Democrats are rolling out a new strategy to defend a controversial Obama administration rule shaking up the retirement savings industry, asking big financial firms to publicly embrace the policy, the Wall Street Journal reported today. Sen. Elizabeth Warren (D-Mass.) yesterday sent letters to the dozens of major financial institutions that have already started taking steps to comply with the new rule before its implementation starts in April. In the letters addressed to JPMorgan Chase & Co., Wells Fargo & Co. and Fidelity Investments, among others, Ms. Warren praised them for announcing steps in recent months to comply with the rule.
Key congressional Democrats are pushing back at GOP lawmakers who are calling for Consumer Financial Protection Bureau Director Richard Cordray to be fired, MorningConsult.com reported today. Rep. Maxine Waters (Calif.), the top Democrat on the House Financial Services Committee, and 20 Democratic panel members sent a letter yesterday to President-elect Donald Trump a day after Sens. Ben Sasse (R-Neb.) and Mike Lee (R-Utah) called on the incoming administration to dismiss Cordray. Separately, Senate Banking Committee ranking member Sherrod Brown (D-Ohio) issued a statement yesterday defending Cordray’s leadership at the CFPB, which was established by the 2010 Dodd-Frank financial law. Conservative organizations such as the Heritage Foundation have called for the CFPB to be abolished, an idea that’s supported by lawmakers like Sen. Ted Cruz (R-Texas). Brown said that during Cordray’s tenure the agency has returned $12 billion to Americans who have been “ripped off by shady debt collectors, for-profit schools, payday lenders, and huge banks like Wells Fargo.”
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After one of the longest, most telegraphed windups in monetary policy history, the Federal Reserve on Wednesday delivered a small brushback pitch to the American economy, raising its key lending rate by a quarter of a percentage point for the first time since 2006. The move ends an extraordinary run in which the central bank held its borrowing rate at essentially zero for seven years in an effort to pump life into the American economy after the onset of the global financial meltdown and the Great Recession from December 2007 to June 2009. In addition to potentially raising the rates for consumers and businesses on trillions of dollars of car, home, student and commercial loans, the Fed move could play a major role in elections next year through its impact on the economic growth rate.
Default rates on various types of consumer loans improved in November, according to Standard & Poor's and Experian. The composite default rate for multiple loan types improved three basis points to 0.97% in November compared to the previous year, according to the S&P/Experian Consumer Credit Default Indices. First-mortgage default rates lifted one basis point to 0.82% from the month before, while second-mortgage default rates improved 11 basis points to 0.67%. Consumer spending and other factors do not suggest cause for concern over consumer defaults, David Blitzer, managing director and chairman of the index committee at S&P Dow Jones Indices, said in a Tuesday news release. "Inflation remains low and expectations of future inflation are low and stable, the labor market continues to improve, and wages — long dormant — may be turning upward," he said.
A Federal Reserve report released yesterday said that Americans lost nearly $1.2 trillion in wealth in the third quarter as a shaky stock market contributed to one of the largest declines in household net worth since the economic recovery began, the Wall Street Journal reported today. The decline was driven mostly by a decline in corporate equities, which shed over $2.3 trillion over the quarter. Major stock indexes in the U.S. plunged sharply in late August. So far in the fourth quarter, stocks have regained most of their lost ground, so the decline in net worth may prove fleeting.