July 21, 2020
AFSPA Partner


US banks warn of much more economic pain ahead

The biggest US banks are setting aside billions of dollars to deal with toxic loans as support from the government falls off in the months ahead, a sign that some of the worst economic damage from the pandemic is still to come.

What's happening: JPMorgan Chase (JPM), Citigroup (C) and Wells Fargo (WFC) said Tuesday that they earmarked nearly $28 billion to cover credit losses last quarter, wiping out a huge chunk of profits made between April and June.

JPMorgan, the largest US bank, reported a 51% plunge in second-quarter profit, citing the need to prepare for "increased uncertainty in the macroeconomic outlook." Wells Fargo reported its first quarterly loss since the Great Recession.
Read more at CNN BUSINESS

AFSPA Partner


Study shows Californians likely to seek home equity, payday loans during pandemic

FAIRFIELD - California and Covid-19 loans show mixed results, according to a WalletHub study released Wednesday.

The state finished 43rd in the loan search interest index and 37th in average inquiry count from Jan. 1 through June 24. Both are below the average rank of 25, with one reflecting the biggest need.

California is at the 24th spot for home equity loans and 28th in payday loans.

Greater interest in getting a loan indicates that more people in the state are struggling to make ends meet.

WalletHub combined internal credit report data with data on Google search increases for three loan-related terms in the 50 states and the District of Columbia to arrive at the rankings.


Office of the Comptroller of the Currency (OCC) Issues Proposed 'True Lender' Rule

WASHINGTON-The Office of the Comptroller of the Currency (OCC) today proposed a rule that would determine when a national bank or federal savings association (bank) makes a loan and is the "true lender" in the context of a partnership between a bank and a third party.

Banks' lending relationships with third parties can facilitate access to affordable credit. However, the relationships have been subject to increasing uncertainty about the legal framework that applies to loans made as part of these relationships. This uncertainty may discourage banks and third parties from entering into relationships, limit competition, and chill the innovation that results from these partnerships-all of which may restrict access to affordable credit.

The proposed rule would resolve this uncertainty by specifying that a bank makes a loan and is the "true lender" if, as of the date of origination, it (1) is named as the lender in the loan agreement or (2) funds the loan.
Read more at OCC


Major banks are hauling in 'big fees' from debt and equity underwriting during the coronavirus crisis

Goldman reports 41% bump in second-quarter revenue to $13.3 billion from a year ago

Cash might be king during a crisis but for top investment banks helping the Federal Reserve do "whatever it takes" to keep credit flowing during the pandemic, the ace in the hole has been capital markets fees.

Take JPMorgan, Chase & Co. JPM, +0.28%, which recorded a chart-busting $33.8 billion of revenue for the second-quarter on Tuesday, despite the coronavirus recession, and a 54% jump in investment banking fees from a year ago.
Read more at MARKETWATCH


See What Taxes Your State Relies on Most

How States Raise Their Tax Dollars

Taxes make up about half of state government revenue, with two-thirds of states' total tax dollars coming from levies on personal income (37.9%) and general sales of goods and services (30.9%).

Broad-based personal income taxes are the greatest source of tax dollars in 30 of the 41 states that impose them, with the highest share-70.5%-in Oregon. General sales taxes are the largest source in 15 of the 45 states that collect them. Florida is the most reliant on these taxes, at 62.5%. Other sources bring in the most tax revenue in a handful of states: severance taxes in Alaska and North Dakota, property taxes in Vermont, license taxes and fees-such as franchise taxes that companies pay to incorporate in a state-in Delaware, and selective sales taxes on particular goods and services-such as tobacco and hotel rooms-in New Hampshire.

This infographic illustrates the sources of each state's tax revenue.
Read more at The Pew Charitable Trusts


FTC Launches New Online Tool for Exploring Military Consumer Data

The Federal Trade Commission launched a new tool that explores data about problems military consumers may experience in the marketplace. For the first time, data about reports the FTC has received from active duty service members and veterans will be available online in an interactive dashboard at data.

The military dashboard, which is updated quarterly, has a drop-down feature that shows data for "active duty," "veterans and retirees," and "all military."

