How the New 2023 Tax Brackets Will Affect Your Wallet

In an effort to adjust for inflation, the IRS announced new tax brackets for the 2023 tax year. The top tax rate remains at 37%, which now applies to individual single taxpayers with incomes greater than $578,125 or $693,750 for married couples filing jointly, up from last year’s income limits, which were $539,900 or $647,850 for married couples filing jointly. These rates will go into effect now on your paycheck but will impact the taxes you file in 2024

The other rates for tax year 2023 are as follows:

35% for incomes over $231,250 ($462,500 for married couples filing jointly)

32% for incomes over $182,100 ($364,200 for married couples filing jointly)

24% for incomes over $95,375 ($190,750 for married couples filing jointly)

22% for incomes over $44,725 ($89,450 for married couples filing jointly)

12% for incomes over $11,000 ($22,000 for married couples filing jointly)

Read more at GOBankingRates

Rent-a-Bank Payday Lenders’ New Filings Show 55% Average Loss Rates: PEW

Loans are charged off at rates far higher than any other product in the banking system

A core principle of bank lending, known as safety and soundness, dictates that institutions only issue loans that have a high likelihood of repayment. This principle protects both banks and borrowers, ensuring that lenders do not incur unsustainable losses or issue credit irresponsibly and that customers get loans they can afford to repay. Over the most recent year of bank loan data released by the Federal Reserve, annual loss rates—known as charge-off rates—for bank-issued loans came in at 2% or lower, but one category of bank-issued loans—rent-a-bank payday loans—looks quite different.

The filings of the large payday lenders offering these bank-originated loans show that a high share of loans are not being repaid, indicating that their bank partners are lending indiscriminately, with loss rates averaging 50% in 2019 and exceeding that figure this year.

These loans are issued by a half-dozen banks supervised by the Federal Deposit Insurance Corp. (FDIC) on behalf of payday lenders to customers with whom the bank otherwise has no relationship. Normally, payday lenders issue their own loans directly to consumers in accordance with state consumer lending laws. These loans are known for high interest rates and large payments and are used primarily by low- and moderate-income borrowers who are struggling to make ends meet.

Read more at The Pew Charitable Trusts

New census estimates show a tepid rise in U.S. population growth, buoyed by immigration: BROOKINGS

Newly released Census Bureau estimates show that in the last year, the nation’s population grew modestly, but hardly returned to pre-pandemic growth levels. Specifically, the estimates reveal: 

The U.S. population grew by a tepid 0.38% between July 2021 and July 2022—slightly above the historic low of 0.16% during the first full year of the COVID-19 pandemic. Although the number of births rose, the number of deaths was still high as the pandemic continued.

The major contributor to the nation’s small population growth uptick was an increase in net immigration from abroad—a sharp contrast from the previous year’s extremely low immigration level. 

Twenty-six states and the District of Columbia either increased population growth or reduced their losses compared to the previous year. Still, 18 states lost population, and deaths exceeded births in 24 states—indicating that the demographic impact of the pandemic has far from subsided. 

Read more at The Brookings Institution

Five ways city leaders can support Black entrepreneurs’ efforts to ‘buy back the block’: BROOKINGS

When it comes to commercial real estate ownership in majority-Black neighborhoods, Black business owners are often systemically excluded from the economic benefits such ownership can generate, while other investors amass control over profits and the trajectory of neighborhood development. 

“There is an assumption that [small business owners] can pay rent in South LA but cannot own property here,” Olympia Auset, a South Los Angeles-based small business owner, told us. “There are so many people here who stay in a rental property for 10 years or longer, but whenever they want to own something, they are given a hard time.” Auset’s words speak to a broader systemic trend not only in the historically Black area of South Los Angeles, but in majority-Black neighborhoods nationwide.  

