ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
October 15, 2020
The Gateway For Payroll Data
Bank of America profit tumbles 16% despite consumer spending rebound
  • Profit at Bank of America fell 16% in the third quarter to $4.9 billion, compared to $5.8 billion a year earlier, the Charlotte, North Carolina-based lender reported Wednesday. This marks the third straight quarter in which the bank’s profit has fallen by more than 15%, though the drop isn't quite as stark as in the second quarter, when profits fell by 52% year over year.
  • The bank set aside $1.4 billion for credit losses in the third quarter, a 73% drop from the $5.1 billion it reserved in the previous quarter.
  • Revenue dropped 11% to $20.3 billion, driven by lower interest rates and lower consumer fees, which were partly offset by improved trading and investment banking results.

Paving the Payments Future
U.S. Bank confirms branch closure acceleration
  • U.S. Bank on Wednesday reported a profit of $1.6 billion in the third quarter, a 17% drop from the $1.9 billion it posted a year ago but more than double the $689 million the Minneapolis-based lender reported in the second quarter.
  • The bank set aside $635 million for loan losses in the quarter — and nearly 20% of that, $120 million, was related to the credit-card portfolio it acquired from State Farm. However, like its fellow big banks, U.S. Bank saw a sharp decline in its quarterly loan-loss figure from three months earlier. The $635 million is just over one-third of the $1.7 billion the bank set aside in the previous quarter.
  • Consistent with comments U.S. Bank CEO Andy Cecere made in May, the bank is accelerating its branch closure plan.

Lending as a Service
Coronavirus will dictate U.S. economy’s path: Fed’s Williams
New York Fed President John Williams says that the outlook for the economy depends on the spread of the coronavirus and people's behavior containing the spread—the latest Fed official to stress that the outlook for the economy remains highly uncertain at the mercy of the virus.

“This is not a standard recession and the economic future is inextricably tied to the spread of the virus, people’s behavior in containing that spread, and the development of vaccines and therapeutics,” Williams said.

Williams underscored the Fed’s new approach to policy – linking raising interest rates and other policy actions like buying bonds to economic outcomes on employment and inflation -- allows the Fed to respond to changes in the economy as they happen.

UPDATE! Educate the public!

IRS extends Economic Impact Payment deadline to November 21 to help non-filers

WASHINGTON — The Internal Revenue Service announced today that the deadline to register for an Economic Impact Payment (EIP) is now November 21, 2020. This new date will provide an additional five weeks beyond the original deadline.

The IRS urges people who don't typically file a tax return – and haven't received an Economic Impact Payment – to register as quickly as possible using the Non-Filers: Enter Info Here tool on IRS.gov. The tool will not be available after November 21.
Insights From Fiscal 50’s Key Measures of State Fiscal Health
States showed fiscal and economic strength before pandemic

The coronavirus outbreak in early 2020 abruptly ended the longest U.S. economic expansion on record and with it a promising stretch for states’ finances. Long-running pressure on state budgets had eased in 2019 amid widespread economic growth and tax revenue gains that led in many states to the first budget surpluses in years. Still, some states were in a stronger position than others as they began to experience a public health emergency and their greatest fiscal and economic test since the Great Recession of 2007-09.

Despite a long recovery marked by slow tax revenue growth, the vast majority of states experienced a spurt of healthy tax collections just before COVID-19 hit and shocked the nation’s economy. At the end of 2019, all but six states were taking in more tax money than they did before the Great Recession inflicted losses in every state. Half of states had posted double-digit gains since the recession, but others collected just barely as much as they did a decade earlier, after adjusting for inflation. The recent surge in tax revenue had led many states to add to their rainy day funds, which at the start of fiscal year 2020 amounted nationally to states’ largest cushion in at least two decades. At least 17 states turned to those savings before the end of fiscal 2020 to help close budget gaps or cover pandemic expenses.
Long-term jobless figures rise, underscoring economic pain
The number of people who have joined the ranks of long-term unemployment has spiked to a record high in a worrying sign of the economic recovery’s health.

According to the Labor Department, the number of people out of work for more than 27 weeks increased to 2.4 million in September, an increase of 32.5 percent from the previous month. There are 4.9 million people who have been unemployed between 15 and 26 weeks.

