NEWS: Bank profits slump 70%

ALTERNATIVE FINANCIAL SERVICE PROVIDERS ASSOCIATION

August 27, 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

Bank profits slump 70% as coronavirus rakes businesses, households

Bank profits across 5,066 insured institutions were $18.8 billion, compared with profits of $62.5 billion in the same period a year ago

The U.S. banking industry's second-quarter profits fell by 70% from a year ago as low interest rates and the economic turmoil of the COVID-19 pandemic weighed heavily on big and small banks alike.

The Federal Deposit Insurance Corp. said Tuesday that total bank profits across 5,066 insured institutions were $18.8 billion, compared with profits of $62.5 billion in the same period a year ago. It was the second consecutive quarter of steep profit declines as banks set aside billions to cover potentially bad loans back in April.

Most of the profit decline was tied directly to the pandemic. Banks are now holding tens of billions of dollars of loans that appeared healthy in March, but are now in forbearance or deferral because those borrowers can no longer pay. Further, the Federal Reserve has slashed interest rates to near zero once again to stimulate the economy, which limits what money banks can charge for loans.
Read more at FOX BUSINESS

Lending as a Service

How much longer until the US economy is back to normal? This new index shows we have a long way to go

We're coming up on six months since Covid-19 turned the world upside down. We are adjusting, but few things feel normal. Certainly not in our daily lives. Most of us are wearing masks and social distancing, while our favorite sports teams play in empty stadiums and arenas. Our work lives are hardly typical, either. Lots of us are unemployed, and many of us fortunate to have jobs continue to work from home.

How far from normal are we? And how much progress are we making toward whatever "normal" will mean in the future? These are tough questions, but CNN Business and Moody's Analytics have teamed up to take a crack at answering them with regard to the economy.

The US economy remains far from normal. That's the bottom line. Based on the Back-to-Normal Index that we constructed, the US economy was operating at only 78% of normal as of August 19. "Normal" for our purpose is the economy as it stood prior to when the pandemic struck in early March. Economic activity nationwide is down by almost one-fourth from its pre-pandemic level - far from normal. Read more at CNN BUSINESS

Paving the Payments Future

Pawn shops see lots of buying, plummet in new loans amid pandemic - opposite of what was predicted

Pawn shops offer a way for people to get fast cash for loaned items, or for them to shop for items at a discount.

When the pandemic hit, pawn shops were deemed essential and stayed open, but the reasons people came in were different than what was expected.

"This is how we test diamonds, it's a diamond tester" Michael Mack, owner of Max Pawn, said while explaining how pawn shops figure out the worth of a ring. "And then we weigh."

This is part of the process at a pawn shop, customers bring an item in and an employee assesses it. They make an offer based on value. If you say yes, you walk out the door with cash. You either keep the money and the shop eventually puts your stuff up for sale, or you bring the money back and reclaim your items. Read more at WTKR

Protecting your finances during the coronavirus pandemic

The CFPB is committed to providing consumers with up-to-date information and resources to protect and manage their finances during this difficult time.

Resources to help you make financial decisions

Mortgage and housing assistance
Managing your finances
Student loans
Avoiding scams

Read more at the CFPB

Statement from Online Lenders Alliance CEO Mary Jackson Regarding Attorneys General Lawsuit Challenging FDIC Rule on Bank-Fintech Partnerships

After the Attorneys General of seven states and the District of Columbia filed a lawsuit against the Federal Deposit Insurance Corporation (FDIC) challenging its recent rule to permit and promote banks' partnering with financial technology ("fintech") firms to offer expanded services and financial products, Online Lenders Alliance CEO Mary Jackson issued the following statement:

"The FDIC rule was a major step forward for the millions of financially underserved consumers, including the many Americans with nonprime credit scores. By resolving longstanding uncertainties, the FDIC rule furthered the goal of promoting banks' ability to partner with non-bank financial technology firms-partnerships which lead to more, better, and safer financial options for consumers to choose from.