While much attention has been paid to the importance of homeownership in supporting economic mobility for Black people, commercial property ownership has been an understudied avenue for accomplishing this imperative. That’s changing: Last year, The Los Angeles Times covered the same uphill battle Auset referred to by chronicling the challenges that Black business owners face in purchasing commercial property in Leimert Park, a gentrifying neighborhood in South Los Angeles that has historically been a mecca for Black arts, culture, events, and businesses.  

Read more at The Brookings Institution

Protecting people’s access to their money: Consumer Financial Protection Bureau

History has made it clear that when companies don’t have to compete for business, there is a risk that they’ll take unfair advantage of the situation. When the COVID-19 pandemic hit in early 2020, Congress and many states and localities provided additional unemployment assistance and other benefits. The Consumer Financial Protection Bureau (CFPB) found that many companies took advantage of the limited choices that people have for accessing public benefits like unemployment assistance. Some banks may have unlawfully seized this money to satisfy negative account balances or pay entirely different debts. And one institution automatically and unlawfully froze people’s accounts with a faulty fraud detection program, and then gave them little recourse when there was, in fact, no fraud. In 2022, the CFPB reported a 673% increase in consumer complaints about government benefit prepaid cards , in large part due to government programs that distribute funds to consumers through such cards. In fact, of all types of prepaid cards, the CFPB receives the most complaints about government benefit prepaid cards.

The CFPB is committed to ensuring that workers and families are protected when they receive money, including government benefits, that they are entitled to under law. For instance, the CFPB administers the Electronic Fund Transfer Act (EFTA), which requires that after a consumer contacts a financial institution about an error on their account, the financial institution must conduct a prompt, reasonable, and timely investigation. These protections apply to prepaid cards, including prepaid cards loaded with government benefits such as unemployment assistance.

Read more at Consumer Financial Protection Bureau

What new supervised institutions need to know about working with the CFPB:

Consumer Financial Protection Bureau

While the CFPB has longstanding supervisory relationships with many institutions, we also conduct exams or other supervisory activities at companies for the first time. Here’s what newly supervised institutions can expect from a supervisory relationship with the CFPB.

Under the Consumer Financial Protection Act of 2010, the CFPB conducts supervisory activities for the purposes of: (A) assessing compliance with Federal consumer financial law; (B) obtaining information about a supervised institution’s activities and compliance systems and procedures; and (C) detecting and assessing risks to consumers and to markets for consumer financial products and services.

Supervisory activities may help entities identify issues before they become systemic or cause significant harm. Effective supervision depends on the cooperation of company staff with the examiner’s requests for information, a collaborative relationship and clear communication on both sides. CFPB supervisory activities are confidential, promoting candid communication between supervised entities and the CFPB.

Read more at Consumer Financial Protection Bureau

CFPB adds six new items to Fall 2022 rulemaking agenda, including overdraft fees, fees for insufficient funds, and credit card penalty fees: Michael Gordon, John L. Culhane, Jr. & Richard J. Andreano, Jr.

The CFPB has published its Fall 2022 rulemaking agenda as part of the Fall 2022 Unified Agenda of Federal Regulatory and Deregulatory Actions. The agenda’s preamble indicates that “[t]he Bureau reasonably anticipates having the regulatory matters identified [in the agenda] under consideration during the period from December 1, 2022 to November 30, 2023.”

The new agenda includes 6 new active rulemakings that did not appear on the Spring 2022 agenda. Perhaps some possible “good news” here is that Director Chopra is listening to calls for him to use notice-and-comment rulemaking (including revisions to Official Staff Commentaries) to further his priorities instead of relying primarily on supervision and enforcement as well as a potpourri of other methods that lack the transparency and predictability of rulemaking. While the agenda does not include any “larger participant” rulemaking, the CFPB is currently considering petitions urging it to engage in rulemaking to define larger participants in the market for personal loans and in the market for data aggregation services. Other potential areas of rulemaking not included in the agenda are buy-now-later, earned wage access, and liability for peer-to-peer payment fraud.

Read more at Ballard Spahr L.L.P.