President Trump has picked Joseph J. Simons, a veteran antitrust lawyer who has represented tech giants like Microsoft, to lead the Federal Trade Commission at a time of broad bipartisan concern over corporate consolidation and big deals in the waiting, the New York Times reported yesterday. Trump has also chosen Noah Phillips, chief counsel for Senator John Cornyn, Republican of Texas, and Rohit Chopra, a fellow at a consumer advocacy group, to fill the remaining two seats at the agency, said Natalie M. Strom, assistant press secretary at the White House. The consumer protection and competition agency has been led by just two commissioners over the last 10 months. Trump’s other leading antitrust official, Makan Delrahim, was recently confirmed to lead competition cases at the Justice Department. The nominations will be reviewed by Congress but are expected to be approved.
The four top American banks — Bank of America, JPMorgan Chase, Citigroup and Wells Fargo — together made more than $4 billion in pretax income from their credit card businesses from July through September, the New York Times reported today. The amount of debt owed by American consumers, which receded in the wake of the financial crisis, is again on the rise. Outstanding credit card debt — the total balances that customers roll from month to month — hit a record $1 trillion this year, according to the Federal Reserve. The number of Americans with at least one credit card has reached 171 million, the highest level in more than a decade, according to TransUnion, a credit-reporting company.
U.S. housing starts decreased last month for the fifth time in six months, as builders felt the brunt of construction delays as well as labor and material shortages caused by hurricanes in Florida and Texas, the Wall Street Journal reported today. Housing starts fell 4.7 percent in September from the previous month to a seasonally adjusted annual rate of 1.127 million, the Commerce Department said yesterday. Single-family starts declined 15.3 percent in the south, driven by the effects of hurricanes Irma and Harvey, which caused builders to delay beginning new projects and made labor and material significantly more expensive in those areas. Residential building permits, which can signal how much construction is in the pipeline, fell 4.5 percent to an annual pace of 1.215 million last month.
U.S. President Donald Trump has a pool of five candidates to choose from for the next chair of the Federal Reserve and is likely to announce his choice before going to Asia in early November, Reuters reported yesterday. Trump has an interview scheduled on Thursday with current Fed Chair Janet Yellen, whose term expires in February. She is one of the five candidates while the others consist of Trump’s chief economic adviser, Gary Cohn, along with former Fed Governor Kevin Warsh, Fed Governor Jerome Powell and Stanford University economist John Taylor. Trump, at a joint news conference in the Rose Garden with Greek Prime Minister Alexis Tsipras, said in all likelihood he would choose one of the five as the next Fed chair. Announcing the choice by the time Trump leaves for Asia on Nov. 3 would give the Senate time for the confirmation process, according to sources.
Some small-business owners struggling to recover from this year’s series of brutal hurricanes said the federal government needs to beef up its response, the Wall Street Journal reported. Unlike individuals, businesses aren’t eligible for grants from the Federal Emergency Management Agency. They can receive disaster-recovery loans, but many entrepreneurs aren’t interested in taking on debt after a big storm, and some don’t qualify for a loan. The U.S. Small Business Administration’s disaster-loan program is the main source of federal aid for flood-ravaged entrepreneurs. It allows businesses to borrow up to $2 million to repair or replace damaged property and cover other disaster-related losses. But more than half of the loan applications are typically rejected, often because they don’t have the cash flow to support repayments.
The persistence of slow inflation was the dominant topic at the Federal Reserve’s most recent policy-making meeting in September, but most officials said they were still inclined to raise the Fed’s benchmark interest rate later this year, the New York Times reported yesterday. The Fed is likely to raise rates so long as the medium-term economic outlook remains unchanged, according to an official account of the meeting that the Fed published yesterday. The account said that recent hurricanes had not disrupted that outlook. The Fed expects slower growth for a few months, but it does not expect a long-term effect. The Fed next meets Oct. 31 and Nov. 1, but investors expect the Fed will wait to raise its benchmark rate at its final meeting of the year, in December. The Fed said after the September meeting that it would begin to reduce its holdings of Treasury securities and mortgage-backed securities, which it accumulated beginning in 2008 as part of the effort to reduce borrowing costs for businesses and consumers. But the minutes of the September meeting said that “a few” Fed officials opposed another 2017 rate move, and that “several others” remained on the fence.
Bankrupt U.S. Retailers Begin to Catch a Break An unexpected helping hand from creditors, landlords and vendors is allowing more U.S. retailers to stay in business following bankruptcy with most of their stores and employees in the fold, Reuters reported Friday. The new approach marks a turning point for the beleaguered sector, which has seen at least 19 brick-and-mortar retail chains shut down the bulk of their operations since 2014. Until this year, most bankrupt retailers, including American Apparel, Sports Authority and The Limited, were dismantled during their bankruptcy process. However, several creditors, landlords and vendors now see more value left in some retailers, and are seizing on an opportunity to minimize their own losses in the retail rout. This could spell a slowdown in the decline in brick-and-mortar retail jobs, which fell by more than 100,000 this year, as more than 6,000 stores shuttered under increasing pressure from competition among traditional retailers as well as e-commerce firms such as Amazon.com Inc. “We’re seeing a set of situations come together in which the constituencies have more interest in the retailer surviving than not,” said Holly Etlin, a managing director at AlixPartners LLP, a consulting firm that worked on the bankruptcy of Gymboree. Most of these retailers were owned by private equity firms, which saddled them with debt in a risky bid to juice returns. But in bankruptcy talks, the chains are arguing successfully that they can generate enough cash to withstand the sector’s woes if their debt mountains are slashed and payment obligations eased. Creditors, landlords and vendors are more receptive to this approach, because their own financial projections show that liquidations would result in a limited recovery of what they are owed.
Overall business bankruptcy filings declined 12 percent to 2,854 filings in September, compared to 3,251 filings in September 2016, according to a news release from the ABI. Consumer filings declined 7 percent from 61,384 in September 2016 to 57,147 in September this year. Total filings in the U.S. also saw a 7 percent decline from 64,635 in September 2016 to 60,001 in September 2017, according to the news release and data provided by Epiq Systems Inc.
“Consumers and businesses looking to stay afloat through financial distress may steer away from the relief of bankruptcy due to high filing costs,” ABI Executive Director Samuel J. Gerdano said in the news release. “The recommendations of ABI’s Chapter 11 Commission and the ongoing efforts of the Commission on Consumer Bankruptcy aim to make bankruptcy more accessible for struggling businesses and families.”
The Trump administration is set to release its blueprint for overhauling regulation of U.S. markets, an expansive list of priorities that touches on the stock, bond and derivatives trading that fuels Walls Street profits, Bloomberg News reported today. The report, being prepared by the Treasury Department, could come as early as today. Rather than making specific demands, the document is meant to be a road map for agencies as they streamline rules. While some of the changes would require congressional action, most could be accomplished by re-writing regulations. The markets review was spurred by President Donald Trump’s February executive order calling for a broad rethink of financial regulations. Treasury issued a separate report on bank oversight reforms in June, and another on asset managers is set to be released in the coming days.
The Consumer Financial Protection Bureau (CFPB) yesterday imposed tough new restrictions on so-called payday lending, dealing a potentially crushing blow to an industry that churns out billions of dollars a year in high-interest loans to working-class and poor Americans, the New York Times reported. The rules announced by the CFPB are likely to sharply curtail the use of payday loans, which critics say prey on the vulnerable through their huge fees. Currently, a cash-strapped customer might borrow $400 from a payday lender. The loan would be due two weeks later — plus $60 in interest and fees. That is the equivalent of an annual interest rate of more than 300 percent, far higher than what banks and credit cards charge for loans.