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The Americans Joe Biden Left Behind on the Bankruptcy Bill - ABI

Sen. Elizabeth Warren’s new consumer bankruptcy plan aims squarely at unwinding one of former Vice President Joe Biden’s chief legislative accomplishments, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (BAPCPA), according to commentary from Georgetown Prof. Adam J. Levitin in The American Prospect. The bankruptcy bill was perhaps the most anti-middle class piece of legislation in the past century. It was also Warren’s introduction into the bare-knuckle world of legislative politics. She fought the bill tirelessly and succeeded in blocking it for nearly a decade. Her new plan makes clear that she hasn’t given up the fight. Biden’s support for BAPCPA is well known, but his numerous roll call votes on amendments to the bill have never been previously examined. Warren’s plan draws sharp attention to these votes by adopting many of the very positions Biden opposed. An examination of Biden’s roll call votes paints a very different picture of Biden’s involvement with the bill than the vice president likes to present. The record makes clear that as a senator, Biden used his clout to push for the law’s passage and to defeat amendments to shield servicemembers, women, and children from its harsh treatment. When votes were taken, “Middle-Class Joe” was no friend to the middle class. Not only did the law discourage bankruptcy filings, but it made it harder to wipe out credit card debt and student loans in bankruptcy. The result was greater profits for consumer lending businesses, many of which are based in Biden’s state of Delaware. Not surprisingly, then, by lowering the risk of bad lending decisions, the Biden bankruptcy bill unleashed a glut of aggressive private student lending, which has contributed to the massive rise in student loan debt. ABI


U.S. Job Growth Seen Slowing in December After Robust Gains - ABI

U.S. job growth likely slowed in December, but the pace of hiring probably remains more than enough to keep the longest economic expansion in history on track despite a deepening downturn in a manufacturing sector stung by trade disputes, Reuters reported. The Labor Department’s closely watched monthly employment report on Friday could buttress the Federal Reserve’s assessment that both the economy and monetary policy are in a “good place.” It would extend the run of upbeat data such as consumer spending, trade and housing that have suggested the expansion, now in its 11th year, is not in immediate danger of being derailed by a recession. Worries that a downturn might be triggered by the Trump administration’s trade war with China spurred the Fed to cut interest rates three times in 2019. Indeed economic growth did slow last year, throttling back to 2.1 percent in the third quarter from 2018’s pace of nearly 3 percent. With a Phase 1 deal with China set to be signed next week, policymakers are now more confident in the outlook and last month signaled borrowing costs could remain unchanged at least through this year. Economists are pegging growth at the end of last year around a 2.3 percent rate. Some of the anticipated slowdown in December is attributed to seasonal volatility associated with a later-than-normal Thanksgiving Day. ABI


Changing Court Attitudes on Bankruptcies - Inside Higher Ed

A decision this week by a federal judge in New York illustrates how some courts have in the past few years made it easier for people with crippling student loan debt to file for bankruptcy, say consumer advocates and legal experts.  But while advocates like John Rao, a National Consumer Law Center bankruptcy expert, see the trend as positive, they still believe federal laws need to be changed to make it easier to discharge student loans through bankruptcy. Inside Higher Ed


The banking tech trends that will dominate 2020 - American Banker

As a new decade begins, one of the major unresolved issues of the previous few years continues to haunt banks — when and how Big Tech will jump into financial services in a significant way. While Facebook has launched its Libra digital currency project and Google has begun partnering with Citigroup on checking accounts, these appear to be just the tip of the iceberg. Banking by 2030 could look very different than it does today. American Banker


Small Businesses Rush to Borrow Online, Sparking Fears of High Rates, Costly Terms - ABI

The growth of online lending has been a boon to hair salons, bakeries and other small businesses that don’t qualify for bank credit. Yet this tech-enabled source of credit can mire some in debt they can’t repay, raising concern about inadequate regulation, the Wall Street Journal reported. Some are extending credit at sky-high rates with opaque terms for costly fees and conditions, drawing comparisons with payday lenders who target consumers in need of quick cash, according to critics. “There is a significant number of bad actors who are mostly unregulated,” said Luz Urrutia, chief executive of Opportunity Fund, a California nonprofit that lends in lower-income communities. “They are really wreaking havoc across America’s small businesses.” Nearly a third of the small businesses surveyed applied for online loans in 2018, up from 19 percent in 2018, according to a Federal Reserve study. The market’s growth is driven by loans of less than $100,000, often as small as a few thousand dollars, according to experts. ABI


