NEWS: Feds OK small bank loans

ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

August 13, 2020

The IRS has partnered with AFSPA

to assist in an ongoing effort to bring information, research, data and education to the unbanked and underbanked population of America.

The IRS has asked for immediate assistance in finding the millions that

are eligible for, but are unaware they qualify for or how to receive,

the $1,200 'Economic Impact Payments' or 'stimulus checks'.

The deadline to receive these payments is October 15, 2020

IRS TOOLKIT

Coronavirus Tax Relief and Economic Impact Payments

Federal Regulators Greenlight Small Installment Loans From Banks

New policy encourages safe alternatives to payday and deposit advance loans

In July, the federal Consumer Financial Protection Bureau (CFPB) rescinded its well-balanced 2017 safeguards for payday and similar loans with terms of up to 45 days. That change will be a setback for the millions of borrowers who won't have these protections, but banks can help mitigate the harm.

Payday borrowers have checking accounts and incomes; payday lenders require both as a condition of the loans. Many borrowers are eager for alternatives. About 8 in 10 payday loan borrowers say they would borrow from their bank instead of payday lenders if it offered small loans. Banks, however, have mostly been on the sidelines because of regulatory uncertainty.

But in May, the Office of the Comptroller of the Currency, Federal Reserve Board of Governors, Federal Deposit Insurance Corp., and National Credit Union Administration for the first time issued joint guidance about their expectations for small-dollar lending, alleviating much of that uncertainty. This action is the culmination of years of research and consultation with industry and community stakeholders, as evidenced by prior statements and a formal FDIC request for information. As a result, banks are now well-positioned to offer affordable small loans to their customers who currently use high-cost credit such as payday and auto title loans.
Read more at The Pew Charitable Trusts

Fintech Solutions Can Enable More Widespread Financial Inclusion, Could Increase GDP of Emerging Markets by $3.7 Trillion: Report

Critical gaps in the global banking system, especially in emerging markets, have restricted business growth and development. Consumer demand cannot be effectively addressed if banking platforms are not updated to meet the requirements of individuals and small business owners.

Billions of people across the globe are underbanked or unbanked, which means they do not have access to modern financial services such as a bank, savings or investment accounts, or other tools needed to conduct business.

However, businesses in China and other countries have achieved success by leveraging the latest Fintech solutions. Fintech has helped with advancing sustainable global development, which has led to greater financial inclusion. More people are being able to access payment platforms and vital services such as reliable credit, which is helping to reduce wealth inequality and poverty levels.
Read more at Crowdfund Insider

States ask for federal aid to stay on a responsible path

As Congress considers whether to provide state governments with additional fiscal aid in the wake of COVID-19, it is important to recognize that many states made significant strides over the past decade to prepare for a recession. But the severity and speed of this downturn could overwhelm even the best efforts by states to stay on a fiscally responsible path.

A state's best line of defense against downturns is a rainy day fund. By saving money in these accounts, states create financial cushions that limit the need for budget cuts and tax increases when residents and businesses can least afford them. After being underprepared for the Great Recession, many states adopted policies to ensure they would save in good years so that adequate dollars would be available in bad ones. These efforts paid off: Research by The Pew Charitable Trusts shows that at the end of the 2019 fiscal year, states collectively had more dollars saved in their rainy day funds - with money that could cover a bigger percentage of state spending - than at any time in at least the past 20 years.
Read more at THE HILL

Dealing with debt during the coronavirus pandemic: Tips to help ease the impact

Contact your lenders if you are at risk of missing payments
If you think you may fall behind on your payments for your mortgage, auto loan, credit card, student loan, or other debt, call your lender and explain your situation. Credit card companies and lenders may be able to offer you hardship programs, also called "accommodations," to help you. In order to receive an accommodation, you must reach out to your lender proactively.

These programs may include allowing you to temporarily delay or adjust some payments. In some cases, you may be allowed to avoid interest charges. You may also be able to avoid negative credit reporting if you enroll before you become late on your payments. Your lender may also offer longer-term programs, such as work-out plans that allow you to pay back debt over a set period of time at a reduced interest rate. We've got more information on how to protect your credit from the impacts of the coronavirus pandemic, including new information on the CARES Act.
Read more at Consumer Financial Protection Bureau

U.S. News Survey: About 55% Don't Know That a Missed Payment Hurts Your Credit Score

The survey highlights knowledge gaps when it comes to credit scores and risky loans.

