June 16, 2020
AFSPA Partner

AFSPA Partner


Federal Reserve chief: Millions of people won't return to work because of COVID-19 pandemic

Enter Federal Reserve Chair Jerome Powell to toss some cold water on those giddy Wall Street bulls continuing to cheer the surprisingly upbeat May jobs report that sparked hopes for a V-shaped economic recovery after the worst of the COVID-19 pandemic.

Powell - speaking to reporters following the Fed's latest decision on rates - said "millions" of people will not return to work for some time because of the aftershocks to businesses from the health scare. The Fed chief suggested the lack of jobs would be rooted in the reality that companies were unable to survive the pandemic or the role no longer exists in the new world order.

By extension, that would suggest a certain kind of structural unemployment that may continue to weigh on U.S. growth unless workers get re-trained for new jobs.
Read more at YAHOO FINANCE

Update from CFPB taskforce on federal consumer financial law

WASHINGTON, D.C. - Earlier this week, the chair of the taskforce on federal consumer financial law created at the beginning of the year by the Consumer Financial Protection Bureau offered an update on the group's progress on examining the existing legal and regulatory environment facing consumers and financial services providers.

Todd Zywicki highlighted in a blog post on the CFPB's website that the taskforce held a listening session back in March with representatives from various consumer advocacy and trade groups. Zywicki indicated the session helped to shape the Request for Information (RFI) to assist the taskforce that was issued by the bureau later that month.

Zywicki - who also is professor of law at George Mason University Antonin Scalia Law School, senior fellow of the Cato Institute, and former executive director of the GMU Law and Economics Center - shared some of the taskforce's planned efforts going forward into the fall, which include:
Read more at SubPrime Auto Finance News


The other lender of last resort

COVID-19 has caused a role reversal in pawnshop borrowers.
During the first four weeks of Illinois' stay-at-home order, some pawnshops in lower-income areas of Chicago saw fewer new loans taken out and old loans being paid back early. Pawnshops in wealthier parts of the city, however, faced a rush of new loans as people scrambled for cash.

Federal government relief has not come equally to all. For some middle-income earners, the overnight disappearance of jobs a month ago cast many into financial turmoil, despite stimulus payments and unemployment benefits. For those who were already struggling financially, however, government aid provided more income than before the pandemic employment.

"I'm completely baffled at what happened," said Daniel Lebovitz, owner of Chicago Pawners & Jewelers located on Chicago's west side. "People trying to get money is down 50%."
Read more at MEDILL Reports

CFPB complaint volume sets another record in May

As of today, consumer complaints to the CFPB set a third straight monthly record in May, with 35,093 complaints reported. Complaints about credit reporting lead by far, followed by debt collection, credit card and mortgage complaints. Job and income losses during the pandemic are hitting families hard.

I'm still reading the CFPB's mail. As of today, consumer complaints to the CFPB set a third straight monthly record in May, with 35,093 complaints reported so far. See chart below. Complaints about credit reporting lead by far, followed by debt collection, credit card and mortgage complaints. It's clear from these data that job and income losses during the pandemic are hitting families hard.

In the next few days, we intend to do a deeper dive into these complaint patterns, including an updated look at complaint narratives that mention the pandemic's impact on consumer finances. Our recent report has more on historic CFPB complaint levels. Even the CFPB is reporting that the pandemic is resulting in record numbers of consumer complaints to the public consumer complaint database. Yet, we agree with former CFPB senior official Diane Thompson, whose post today questions a variety of CFPB efforts to weaken requirements on banks and credit bureaus instead of looking at the data and using it to help consumers.

Dreher Tomkies LLP

U.S. banks prepare branches for gradual post-coronavirus re-opening

NEW YORK (Reuters) - U.S. banks have been stocking up on masks and other supplies and setting up acrylic barriers to prevent spreading the novel coronavirus as they ready their branches for the country's gradual reopening, executives and suppliers told Reuters.

Bank of America Corp has installed over 20,0000 acrylic barriers across branches to prepare for more foot traffic as shelter-in-place orders ease, spokesman Matt Card said. The bank requires employees to wear masks, and has stockpiled enough so that each employee receives one a day, he said.

