News
"The cost to overdraw a bank account could drop to as little as $3 under a proposal announced by the White House, the latest effort by the Biden administration to combat fees it says pose an unnecessary burden on American consumers, particularly those living paycheck to paycheck.
The proposed change by the Consumer Financial Protection Bureau would potentially eliminate billions of dollars in fee revenue for the nation's biggest banks, which were gearing up for a battle even before Wednesday's announcement. Exactly how much revenue depends on which version of the new regulation is adopted."
"House and Senate negotiators have agreed on a roughly $78 billion framework for a package of tax benefits aimed at businesses and low-income families, according to a source familiar with the negotiations.
The two sides expect to roll it out this morning.
The question now is whether Senate Finance Chair Ron Wyden (D-Ore.) and House Ways and Means Chair Jason Smith (R-Mo.) can build enough support to get their deal through both chambers. It's iffy. More on that below.
First, the details. Here's [some of] what's expected to be in the proposal, according to the source.
Businesses: The agreement would bring back full, upfront deductions for domestic research and development costs along with bigger deductions for businesses' interest expenses and purchases of machinery and equipment — all through 2025. It's also expected to increase immediate deductions that smaller businesses can take for buying equipment and machinery, and raise the threshold to $1,000 for sending tax forms for payments to certain non-employees.
Child tax credit: The deal would gradually raise the maximum child tax credit to $2,000 for families who owe less than that in taxes. It would also allow low-income families with multiple children to phase in eligibility for more benefits faster, and let families use the previous year's income to qualify for benefits in 2024 and 2025. In a broader change, the child tax credit's maximum benefit would be tied to inflation, with a potential increase from $2,000 to $2,100 likely in 2025.
Housing: The low-income housing tax credit — which incentivizes developers to build affordable rental units — gets a boost in the deal, restoring a higher credit allocation to states and lowering the bond-financing threshold."
Graham Steele, Assistant Secretary for Financial Institutions
"Over the past few years, the field of community finance has been transformed both by the historic scale of federal investments and policies focused on supporting equitable economic growth. During the Biden-Harris Administration, the Treasury Department has focused on unlocking the economic potential of financially underserved communities across the country. Secretary Yellen has outlined an economic strategy called 'modern supply-side economics,' which calls for, among other actions, boosting economic productivity by addressing inequality and making investments in people, places, and infrastructure that have been constrained by a lack of resources and opportunity.
Treasury's community finance programs have played an important role in this overarching strategy, and we are seeing results in financially underserved communities across the country, from increases in lending in the most economically disadvantaged areas to new clean-energy investments in low-income communities. In December 2022, I provided an overview of Treasury's approach to community finance policy. I am now pleased to provide an update on how Treasury's community finance related efforts are supporting underserved communities throughout the country..."
"Black households are less likely to own their home compared to white households, which contributes to the broader Black-white housing wealth gap. But closing the homeownership rate disparity may not fully address the racial wealth difference. Even when they achieve homeownership, Black households are more likely to live in properties considered to be in inadequate condition."
"Today, the Chairman of the House Financial Services Committee, Patrick McHenry (NC-10), and Ranking Member Maxine Waters (CA-43) announced the formation of the Committee's bipartisan Working Group on Artificial Intelligence (AI), led by Digital Assets, Financial Technology and Inclusion Subcommittee Chairman French Hill (AR-02) and Subcommittee Ranking Member Stephen F. Lynch (MA-08).
The bipartisan AI Working Group will explore how artificial intelligence (AI) is impacting the financial services and housing industries, including the development of new products and services, fraud prevention, compliance efficiency, and the enhancement of supervisory and regulatory tools, as well as how AI may impact the financial services workforce. The Working Group will also examine how existing regulation addresses the use of AI and how lawmakers can ensure that any new regulations consider both the potential benefits and risks associated with AI. This Working Group is a continuation of the work conducted by the Task Force on Artificial Intelligence in the 116th and 117th Congresses."
"The Senate failed to override President Biden's veto of a resolution to nullify the Consumer Financial Protection Bureau's small-business data collection rule.
The Senate on Wednesday voted 54-45, falling short of the two-thirds majority needed to override the president's veto last month of a Republican-led resolution to gut the small-business data collection rule under the Congressional Review Act."
"As part of our mission to make the U.S. economy stronger and the financial system more stable for all segments of society, the New York Fed issues periodic reports on credit access for low-income Americans in a series called 'The State of Low-Income America.'
The 2024 report, 'The State of Low-Income America: Credit Access & Housing,' examines low-income households' access to credit, ability to repay loans, and use of mortgage refinancing through Q3 of 2023."
"The federal bank regulatory agencies today jointly issued a overview webinar on the final rule to strengthen and modernize regulations implementing the Community Reinvestment Act (CRA).
The nearly one-hour video provides an overview of the new CRA rule issued on October 24, 2023, and its objectives. Additional topics in the recording include assessment areas, community development, evaluation framework, performance tests, ratings, data collection and reporting, and applicability dates.
The CRA is a landmark law enacted nearly 50 years ago to encourage banks to help meet the credit needs of their local communities, with a focus on low- and moderate-income neighborhoods, in a safe and sound manner."
"Two years ago, when billions of dollars of equity capital from the U.S. government were awarded to minority banks and community development financial institutions, there was widespread hope that the funding would propel growth at those institutions and eventually help close the racial wealth gap.
Combined with equity investments from the country's largest banks, the massive injection of capital into dozens of minority depository institutions in particular — which have long struggled to build capital with the same success as non-minority banks — was hailed as transformational.
But a combination of higher interest rates, higher deposit costs and post-banking crisis concerns about the safety and soundness of the nation's smaller financial institutions has put a significant damper on some minority banks' ability to attract and retain deposits. And without more deposits, some bankers say they cannot fully leverage the equity capital they have received."
"A more robust secondary market for loans originated by Community Development Financial Institutions (CDFIs), which specialize in lending to low- and moderate-income communities, would give CDFIs greater access to capital, thus allowing them to make more loans. This is why the Community Development team at the New York Fed is researching the secondary market for loans originated by CDFIs and how that market could be expanded."