AN AUGUST 2020 survey from U.S. News & World Report shows that Americans have a little work to do when it comes to understanding how credit scores and different types of loans work.

Respondents were asked if missing a loan payment would hurt your credit score if you were not in a hardship program.

Here is a breakdown of the results:

41% don't know whether a missed payment hurts your score.
Close to 11% say it wouldn't hurt your score unless you missed more than one payment.
Almost 4% say a missed payment would not hurt your score.
Nearly 45% know that missing a payment would hurt your credit score.

Read more at U.S. News & World Report

Top Fed official suggests US economic recovery may be losing steam

Fed's Rosengren warns US economic rebound could be stalling amid COVID-19 spike

The U.S. economic recovery from the coronavirus pandemic may be stalling after a surge in infections across the country forced most states to pause or reverse their reopenings, according to Boston Federal Reserve President Eric Rosengren.

"Despite the sizeable interventions by monetary and fiscal policymakers, high-frequency economic data indicate that the recovery may be losing steam, as activities in many states are once again restricted, officially or voluntarily, to slow the virus's spread," Rosengren said Wednesday while speaking to the South Shore Chamber of Commerce.

Rosengren raised fresh doubts about the viability of a full economic rebound and said the virus will continue to dictate the speed of the nation's turnaround -- a sentiment that has been echoed by Jerome Powell, the chairman of the U.S. central bank.
Read more at FOX BUSINESS

US consumer prices rose 0.6% in July, matching June uptick

The uptick is about twice what economists expected

WASHINGTON - U.S. consumer prices jumped 0.6% in July as gasoline prices continued to rise.

The Labor Department reported Wednesday that the increase last month in its consumer price index matched a 0.6% rise in June. The uptick was about twice what economists expected. But inflation remains in check: Consumer prices are up just 1% over the past year.

Gasoline prices rose 5.3% from June to July but are down 20.3% in the past 12 months as the coronavirus recession kept many Americans from driving.

Food prices dipped 0.4%, the first drop since April 2019. Grocery prices dropped 1.1% while the cost of dining out rose 0.5%.
Read more at FOX BUSINESS

Trump's payroll tax holiday a 'substantial' lift for businesses as terms remain unclear

The president is looking to implement the measure by Sept. 1

President Trump is looking to implement a payroll tax deferral beginning next month, but experts warn businesses may not be able to adjust their systems so quickly.

"Changes applied to payroll systems would be substantial," Pete Isberg, vice president of government relations for payroll processing firm ADP, told FOX Business. "How quickly could this be done - it's going to be a mixed response."

On Saturday, the president laid out a plan to defer payroll taxes from Sept. 1 through Dec. 31 for employees whose biweekly wages are less than $4,000, on a pre-tax basis.
Read more at FOX BUSINESS

U.S. bankruptcies on track for 10-year high with more than 100 consumer companies already filing

U.S. bankruptcies are en route to a 10-year high with 424 companies filing as of August 9, according to S&P Global Market Intelligence. The group's analysis took into account both public and private companies with public debt. The coronavirus has hit consumer companies hard, with more than 100 filing for bankruptcy including Men's Wearhouse parent Tailored Brands Inc. TLRD, +4.63%, department store Lord & Taylor and work wear retailer Brooks Brothers. Nearly 100 bankruptcies are in the energy and industrials sector. Oil-and-gas producer Chesapeake Energy Corp. CHKAQ, +0.70% and small-engine maker Briggs & Stratton Corp. are among the 35 companies that have filed with more than $1 billion in liabilities. The Consumer Discretionary Select Sector SPDR ETF XLY, 0.09% has gained 13.3% for the year to date while the S&P 500 index SPX, -0.14% is up 4% and the Dow Jones Industrial Average DJIA, -0.31% has lost 2.6%.
Read more at MARKETWATCH

It's time to implement a 4-day work week, Andrew Yang says. The pandemic has made it important now more than ever.

Former Democratic presidential candidate Andrew Yang told Business Insider that the US is past due on implementing a four-day workweek to better accommodate American workers.
As health experts project that life as we know it may not return until next year, Yang told Business Insider in an interview that a four-day workweek could be imperative now more than ever.
"It would help get us off of this hamster wheel that we're on right now, where we're all sort of racing against the clock in service of this like giant capital efficiency machine," Yang said. "And the race is driving us all crazy."
"All of the key drivers that make your business a more successful business will improve as a consequence of this strategy," Andrew Barnes, co-founder of the nonprofit platform 4 Day Week Global told Business Insider.