With Trump’s Farm Bailout Came Surprising Profits, but Little Help for the Neediest - ABI

While record rainfall made it difficult to plant corn and soybeans until long after the typical growing window had passed, President Trump’s long-running trade war cut off farmers’ access to China’s enormous market and commodity prices remained in the doldrums, the Agriculture Department estimates that 2019 was farmers’ most profitable in five years. The estimate is a result of the Market Facilitation Program, or the government's farm bailout, the Washington Post reported. Without government assistance, U.S. farm income would have fallen about $5 billion from its already-low 2018 level. So the $14.5 billion in bailout funding announced so far represents a substantial reversal of fortune. About three-quarters of the funding already has been distributed. “If you look at the prices, the weather and the trade imbalances, you’d expect the farm sector to be in a terrible spot,” Montana State University economist Eric Belasco said. "It’s not.” Most farmers benefited from the bailout, Belasco said, but because bailout money is distributed based on acreage and not farmer’s need, about half of the money (47 percent) went to the largest 10 percent of operations. According to 2018 data, more than 70 percent of farm households had a high level of financial risk in 2018. But of those that qualify as very large (median income $756,000), only 25 percent fit into that same category. ABI


Rising credit card debt boosts bank profits - Fox Business

Consumers are carrying near-record levels of credit card debt and the banking industry is a big beneficiary, according to the Washington Post. Card companies have increased interest rates and fees as credit balances rise. Industry experts say that will cost consumers who carry balances and don't pay off their bills every month. Credit card sales were up 10 percent at JPMorgan Chase and 5 percent at Citigroup in the third quarter. Fox Business


Americans’ Near-Record Levels of Credit Card Debt Helping Bolster Banking Industry - ABI

Americans have accumulated near-record levels of credit card debt over the past year as card companies have increased interest rates and fees, the Washington Post reported. The booming market is helping drive record banking industry profits but could become increasingly costly for consumers who do not pay off their bill every month or miss a payment, industry experts say. JPMorgan Chase, the country’s largest bank by assets, and Citigroup reported that credit card sales were up 10 percent and 5 percent, respectively, in the third quarter. Profits at Visa were up 17 percent in its most recent fiscal year, while Mastercard reported an 11 percent profit jump in its most recent quarter. To be sure, despite increasing debt loads, delinquency rates remain relatively low. About 6 percent of consumers were late on a payment this year compared with 15 percent in 2009, according to WalletHub. Consumers have yet to balk at the relatively high interest rates, industry experts say. ABI


Struggling Farmers Find Challenges Accessing Government Aid - ABI

Farmers around the country are struggling to pay for basics like groceries and electricity as farm bankruptcies rise and farm debt hits a record high, the Washington Post reported. Calls from farmers in financial crisis to state mediators have soared by 57 percent since 2015. An estimated 197,000 farmers, farmworkers, fishermen and forestry workers use the Supplemental Nutrition Assistance Program (SNAP), according to a study by the Center on Budget and Policy Priorities, but farmers say they sometimes find it difficult to qualify because of complicated rules governing self-employment income. The Trump administration has long-term plans to tighten SNAP eligibility for many. ABI


U.S. Government Sets Record for Debt Auctions - ABI

The Treasury Department auctioned seven-year notes, closing the door on a record year for sales of longer-term debt in 2019, the Wall Street Journal reported. The auction lifted the total of notes and bonds sold by the U.S. government with maturities ranging from two to 30 years to $2.55 trillion, a 26 percent increase from 2017, when Congress and President Trump agreed to massive corporate tax cuts. Aggregate demand at U.S. government debt auctions has remained stable in recent years, with investors and bond dealers submitting bids totaling more than twice the amount of notes and bonds for sale. That comes even though yields on the securities have swung from multi-year highs to multi-year lows during the period. While total demand has held steady, some of the bidders taking away the securities at auction have changed, according to Treasury data. ABI