Aurelia Butler

The chief executive officers will testify before two congressional committees this week at a time when Americans face the highest levels of inflation in a generation and economists debate whether the US has entered a recession. The hearings start Wednesday as Federal Reserve officials meet to determine their next interest-rate move and release new economic projections.Citigroup’s Jane Fraser said in her written testimony for the House Committee on Financial Services that “the worst of Covid may be behind us, but the economic challenges we face are no less daunting.” JPMorgan’s Jamie Dimon wrote that the “US economy today is a classic tale of two cities,” with competing headwinds and tailwinds that make it “challenging to predict the future.”“We continue to see strong consumer spending from solid consumer balance sheets” and there are “plentiful job openings, with encouraging jobs reports that continue to surprise economic forecasters,” Dimon wrote in his prepared testimony. “At the same time, many Americans are being crushed by high inflation eroding real incomes, particularly from higher prices on gas and food,” along with persistent supply-chain problems and rising interest rates. “Many Americans are feeling the pain, and consumer confidence continues to drop.”The CEOs said they’re providing help to consumers. Citigroup (NYSE:C) said it eliminated overdraft and other non-sufficient funds fees earlier this year after it collected $103 million in such charges in 2021. Overdraft fees — the $30-something charge banks assess when a consumer spends more than they have in their checking account — have come under fire from lawmakers and regulators, who say the charges hurt those who can least afford them.Still, in an appendix to Fraser’s testimony, the New York-based bank acknowledged that it collected roughly $2.7 billion last year in late fees, annual fees, monthly service charges and wire transfer fees. That amounted to about 8% of the firm’s total revenue from its North American operations.“This revenue and the percentage of revenue they account for have been relatively consistent over the last 10 years,” the bank said in the testimony.At JPMorgan (NYSE:JPM), the country’s largest bank, policy changes on overdraft fees are helping consumers who are short of cash, Dimon said.Overdraft-protection services “help customers make critical payments, like covering a rent check, or automatic withdrawals by third parties, like utilities, which may help customers avoid a late fee or negative impact on their credit report,” he wrote. “This service can be more affordable than many non-bank services like payday loans or check-cashing services.”Almost 70% of transactions covered by the policies incur no overdraft fee at all, Dimon said, adding that revenue from such fees at the New York-based company has plummeted 40% since before the pandemic. Since March 2020, JPMorgan delayed payments due and refunded fees for more than 3.5 million customer accounts, giving back more than $250 million and offering deferred payments and forbearance on more than 2 million mortgage, auto and credit-card accounts, Dimon said.Bank of America (NYSE:BAC), the second-largest US bank, also made changes over the past decade to its overdraft services, “reducing clients’ reliance on overdraft and providing resources to help clients manage their deposit accounts and finances responsibly,” CEO Brian Moynihan said in his prepared remarks. The Charlotte, North Carolina-based bank expects that, by next year, the new programs will reduce consumer overdraft fees by 97% from 2009 levels, he wrote.Payment DeferralsThe lender also assisted clients through the pandemic, helping around 2 million individual consumers and small businesses defer payments on credit cards and vehicle and home loans, Moynihan wrote.“Even with a deferral, the vast majority of those clients remained current on their payments. A small percentage have needed extended assistance, and we continue to work with them individually to help them get back on track,” he said. For clients with mortgages originated by BofA, the lender added deferred payments to the end of the loan term so they aren’t making a lump-sum payment up front, Moynihan wrote.Charlie Scharf, CEO of San Francisco-based Wells Fargo (NYSE:WFC), touted his bank’s recent efforts to limit overdraft-related fees, such as eliminating non-sufficient-fund fees and the introduction of an early payday program for some customers. He also pointed to initiatives to help unbanked households, which have a disproportionate number of Black, Hispanic and Native American customers.Wells Fargo has come under fire from lawmakers this year after a Bloomberg News investigation found the lender approved fewer than half of mortgage refinancings sought by Black homeowners during the pandemic, a lower rate than for White applicants.“We must be customer-centric in how we approach our products and services,” Scharf said in his prepared remarks.In addition to Dimon, Fraser, Moynihan and Scharf, CEOs from U.S. Bancorp, Truist Financial (NYSE:TFC) Corp. and PNC Financial Services Group Inc (NYSE:PNC). are set to appear before the House committee on Wednesday and a Senate committee Thursday. The hearings are focused specifically on issues facing consumers as a potential downturn looms. Questions sent to the banks ahead of the hearing include queries on diversity among top executives and board members, mortgage-lending activities during the pandemic and what steps if any lenders have taken to aid consumers “seeking financing to help them access safe abortion care.”Regional BanksThe largest of the regional banks by assets, Minneapolis-based U.S. Bancorp used its prepared remarks to make a case for its acquisition of MUFG Union Bank NA, which is still awaiting final regulatory approval.“We recognize that banks are the economic engines of our communities,” CEO Andy Cecere wrote in his testimony. “As such, we can make meaningful and significant impacts in supporting the ability of LMI communities and communities of color to access capital and build wealth,” he said, referring to low- and moderate-income communities. Testimony from Pittsburgh-based PNC emphasized steps the bank has taken to fight fraud on Zelle, the person-to-person payments platform owned jointly by the largest banks. US senators earlier this year urged lenders to do more to curb scammer abuse of the platform.Charlotte-based Truist touted its contributions to minority communities and low- and moderate-income borrowers. Those include $31 billion in home-purchase loans and opening 16 new banking branches in low-and moderate-income or minority neighborhoods by the end of this year.©2022 Bloomberg L.P. More

