Consumers Murky on How Much of Their Portfolio Consists of ESG Investments
Consumers don’t really know how much of their investment portfolios are dedicated to ESG, Morning Consult financial services analyst Charlotte Principato notes in a recent memo. Younger investors are more eager to increase their holdings of ESG funds — 40% of Gen Z and millennial investors want to increase their ESG investments next year, compared with 24% of all investors. But coming regulations may require ESG-focused investors to re-evaluate their portfolios when the Securities and Exchange Commission imposes new standards for ESG measurement and disclosures.
Sen. Kyrsten Sinema (D-Ariz.) announced she would support Democrats’ reconciliation bill after reaching an agreement to drop the provision to narrow the carried interest loophole for investment income and add a 1% excise tax on stock buybacks that is expected to raise $73 billion. Senate Democrats tomorrow will move forward with the legislation, which is now expected to increase its original $300 billion deficit reduction figure with Sinema’s changes. (Politico)
Goldman Sachs Group Inc. revealed in a regulatory filing that the Consumer Financial Protection Bureau is investigating how the bank’s credit card unit has handled customer refunds and billing disputes, as well as practices around its advertising and the reporting of consumer information to credit bureaus. Goldman Sachs entered the credit card business about six years ago and at the end of June had roughly $12 billion in outstanding credit card loans. (The Wall Street Journal)
Federal Reserve Bank of Cleveland President Loretta Mester said the U.S. central bank should aim to continue tightening through the first half of 2023, and that keeping rates “a bit above” 4% would be appropriate. A voting member of the Federal Open Market Committee, Mester reiterated her view that she would like to see several months of decreasing inflation before easing back on interest rate hikes, and said it was “not unreasonable” to think the bank may issue another 75 basis point hike at its September meeting. (Reuters)
Internal Revenue Service Commissioner Charles Rettig said the agency will not increase audits on filers making less than $400,000 per year should the passage of the Inflation Reduction Act provide the IRS with an infusion of billions of dollars to help the agency increase enforcement. Rettig wrote in a letter to lawmakers that improved customer service at the IRS should help honest taxpayers avoid audits, and he noted that it was wealthy taxpayers and large corporations who often pursue “unsettled or sometimes questionable interpretations of tax law.” (The New York Times)
Three Republican lawmakers think President Joe Biden is going about the $1.7 trillion student-debt crisis the wrong way — and they have some ideas on what he could do instead. On Thursday, Reps. Virginia Foxx, Elise Stefanik, and Jim Banks introduced the Responsible Education Assistance Through Loan, or REAL, Reforms Act, which is intended to act as an “alternative” to proposals the Education Department has put forth to reform student-loan programs.
Senator Pat Toomey is again demanding transparency by the Federal Reserve after learning the central bank withheld documents he and other Republicans sought related to former Fed nominee Sarah Bloom Raskin during her confirmation fight.
Senate Parliamentarian Elizabeth MacDonough will continue to host Democratic and Republican aides behind closed doors today (no press allowed) to scrub the reconciliation bill for potential violations of the Byrd Rule.
National Taxpayer Advocate Erin Collins escalated her push for the IRS to adopt barcode scanning of paper tax returns, which she had directed the Service to implement by 2023, by appealing its response, which she called disappointing.
Worker filings for unemployment benefits rose last week, holding close to the highest level of the year as the U.S. labor market showed several signs of cooling. Initial jobless claims, a proxy for layoffs, increased slightly to a seasonally adjusted 260,000 last week from a downwardly revised 254,000 the prior week, the Labor Department said Thursday.
Scattered reports of layoffs, declining job openings and a softening economy all point to a slowdown in hiring. And that’s why the number of new jobs created in July is forecast to fall to the lowest level in 19 months.
Democrats on the Senate Banking Committee pressed U.S. Bank for more details about fake consumer accounts that were recently revealed by regulators — the latest sign of government scrutiny as the nation’s fifth-largest bank pursues approval of a major acquisition. In a letter sent Thursday morning and first reported by American Banker, the Democratic senators told U.S. Bank Chairman and CEO Andrew Cecere that they were “deeply concerned” by recent revelations of misconduct at the bank.
