June 9, 2020
AFSPA Partner

AFSPA Partner


If Trump isn't re-elected as president, here's what may happen to corporate profits

Higher corporate taxes (and personal taxes, too) and lower profits could be lurking in 2021 if former Vice President Joe Biden wins the presidency from President Trump, suggests strategists at Goldman Sachs. The billion-dollar question is whether markets would tank in the lead-up to signs a Biden presidency -and its era of higher taxes on businesses and households - is inevitable.

"For many clients, the most important equity market implication is the potential for higher corporate tax rates," cautioned Goldman Sachs strategist David Kostin in a new note on Monday.

The Trump tax cuts enacted in 2017 reduced the federal statutory rate for corporations to 21% from 35%. In turn, the effective corporate tax rate fell to 19%. The lower taxes have unleashed higher corporate profits, rising dividends and a fresh wave of stock buybacks. Verdict is still out if corporations have upped capital investments as aggressively as hoped for originally under the tax cut scheme.
Read more at YAHOO FINANCE

As COVID-19 spurs cashless purchases, Congress mulls a limit

Lawmakers seek to reverse trend of companies refusing to accept cash, saying the pandemic heightens the urgency to help consumers retain choices

Like other businesses, Southland Beer decided to go cashless when COVID-19 struck.

The owner of the craft beer bar and bottle shop in Los Angeles' Koreatown neighborhood, Timothy Sturm, said the change was "mostly just for sanitary reasons - not wanting to touch money, not wanting to have things exchanged between customers and employees."

As thousands of businesses took steps like Sturm's to slow the spread of the disease, some members of Congress seek to block their path and simultaneously reverse a trend of companies refusing to accept physical cash. They say the pandemic heightens the urgency to help poorer, unbanked consumers retain choices as consumers.

Rep. Donald M. Payne Jr., D-N.J., has a bill that would ban cashless stores. His bill was introduced before the pandemic upended daily life, but Payne says COVID-19 has only drawn more attention to the issue. "Unfortunately, because of the pandemic, it's gained a bit more interest," he said.
Read more at ROLL CALL

Dreher Tomkies LLP

Older crowd embraces online banking, rewards firms' digital push

It took a global pandemic to get many baby boomers to bank online. Lenders have taken notice.

Over the past two months, Americans flocked to websites and apps to manage their finances as the coronavirus limited access to branches, according industry executives. For JPMorgan Chase, existing online clients are using the offerings more frequently, while Bank of America found that older customers are seeking out its digital services.

"We may have opened some people's eyes to the future," Bank of America CEO Brian Moynihan told investors at a conference last week. "We're just on a relentless push."

The coronavirus has given a boost to digital banking, which entails less paper, greater use of electronic services and fewer in-person meetings. Tech has been viewed by banks as both an offensive and defensive tool. Online services have the potential to bring in customers, help cut costly branches and pare workforces, while also making it harder for new competitors to poach clients with the allure of better technology.

Big banks took $11.7B in overdraft fees last year, nonprofit says

  • Large U.S. banks took $11.68 billion in overdraft fees out of their customers' accounts last year, the Center for Responsible Lending said, according to data released Wednesday that focused on financial institutions with $1 billion or more in assets.
  • About 9% of account holders paid 84% of the overdraft fees, including a disproportionate number of black and Latino customers, the nonprofit said.
  • "Banks should not experience an unprecedented windfall as the direct result of their customers' unprecedented distress," wrote Peter Smith, co-author of the report, which advocates for a bill to prevent financial institutions from assessing overdraft fees on any transaction during the coronavirus crisis.

Read more at BANKING DIVE


The Office Elevator In COVID Times: Experts Weigh In On Safer Ups And Downs

When the American Medical Association moved its headquarters to a famous Chicago skyscraper in 2013, the floor-to-ceiling views from the 47th-floor conference space were a spectacular selling point.

But now, those glimpses of the Chicago River at the Ludwig Mies van der Rohe-designed landmark, now known as AMA Plaza, come with a trade-off: navigating the elevator in the time of COVID-19.