Capital One Financial Corp is also installing barriers, enhancing deep cleaning protocols, placing social-distance markers for queuing and providing hand sanitizers and masks, said spokeswoman Devon Gunn. It will also provide masks to customers if they arrive without one, she added.
Read more at REUTERS

Understanding How Consumer Borrowing Habits Will Change Post-COVID

Americans won't stop borrowing but there's a growing conservatism brewing as more confront the potential for job loss or a reduction in income as key federal programs near their original sunsets. On the upside, point of sale installment credit offerings for both store and ecommerce sales are catching on, especially among Millennials.

For decades, America's economy has been built on consumer spending. Historically credit powered much of that spending. So much so that it's fair to say that if none of that credit existed, Americans would live much different lives.

Now the economy labors in the midst of an extended reboot from the COVID crisis. As Americans reenter some version of normality their views about borrowing will vary, based on their employment status, where they live, the options available to them now, and in some cases their age. In some ways their thinking about credit is changing.


U.S. economy entered recession in February, business cycle arbiter says

(Reuters) - The U.S. economy ended its longest expansion in history in February and entered recession as a result of the coronavirus pandemic, the private economics research group that acts as the arbiter for determining U.S. business cycles said on Monday.

The Business Cycle Dating Committee of the National Bureau of Economic Research said in a statement its members "concluded that the unprecedented magnitude of the decline in employment and production, and its broad reach across the entire economy, warrants the designation of this episode as a recession, even if it turns out to be briefer than earlier contractions."

The designation was expected, but notable for its speed, coming a mere four months after the recession began. The committee has typically waited longer before making a recession call in order to be sure. When the economy started declining in late 2007, for example, the group did not pinpoint the start of the recession until a year later.
Read more at REUTERS

US bank execs see less-than-expected need for ongoing loan deferrals

US banks expect a significant number of borrowers to get back on normal loan repayment schedules after their forbearance periods end later this month, senior executives told the Financial Times. They also noted that many clients weren't hit as hard by the pandemic as they feared.

At Citizens Bank, for example, only 10% of direct deposit customers who took advantage of payment holidays have dealt with income disruption since the pandemic began. And a senior executive at a major US bank cited by the FT said that the bank's research suggested the number of borrowers in forbearance will drop 20% after the initial payment deferral period expires.

If banks can get customers to pivot back to a normal payment structure, it would likely ease damage to their bottom lines. Banks have set aside billions of dollars to prepare for losses due to the economic fallout from the coronavirus, but if they get customers back on track with loan payments sooner rather than later, it will blunt the hit that banks' revenues take.


Money Fix: Lessons from 2008 financial crisis

Life offers many lessons if you're still and studious enough to grasp them. The past is always a road map to the present. The last time things were so bad economically in this country it was 2008.

What can we learn with a look back, and how can it help us in the current chaos? Experts share their insights.

Stay invested, but diversify
"No matter how bleak and dire a situation may be, the markets are very resilient and as long as you have the patience and some time to ride through the volatility, longer term the markets have always come back," says Christopher Congema, a certified financial planner with Landmark Wealth Management in Melville.
Read more at NEWSDAY

FTC Makes More State-Level Data Available About COVID-19 Related Complaints from Consumers

The Federal Trade Commission is making more state-level information available to the public about the complaints it receives from consumers related to COVID-19, with reports about online shopping problems topping the list of complaints in most states.

Under its expanded reporting, the FTC is now releasing the numbers of different types of fraud, Do Not Call, and other complaints received from consumers in each state. You can find national and state-level data on the FTC's new interactive COVID-19 complaint data dashboards.

The COVID-19-related online shopping complaints from consumers include reports about items not arriving or not arriving when promised and items that are different than advertised. The FTC began releasing COVID-19-related complaint data in late March 2020. So far, the FTC has received more than 91,000 total COVID-19-related complaints between January 1 and June 8, 2020. Consumers have reported losing a total of more than $59.2 million to COVID-19-related fraud. California has reported the largest number of COVID-19-related complaints.
Read more at The Federal Trade Commission



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