a ceiling to prevent federal student loans from becoming too costly. The interest on undergraduate loans can never go higher than 8.25 percent. Graduate loans are capped at 9.5 percent, while the limit on PLUS loans — for eligible parents as well as graduate and professional students — is 10.5 percent.


Five Years After Crude’s Collapse, Shale Patch Still Struggles - Bloomberg

It has been five years since crude started a precipitous drop that eventually saw it hit a low of $26 a barrel. While prices have recovered some of the lost ground, shale producers are still feeling the pain, Bloomberg News reported. Oil’s 76 percent collapse from almost $108 a barrel in June 2014 was the worst plunge since the financial crisis of 2008. In 2014, oil and gas companies made up almost 11 percent of the S&P 500 Index. Now, that’s just over 5 percent as some investors appear to have given up on the sector. Shareholder antipathy stems at least in part from questions over the profitability of shale drilling. While the five big, publicly traded integrated major producers — BP Plc, Chevron Corp., Exxon Mobil Corp., Royal Dutch Shell Plc and Total SA — resumed generating free cash flow as a group in 2017, independent U.S. drillers only became cash-flow-positive (based on an average of 12 such companies compiled by Bloomberg) in 2018 — and they were back in the red in the first quarter of 2019.


Fed Stress Tests Find Top Banks Are Strong, Setting Stage for Wave of Payouts - ABI

The Federal Reserve said yesterday that its annual tests of the financial strength of the 18 largest banks in the U.S. revealed that each had enough capital to justify paying some of it out to shareholders, the New York Times reported. There was one caveat to the Fed’s across-the-board thumbs-up: The central bank said it found weaknesses in how Credit Suisse was measuring potential losses, and the Fed therefore capped the amount of money the Swiss bank could return to its investors until it corrected the problem. The Fed’s “stress tests” examine how the largest banks would fare in a severe economic downturn or a sudden shock to the global financial markets. After a two-part evaluation, banks either receive permission to return capital — via repurchasing their own shares, paying dividends or other means — or are prohibited from doing so until they fortify their capital cushions or strengthen their management. Within minutes of the Fed releasing the test results, the country’s four largest banks — Bank of America, Citigroup, JPMorgan Chase and Wells Fargo — announced that they could repurchase a total of about $105 billion of their own shares. The four banks also said they would increase their dividends.