The total net worth of U.S. households climbed further into record territory in the third quarter of 2017, reaching $96.939 trillion as stock markets and property prices boosted Americans’ wealth, the Wall Street Journal reported. The increase on the quarter was $1.742 trillion, according to the data the Federal Reserve released Thursday. That was a larger gain than the $1.276 trillion advance in the second quarter of this year. Household wealth in the stock market climbed by $1.1 trillion in the quarter, reflecting rising equity valuations last quarter amid solid business and consumer confidence and a strong labor market. The value of households’ real estate increased by about $411 billion, reflecting ongoing higher home prices. The data on household net worth include assets held by nonprofits, although nonprofits make up a relatively small proportion of household wealth.
The deputy director of the Consumer Financial Protection Bureau (CFPB) asked a federal court Wednesday night to halt a previous ruling that cleared President Trump to appoint a temporary chief in her place, The Hill reported. The move by CFPB Deputy Director Leandra English is the latest maneuver in the fight for control of the agency. English filed an injunction in the District Court for the District of Columbia to block Office of Budget and Management Director Mick Mulvaney from leading the agency. English’s complaint asks the court to impose her restraining order against Mulvaney after it dismissed her effort two weeks ago. English had sued Mulvaney, who Trump appointed to lead the CFPB until the Senate confirms a permanent replacement, and the president, claiming the Dodd-Frank Act made her the rightful acting director. The deputy director argues in the new filing that Mulvaney is ineligible to run the CFPB because of the line of succession established in Dodd-Frank. English also claims Mulvaney’s appointment violates the Federal Reserve’s independence since the CFPB was created within the Fed system and Mulvaney is a senior White House aide.
U.S. consumer borrowing rose in October, according to new data from the Federal Reserve, Dow Jones Newswires reported. Outstanding consumer credit, a measure of non-real estate debt, rose by $20.52 billion in October from the prior month, climbing at a 6.51 percent seasonally adjusted annual rate, the Fed said yesterday. Total outstanding credit increased a revised $19.21 billion in September. Revolving credit outstanding, mostly credit cards, increased at a 9.9 percent annual pace in October. Non[-]revolving credit outstanding, mainly student and auto loans, rose at a 5.3 percent annual pace. Household debt totaled $12.955 trillion in the third quarter, up 0.9 percent from the spring, the Federal Reserve Bank of New York said last month. That was the most on record, though the figure wasn't adjusted for inflation.
The Federal Reserve yesterday proposed disclosing more about its big-bank stress tests, in response to criticism from bankers who have said the exams’ results are hard to understand, the Wall Street Journal reported. The proposal, if adopted, would have the Fed publish how different loan portfolios perform under the statistical models it uses to calculate whether banks can survive a hypothetical recession. The loan data would be published each year before the tests are run. The proposal stops short of fully disclosing the Fed’s statistical models, a move that some Fed officials believe would allow banks to game the exams. The new loan disclosures show the characteristics of three sets of 200 loans: a higher-risk portfolio, a lower-risk portfolio and an average one. The Fed also disclosed the loss rates that its models calculated for those loan portfolios based on the 2016 stress-test scenario.
The Senate Banking Committee yesterday moved toward approving legislation that would ease restrictions on community banks and small financial institutions like credit unions, amid criticism from regulation advocates that the bill would be a giveaway to large banks, MorningConsult.com reported. The measure being marked up, S. 2155, boasts bipartisan support from Republicans and moderate Democrats — including many who will face tough re-election contests next year in states that President Donald Trump won in 2016. The legislation would raise the threshold — from $50 billion in assets to $250 billion — for determining whether a bank is systemically important. It would also give the Federal Reserve discretion to conduct stress tests on institutions valued between $100 billion and $250 billion on a periodic basis, in addition to loosening industry-wide rules regarding issues like home mortgages and supervision.