The Federal Deposit Insurance Corp. plans to increase its scrutiny of banks’ exposure to commercial real estate loans, citing uncertainty about the future of work and commerce in the wake of the COVID-19 pandemic.
Banks and other mortgage providers have been battered by plunging demand for loans this year, a consequence of the Federal Reserve’s interest rate hikes. Some firms will be forced to exit the industry entirely as refinance activity dries up, according to Tim Wennes, CEO of the U.S. division of Santander.
The Federal Reserve has a neutral stance on whether it pursues its own digital currency, but at least one regional bank president remains deeply skeptical of the idea. Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said consumers already had access to instant digital payments through private-sector platforms without the privacy concerns that arise from a government-backed alternative.
Visa and Mastercard on Thursday said they had suspended ties with the advertisement arm of MindGeek, owner of website Pornhub, after a lawsuit raised questions over whether the payment firms could be facilitating child pornography.
The man who predicted the financial crisis is warning about “silliness” in markets. Michael Burry, the founder of Scion Asset Management who’s best known for betting against the housing market ahead of the 2008 crash, said Thursday that the “familiar Covid-era silliness is not dead yet.”
Allianz spent around 140 million euros ($143.11 million) on restructuring to wind down a U.S. funds unit at the centre of a multi-billion fraud, the German insurer disclosed on Friday, an expense that added to a worse-than-expected 23% fall in quarterly profit.
Intercontinental Exchange beat Wall Street estimates for second-quarter profit on Thursday, as the New York Stock Exchange’s owner benefited from choppy global markets that led to a surge in trading volumes, sending its shares up over 4%.
Mortgage rates dropped to their lowest level since April, offering a reprieve to prospective home buyers who have been hit this year with higher rates and surging prices. The average rate on a 30-year fixed-rate mortgage is 4.99% this week, down from 5.30% a week earlier, according to a survey by mortgage giant Freddie Mac published Thursday.
During this period of rising rates and general rate volatility, having the cash and credit lines on hand to ride out the rough patches in the market — known as liquidity — can be what separates the winners from the losers in the mortgage industry.
One of the Senate Banking Committee’s top progressive lawmakers circulated a letter this week to pressure the Office of the Comptroller of the Currency to abandon Trump-era guidance that cleared the banking sector to explore crypto-related banking activity.
BlackRock Inc. is partnering with Coinbase Global Inc. to make it easier for institutional investors to manage and trade Bitcoin, taking the world’s largest asset manager into a cryptocurrency market hammered by plunging prices and government investigations.
The massive rally in two little-known Hong Kong-based financial services firms is ending just as quickly as it began. Financial services provider AMTD Idea Group dropped 31% Thursday, following a blistering surge that left market watchers baffled, while its subsidiary AMTD Digital Inc. fell 27%.
Senate Majority Leader Chuck Schumer pulled a rabbit out of his hat when he announced a budget agreement with Sen. Joe Manchin (D., W.Va.). But faster than you can say “supply-side economics,” Republicans gave their rote objection to any tax increase: It will destroy the economy.
Move over Fannie and Freddie. Until now, popular wisdom was that Sandra Thompson’s tenure as director of the Federal Housing Finance Agency would be judged by how she managed the enduring conservatorships of Fannie Mae and Freddie Mac. Little note would be taken of how she manages the sleepy Federal Home Loan Banks.
Scott R. Baker et al., Becker Friedman Institute for Economics at the University of Chicago
We quantify and study state-level economic policy uncertainty. Tapping digital archives for nearly 3,500 local newspapers, we construct three monthly indexes for each state: one that captures state and local sources of policy uncertainty (EPU-S), one that captures national and international sources (EPU-N), and a composite index that captures both. VAR models fit to pre-COVID data imply that upward shocks to own-state EPU foreshadow weaker economic performance in the state, as do upward EPU shocks in contiguous states.