"Bank-fintech partnerships lead to more competition in the marketplace, which ultimately benefits consumers. This is a good thing, and the FDIC is right to promote it. For the sake of the consumers who rely on these products, we hope that the FDIC's rule is upheld."
Read more at Online Lenders Alliance

Biden promises to raise taxes on Americans making more than $400,000 per year

Biden also called for new taxes on wealthy businesses

Democratic presidential nominee Joe Biden said that if he wins the presidency in November's election, he will raise taxes on Americans who earn more than $400,000 a year.

In an interview with ABC's David Muir that aired Sunday, Biden discussed his plan for raising taxes that included this segment of the population and appeared to include businesses as well.

"I will raise taxes for anybody making over $400,000," Biden said. "Let me tell you why I'm going to do it. It's about time they start paying a fair share of the economic responsibility we have. The very wealthy should pay a fair share - corporations should pay a fair share."

Biden referred to businesses that take in "close to a trillion dollars and pay no tax at all."
Read more at FOX BUSINESS

ICBA calls for investigation into JPMorgan Chase-USPS talks

A community banking trade group is calling for the U.S. Postal Regulatory Commission (PRC) to investigate JPMorgan Chase's talks with the U.S. Postal Service (USPS) about offering banking services at some post office branches.
Reports that the bank had explored the idea of leasing space for ATMs at several locations were first reported last week by The Capitol Forum and confirmed by a JPMorgan Chase spokesperson who said the conversations were "preliminary" with "no agreement in place and no imminent plans to move forward."
"Equitable access to basic banking services must be discussed and addressed by policymakers and the entire financial services industry - not in a vacuum between an independent government agency and a single, privileged financial institution," Independent Community Bankers of America (ICBA) President and CEO Rebeca Romero Rainey wrote in a letter Monday to PRC Chairman Robert Taub. The PRC, an independent federal agency consisting of five commissioners, did not respond to Banking Dive's request for comment.

Read more at BANKING DIVE

Home prices climb 3.5% in June, led by Phoenix, Seattle and Tampa

Prices fell in Las Vegas, New York and San Francisco

U.S. home-price growth slowed in June, but continued to show modest growth amid the COVID-19 pandemic.

The S&P CoreLogic Case-Schiller 20-city home price index rose 3.5% year-over-year in June, a slight slowdown from the revised 3.6% growth in May and below the 3.8% pace that economists surveyed by Refinitiv were expecting.

"June's gains were quite broad," said Craig Lazzara, managing director and global head of index investment strategy at S&P Dow Jones Indices. "As has been the case for the last several months, prices were particularly strong in the Southeast and West, and comparatively weak in the Midwest and (especially) Northeast."
Read more at FOX BUSINESS

More Trump tax cuts ahead for individuals, Kudlow says

Measures under consideration include further income tax reductions

White House Economic Adviser Larry Kudlow credited the Trump administration's economic and relief policies with helping the U.S. economy rebound from a coronavirus-induced recession that began in February - and he said more tax relief is on the way if the president is reelected.

During the second night of the Republican National Convention on Tuesday, Kudlow said U.S. economic health is "coming back" and Americans are going back to work thanks to emergency spending measures and tax cuts.

"Now, looking ahead, more tax cuts and regulatory roll back will be in store - payroll tax cuts for higher wages, income tax cuts for the middle class, capital gains tax cuts for investment, productivity and jobs," Kudlow said.
Read more at FOX BUSINESS

Colorado settles 'true lender' suit against banks, fintech partners

Colorado's attorney general's office announced a settlement Tuesday with two online lenders - Avant and Marlette Funding - and their partner banks, New Jersey-based Cross River Bank and Utah-based WebBank, in a fight over which companies are considered the "true lender" in a consumer transaction.
Companies can qualify for a legal safe harbor in Colorado if they comply with a ban on loans with annual percentage rates higher than 36%. Under the settlement, regulators must also be able to examine, review and audit the online lender. The bank also retains the right to approve or deny loans and must control all terms of credit.
The settlement may serve as a model for other states to institute consumer safeguards. It may also help banks and fintechs navigate a system marked by interest rate laws that vary by state. For example, other online lenders could choose to restructure their business to comply with safe harbor guidelines.