Once the epitome of efficiency for moving masses of people quickly to where they needed to go, the elevator is the antithesis of social distancing and a risk-multiplying bottleneck. As America begins to open up, the newest conundrum for employers in cities is how to safely transport people in elevators and manage the crowd of people waiting for them.
Read more at NPR

REPAY Announces Partnership with Inovatec Systems Corp

Partnership will enhance payment capabilities for lenders and finance companies across the Inovatec system

Repay Holdings Corporation (NASDAQ: RPAY) ("REPAY"), a leading provider of vertically-integrated payment solutions, today announced its partnership with Inovatec Systems Corp., a provider of industry-leading, cloud-based lending solutions for all financial institutions.

As an integrated partner with Inovatec, REPAY will enable lenders and finance companies on the Inovatec system to securely accept debit cards, credit cards, and ACH payments through its digital suite of consumer-facing payment channels, including text-to-pay, Interactive Voice Response (IVR) phone pay, the REPAY mobile app, and online payment portals.



Overdraft fees have forced the poor out of banks: Former FDIC chair

(YAHOO) - In 2019 Americans paid nearly 12 billion dollars in bank overdraft fees. Eighty percent of the fees were paid by only 9% of the customers, who are most often the bank's poorest, with balances around $350 or less, according to the Center for Responsible Lending.

This tends to have a particularly harsh impact on communities of color, which the Center said are already disproportionately excluded from much of the traditional banking system.

Overdraft fees - when a bank charges a customer who spends more than what they have in their account -- aren't new, Yahoo says. However, they are at least partially, if not mostly, responsible for forcing many people to become "underbanked," says the Center, and former FDIC Chief Sheila Bair.

"A lot of people who are underbanked used to be banked and they stopped because they got overdraft fees," said Bair on Yahoo Finance's On The Move. "They got minimum balance fees, they got a lot of fees they didn't understand."
Read more at KAKE ABC

Banks were already feeling the impact of COVID-19. This new accounting rule doesn't help

Banks across the nation felt headwinds even before the coronavirus pandemic hit, and a new, more rigorous accounting rule isn't helping.

Banks could face eroding profits on a scale they haven't seen since the Great Recession. For depositors and other bank customers, this is a possible cause for concern - or at least a reason to reevaluate their banking needs.

Banks aren't in trouble. The number of banks on the Federal Deposit Insurance Corp.'s problem list eased to 51 at the end of last year - a 13-year low and representing only about 1% of all companies. No banks failed in 2018, four did so last year, and two have through May. The FDIC doesn't identify the institutions on its problem-bank list.

"The banking industry remains strong," FDIC Chairman Jelena McWilliams said in February, when the agency revealed that banks with deposit insurance, the overwhelming majority, earned a combined profit of $55.2 billion.
Read more at USA TODAY


We need a public option for banking

The COVID-19 pandemic response has shown that the very foundations of our economy are shaky, fragile, and - for some of us - downright dangerous.

We're once again watching working people, especially working people of color, bear the brunt of the fallout. Meanwhile, big companies traded on the stock market took two-thirds of the money meant to bail out small businesses.

But in getting relief out, it's also become clear that we have a plumbing problem: We are forced to rely on the banks as middlemen to deliver government assistance.

Some of them are seizing our stimulus payments to pay themselves. And as big banks have exited the business of serving poor people, one in four U.S. households are now underbanked or unbanked. This has predictably led to marginalized communities and households waiting in distress for life-sustaining stimulus funds, simply because they lack access to a bank account.
Read more at Times Republican

Banks have a mountain of deposits, so they don't need PPP funding

A record surge in bank deposits has given U.S. lenders more cash than they know what to do with. One thing they don't need: help from the Federal Reserve to fund the government-backed loans they made to small businesses.

Banks had tapped only $49 billion from the Paycheck Protection Program Liquidity Facility by May 27 as they loaned $511 billion, according to the central bank and the U.S. Small Business Administration. That's largely because lenders are sitting on $1.8 trillion of new deposits that have flooded in since March 11 - a 13% increase, and the biggest two-month jump since at least 1973, when comparable data is available.

"It looks like this excess liquidity in the banking system is going to stick around much longer," said Brian Klock, a bank analyst at Keefe, Bruyette & Woods. "So if you don't really need it, why get the Fed loan?" Read more at AMERICAN BANKER



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