September 2, 2021
The Gateway For Payroll Data
Credit access declined during the pandemic for credit cards, but increased for mortgages and auto loans

This is the fifth and final post in a series documenting trends in consumer credit outcomes during the COVID-19 pandemic. This post focuses on access to new credit—the share of new credit applications that result in new accounts and the amount of credit that is extended to consumers who open new accounts. During the last recession in the late 2000s, creditors sharply pulled back on the availability of all types of credit to reduce their risk. In a report we released in August 2020, and updated in earlier post in this series, we showed there was not a pronounced reduction in available credit card credit since the start of the COVID-19 pandemic, although credit limit increases seem to have been halted for many consumers. However, because of lags in the reporting of new accounts, the August 2020 report did not discuss trends in access to new credit.

As in previous posts in this series, we use the Bureau’s Consumer Credit Panel (CCP), a de-identified sample of records from one of the three nationwide consumer reporting agencies. We look at two key outcomes: First, we look at the probability that a hard inquiry on a consumer’s credit report is “successful,” meaning that it is followed by a newly opened account shortly after (credit card inquiries that are followed by a substantial limit increase are also considered successful).

Paving the Payments Future
Millions of Americans will lose unemployment benefits this weekend

  • Federal unemployment programs in place since March 2020 will end this weekend in all states.
  • Almost 9 million Americans will lose benefits entirely, and another 3 million or so will see aid reduced by $300 a week, according to the Century Foundation.

Millions of people are poised to lose their unemployment benefits this weekend, when federal pandemic-era policies will end.

Congress authorized a historic expansion of the country’s safety net for jobless individuals in March 2020 to manage the fallout of the Covid-fueled economic downturn.

Lawmakers twice extended those temporary expansions, which increased the number of people eligible for unemployment benefits and raised the amount of weekly aid for recipients.

Low-income families still have time to sign up for advance child tax credit payments

The IRS urges anyone who normally isn't required to file a tax return to explore the tools available on The Eligibility Assistant can help determine eligibility for the advance child tax credit. The Non-filer Sign-up tool can help people file a simplified tax return to sign up for these payments. Some non-filers may also be eligible for the $1,400 per person Economic Impact Payments and the recovery rebate credit. People can get these benefits, even if they don't work, have no income or don’t have a permanent address.

Although Payday Loans Have Declined in CA, A Rebound May Be Looming

California payday lenders experienced a sharp decline in loans and borrowers in 2020 during the pandemic despite the initial rates of job loss and unemployment.

The Department of Financial Protections and Innovation (DFPI) reported a 40 percent decline in payday loans in 2020, according to their 2020 Annual Report of Payday Lending Activity.

“Payday loans are believed to have decreased during the pandemic for a number of reasons that may include factors such as stimulus checks, loan forbearances, and growth in alternative financing options,” said DFPI Acting Commissioner, Christopher S. Shultz, in a press release.

Payday lenders experienced a loss of over $1.1 billion dollars according to 2019 total dollar amounts of payday loans.
Payday Loans: Top 5 Myths to Destroy

Some untrustworthy sources have been spreading false opinions about payday loans. In reality, alternative lenders, giving out payday loans, have been helping borrowers all over the country and the borrowers only benefit from that cooperation. 

In order to know how to borrow responsibly and get the most from payday loans for your financial independence, you have to know true facts about those lending options. Here are the top 5 myths about payday loans proved wrong.

1) Payday Loans Are Only for Financially-Challenged Borrowers
True, those borrowers with bad or no-credit scores would faster get a loan from an alternative lender online than a loan at the regular bank. But other borrowers who have a well-managed budget and financially stable standing do benefit from payday loans as well

Most US companies surveyed said they're planning to require employees to get vaccinated by the end of the year

  • Willis Towers Watson polled 961 US companies that collectively employ about 9.7 million people.
  • Half of the companies surveyed planned to require workers to get a COVID vaccine by the end of 2021.
  • Apple, Goldman Sachs, and Uber are requiring that some or all employees get a COVID vaccine.

More than half of US companies plan to require some or all of their employees to get vaccinated against COVID-19 by the end of the year, found a survey first reported by Reuters.

The survey, which polled 961 US companies that collectively employ about 9.7 million people, found that over 52% of employers plan to have one or more vaccine mandate requirements, Reuters reported.

Among the companies requiring some kind of a vaccine mandate are Google's parent Alphabet and the Goldman Sachs Group.

Household debt jumps by the most in 14 years to nearly $15 trillion in the second quarter

Household debt rose $313 billion in the second quarter to nearly $15 trillion.
In dollar terms, that was the fastest growth since the second quarter of 2007, and at 2.1% was the fastest percent increase in seven and a half years.
Over the past four quarters, mortgage originations have totaled close to $4.6 trillion, amounting to 44% of all outstanding home loan balances.

Household debt rose by its highest dollar amount in 14 years during the second quarter, thanks mostly to a surge in the housing market that brought the collective American IOU to just shy of $15 trillion, the Federal Reserve reported Tuesday.

Total debt balances jumped $313 billion in the April-to-June period, the sharpest rise since the same period in 2007.

As a share of debt, that represented a 2.1% increase, the fastest pace since the fourth quarter of 2013.

Bank regulators issue guidance on partnering with fintechs

  • Bank regulators highlighted a number of areas Friday where community banks should conduct due diligence when partnering with fintech firms to properly assess a fintech’s risks and qualifications.
  • The 20-page guide, released by the Office of the Comptroller of the Currency (OCC), the Federal Deposit Insurance Corp. (FDIC) and the Federal Reserve, focuses on six topics banks should evaluate in a potential fintech partner: business experience and qualifications; financial condition; legal and regulatory compliance; risk management and controls; information security; and operational resilience. 
  • "This guide is intended to be a resource for community banks when performing due diligence on prospective relationships with fintech companies," the guide said. The regulators said use of the guide is voluntary, and it does not anticipate all types of third-party relationships and risks.

Building a more stable financial system: Unfinished business

Twice in this still-young century central banks have had to take steps, unprecedented in size and scope, to limit the economic fallout from financial instability. While we can’t expect a financial system to withstand an overnight shut down of the global economy like we experienced in March 2020 without support from central banks and fiscal authorities, the financial market turmoil at that time highlighted vulnerabilities that were visible well beforehand. The system is stronger than it was going into the Global Financial Crisis (GFC), but much remains to be done, especially in nonbank finance. I’m going to reflect on some of the actions that need to be taken, drawing on the recent recommendations of a Task Force on Financial Stability in the U.S. that I co-chaired, and on my experience as an external member of the Financial Policy Committee at the Bank of England.

My main points are:

Dealing with risks to financial stability is urgent. If the economic and financial situation evolves as seems to be expected in financial markets, credit should flow, and financial markets will continue to serve the needs of the economy. But the current situation is replete with fat tails—unusually large risks of the unexpected which, if they come to pass, could result in the financial system amplifying shocks, putting the economy at risk. Shoring up our defenses against financial instability can’t run on Federal Reserve or, even worse, FSOC time where near endless analysis and consensus building delay needed action for years.

Alternative Financial Service Providers Association
315 Tuscarora St., Lewiston, NY 14092