Workers who have been separated from their jobs for more than 6 months typically have a more difficult time getting back to work even once the economy improves.
Fintech boom prompts Justice to revisit bank merger guidance
DOJ asking public whether online lenders and their ilk should factor into decisions on competitive effects of proposed mergers

The Department of Justice’s antitrust division is contemplating whether it should revisit 25-year-old bank merger guidelines as new financial technologies reshape the banking industry and the market share data that the government uses to determine whether to allow mergers to proceed.

It is asking the public whether it should include “nontraditional banks,” such as online lenders, when considering the competitive effects of a proposed bank merger. The responses could shape a policy allowing more rural banks to combine, a move that might not impact competition as much as in the past, given consumers’ increasing options.
Banks have barely touched the Fed's Main Street Lending Program. Except this one.
Only about $2 billion worth of loans have been issued so far through the $600 billion program, many of them by City National Bank of Florida

Most banks have steered clear of the Federal Reserve's loan program designed to buoy midsize businesses. One Florida lender is diving in.

Miami-based City National Bank of Florida has embraced the Fed's Main Street Lending Program, which made its first loan this summer. Of the 252 loans issued through the program in its first three months, City National made nearly 100 of them, extending loans of up to $50 million to companies in states as far away as California and Wyoming.

But otherwise the program, which lets banks make loans to businesses and then sell most of the loan to the Fed, has received a lukewarm reception at best. Fewer than 100 banks have used it, as of the end of September, issuing about $2 billion of loans in a $600 billion program. More than $500 million of that was through City National. None of the nation's largest banks have made one of the loans.
EMPLOYMENT-TO-POPULATION RATIO 
State Employment Recovered Unevenly from Last Recession

Before the COVID-19 pandemic upended the economy, much of the country had enjoyed years of slow but steady job growth over the longest recovery on record. The U.S. employment rate for prime-working-age adults finally recovered in 2019 from losses in the Great Recession. But rates in about half of states still fell short on the eve of the current downturn, leaving some at an economic disadvantage

Nationally, an average of 80% of Americans in their prime working years were employed in 2019. For the first time, that slightly surpassed the annual rate in 2007 just before the last recession, after dipping to as low as about 75% between 2009 and 2011. The prime age employment-to-population ratio, a key economic indicator, represents the percentage of adults ages 25 to 54 who hold jobs. It provides a different perspective on the jobs situation from the better-known unemployment rate, which last year was at its lowest level in half a century.
Comparing Trump and Biden's economies — who had more successful strategies?
The president's lush grounds grew greenest for the young, the less educated and people of color

At their rambunctious debate on September 29, former Vice President Joe Biden said this about President Donald J. Trump: “We handed him a booming economy. He blew it.”

Not so fast, Sleepy Joe.

In fact, rather than “booming,” Biden and Obama bequeathed President Trump an economy that resembled a dehydrated garden. It was alive, but drooping. Obama-Biden’s recovery from the Great Recession was the most parched since the Great Depression.

The president treated the garden with Trumponomics: He irrigated it with the GOP’s Tax Cuts and Jobs Act (which every congressional Democrat opposed). He fertilized it with robust deregulation that junked eight old rules for every new one imposed. And he serenaded it with a pro-enterprise tone.
State Legislators Push Reforms That Lead to Data-Informed Policies
Leaders in using evidence are collaborating to improve decision-making in difficult economic times

With revenues drastically reduced in many states because of the coronavirus pandemic, legislators are working to maximize what they can do with limited resources. In many instances, these elected officials are using data and evidence gathered from rigorous program evaluations to make budget decisions. And their experiences demonstrate that such evidence-based policymaking is achievable, practical, and necessary.

Lawmakers can advance and sustain this approach to policymaking by establishing clear priorities for state agencies or cementing executive branch actions in new laws. These reforms can help state partners—such as executive branch agencies or budget offices—produce evidence that improves the efficiency of their work and ensures that legislators are using evidence to inform decisions.
ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION
Alternative Financial Service Providers Association
757.737.4088
315 Tuscarora St., Lewiston, NY 14092