A high-profile plan to prevent federal watchdogs from getting too cozy with banks they are supposed to police has been scrapped by President Donald Trump’s newest Wall Street regulator, Bloomberg News reported. For years, the Office of the Comptroller of the Currency intended to remove hundreds of examiners who work inside the offices of JPMorgan Chase & Co., Citigroup Inc. and other lenders. In just his second week on the job, OCC chief Joseph Otting nixed the effort. “Upon review, it is not practical to continue the agency’s efforts to move resident examiners out of on-site locations,” said Otting, a former banker. Other reforms, such as regularly rotating supervisors from bank to bank so they don’t spend too long in a particular firm, show that the OCC has taken steps to prevent “regulatory capture,” said Otting, who ran OneWest Bank Group when Treasury Secretary Steven Mnuchin was the lender’s chairman. Factors cited as contributing to the OCC maintaining the status quo include the high cost of Manhattan real estate and the burden examiners would face in slogging back and forth between government offices and Wall Street banks.
The Trump administration’s interim director of the Consumer Financial Protection Bureau said he has frozen the agency’s collection of personal information due to cybersecurity concerns, a step in changing policies criticized by the financial industry, the Wall Street Journal reported. Mick Mulvaney, who is splitting his time as acting CFPB director and the White House’s budget chief, yesterday said that the decision is part of his effort to improve the agency’s data-security program. The longtime critic of the CFPB was appointed as its acting director by President Donald Trump on Nov. 24, succeeding Richard Cordray, an Obama appointee who left after a six-year tenure at its helm. Critics of the CFPB have long complained about the bureau’s efforts to collect consumer data on credit cards and mortgages through its disclosure rules, consumer complaint database and enforcement actions. They say such actions threaten privacy and information security. CFPB officials have in the past said such data help the agency identify discrimination and other industry misconduct, and can serve as a basis for writing rules.
U.S. student loan debt now equals the size of the $1.3 trillion U.S. high-yield corporate bond market, presenting investors with a whole different range of risks, Bloomberg News reported. “Delinquency rates on student loans are much higher than those on auto loans or mortgages, due to loose student loan underwriting standards, the unsecured nature of student debt, and the inability to charge off non-performing student loans in bankruptcy,” Goldman Sachs Group Inc. analysts Marty Young and Lotfi Karoui wrote in a note on Tuesday. “The substantial majority of student loan default risk is borne by the U.S. Treasury.” While the trend of rising defaults on student loans doesn’t pose “systemic financial risks,” it does impact household behavior, as the debt load itself hurts home ownership rates, Young and Karoui said. The share of student loan debt that is securitized, meaning it’s backed by assets and known as asset-backed securities, is about $190 billion, according to Goldman Sachs. Of that, about $150 billion is linked to loans where the repayment of the principal is guaranteed by the U.S. government.
The U.S. Commodity Futures Trading Commission said it would allow two major Chicago exchanges to launch bitcoin futures, the Wall Street Journal reported. The announcement on Friday paves the way for the start of bitcoin futures on CME Group Inc. and Cboe Global Markets Inc. in the coming weeks — a potentially huge step in the evolution of the digital currency, making trading bitcoin easier for Wall Street banks and small investors alike. CME said its bitcoin futures would launch Dec. 18. Cboe said that it would shortly announce the start date for its new bitcoin contract. After “extensive discussions” in recent weeks, the two exchanges made significant changes to their proposals at the regulator’s request, the CFTC said.
Attorney General Jeff Sessions has appointed one interim U.S. Trustee and five Acting U.S. Trustees to cover six U.S. Trustee Program (USTP or Program) regions, according to an Executive Office for U.S. Trustees (EOUST) press release last week. The effective date of each appointment correlates with the upcoming retirements of Judy A. Robbins, U.S. Trustee for Regions 4 and 7, and Guy G. Gebhardt, Acting U.S. Trustee for Region 21, and the detail of Gail B. Geiger, Acting U.S. Trustee for Region 18, to a leadership position in the EOUST.