From 2015 through the first two quarters of 2020, reports received by the Consumer Sentinel Network showed the median fraud losses for veterans and retirees were $750. For active duty military, the top reported scam type was government imposters, followed by unwanted telemarketing calls. In addition, for "all military"-which includes military families and reservists-65.5 percent of people who reported online shopping problems reported losing money. Many online shopping reports are about merchandise ordered online that never arrives.
Read more at Federal Trade Commission


As big U.S. banks let customers delay payments, loan losses remain unclear

NEW YORK (Reuters) - Major U.S. bank executives this week said they extended forbearance programs to millions of credit card, auto loan and mortgage customers who were financially hard hit by the coronavirus pandemic.

While that is good news for customers who need more time to pay their bills, the delays mean some of the largest U.S. banks may not know how many consumer loans have gone bad until the end of this year or early next.

"Significant credit card losses won't show up until 180 days past the end of (forbearance) programs," Bank of America Chief Financial Officer Paul Donofrio said on Thursday. "I would not expect to see significantly higher losses until 2021."

JPMorgan Chase & Co, Bank of America, Citigroup and Wells Fargo & Co have all extended programs launched this spring that allow customers to delay payments on their credit card balances or loans without incurring late fees or hurting their credit.
Read more at REUTERS


CFPB Releases Making Ends Meet Survey

WASHINGTON, D.C. - The Bureau released the first results from the Making Ends Meet survey today. The results provide a deeper understanding of how often U.S. consumers have difficulty making ends meet and how they cope with financial shortfalls.

Key results from the survey
  • Among survey respondents, 52 percent reported they could cover expenses for two months or less if they lost their main source of income. Respondents were asked to consider all available sources of funds including borrowing, using savings, selling assets, and seeking help from family or friends. Twenty percent could cover expenses for two weeks or less.
  • In May 2019, 40 percent of U.S. consumers reported that they had difficulty paying a bill or expense in the previous year.
  • Households that suffered a period of unemployment, reduced work hours, or an inability to work because of illness were nearly twice as likely to report having difficulty paying a bill or expense than households that had not experienced these events.
  • When asked how they handled a difficulty paying a bill or expense, half of respondents said they borrowed, either formally or informally. Half also reported cutting back on other expenses.
  • When a respondent had difficulty paying for one bill or expense, she or he was often also unable to pay for other necessities such as food, utilities, rent, or the mortgage.

Read more at CFPB

Dreher Tomkies LLP

By the Numbers: A Look at Municipal Bankruptcies Over the Past 20 Years

How local governments handled fiscal distress and insolvency before the pandemic

On May 19, the city of Fairfield, Alabama, filed for bankruptcy, becoming the first U.S. city or county to file for Chapter 9 in close to a year. The 10,500-person town is seeking protection from creditors while it comes up with a plan to adjust its debt.

Fairfield, located just southwest of Birmingham, has struggled to keep up with its funding obligations since U.S. Steel closed portions of a facility in 2015 and Walmart closed a Supercenter in 2016. After the closures, the local transit authority stopped bus service, the city faced a shut-off of water service for failure to pay, and the county took over the police force.
Read more at The Pew Charitable Trusts


Here's how a Biden presidency could hurt financial stocks

'We expect that financial stocks will sell off later this summer if it looks like a Biden win is likely,' KBW analyst Brian Gardner says

As Joe Biden leads President Donald Trump in polls ahead of November's election, analysts are already assessing how financial stocks could be affected by having the veteran Democratic politician in the Oval Office.

"We expect that financial stocks XLF, -0.45% will sell off later this summer if it looks like a Biden win is likely," said KBW analyst Brian Gardner in a note on Sunday.

"In our opinion, investors' fear that the Elizabeth Warren wing of the Democratic Party could be in charge of financial regulation will weigh on financial stocks unless there is signal that a Biden administration will be led by centrists rather than progressives."
Read more at MARKETWATCH


VA Partially Suspends Debt Collections on Veterans Through End of Year

The Department of Veterans Affairs has announced the partial suspension of debt collections against veterans through the end of the year to provide financial relief during the COVID-19 pandemic.

In a July 9 news release, the VA said it was suspending all actions against veterans to the end of 2020 where responsibility for the collection of money owed has passed from the VA to the Treasury Department.

Under current rules, the Treasury Department has jurisdiction over VA debt collection after the debt has been delinquent for more than 120 days.
Read more at MILITARY.COM



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