(Reuters) – Denmark on Tuesday pledged over $13 million (100 million Danish crowns) to support developing nations that have experienced losses caused by climate disruptions, becoming the first country to offer “loss and damage” compensation to the most climate-vulnerable areas.Danish Development Minister Flemming Møller Mortensen made the pledge on the sidelines of the United Nations General Assembly, saying the new climate funds would go to the Sahel region in northwestern Africa and other fragile regions.”I am very happy that we have agreed to increase support for climate-related losses and damages,” he said in a statement. “It is grossly unfair that the world’s poorest should suffer the most from the consequences of climate change, to which they have contributed the least.”Some of the world’s most fragile areas, such as low-lying islands are pushing to create a funding facility for “loss and damage” – or consequences of climate change that go beyond what people can adapt to – to be established at U.N. climate negotiations in Egypt in November.The United States, EU and other rich nations that represent the bulk of historical greenhouse gas emissions have opposed the creation of a separate fund to address loss and damage.U.N. Secretary General Antonio Guterres on Tuesday urged rich countries to tax windfall profits of fossil fuel companies and use that money to compensate “countries suffering loss and damage caused by the climate crisis.”At the COP26 climate summit in Glasgow last year, Scottish leader Nicola Sturgeon announced a symbolic 1 million pound loss and damage investment as a way to encourage industrialized countries to follow suit.Denmark offered the new loss and damage funding as part of its 2022 Finance Act and pledge to dedicate at least 60% of its climate aid to help countries adapt to climate change. More

(Reuters) -American Airlines Inc on Tuesday confirmed a data breach and said while an “unauthorized actor” gained access to personal information of a small number of customers and employees through a phishing campaign, there was no evidence of data misuse. Shares of the carrier, the latest U.S. company to suffer a cyber attack, fell 2.6% in afternoon trade. Recently, Uber Technologies (NYSE:UBER) Inc and Take-Two (NASDAQ:TTWO) Interactive Software Inc also disclosed similar breaches, leaving investors and customers worried about data security.”We are also currently implementing additional technical safeguards to prevent a similar incident from occurring in the future,” the airline said on Tuesday. It discovered the breach in July and engaged a third party cybersecurity forensic firm to conduct an investigation to determine the nature and the scope of the incident, according to a Sept. 16 consumer notification letter. American Airlines (NASDAQ:AAL) has notified customers that personal information such as address, phone number, driver’s license number, passport number and/or certain medical information may have been accessed by the hacker, the letter showed. “We regret that this incident occurred and take the security of your personal information very seriously,” Chief Privacy and Data Protection Officer Russell Hubbard said in the letter. More

The number of U.S. nuclear reactors has fallen to 92 from 104 ten years ago due to rising security costs, competition from power plants that burn abundant natural gas and falling prices for wind and solar power. Last year’s bipartisan infrastructure law and this year’s Inflation Reduction Act have billions of dollars in incentives and tax breaks for nuclear power, leading to hope for extending the life of aging plants and opening new advanced reactors.But the issue of the industry’s radioactive, toxic waste, currently kept at nuclear plants across the country, is a problem often cited by the industry’s opponents. The U.S. Energy Department said it will offer $16 million in funding to provide resources in communities that want to learn about interim and consent-based siting of nuclear waste, which the industry calls spent nuclear fuel. The United States gave up a plan of storing the waste at Nevada’s Yucca Mountain, despite spending billion of dollars, after stiff opposition from state and local politicians. “Producing safe, reliable nuclear energy here at home is key to reaching President Biden’s clean energy goals, and the Department of Energy wants to advance the discussion of how communities can best host a variety of nuclear facilities,” U.S. Energy Secretary Jennifer Granholm said in a release.”With this funding, we are facilitating constructive, community-based discussions around the consensual solutions for storing spent nuclear fuel in order to harness the true power of clean nuclear energy.”Some members of communities in rural Texas and New Mexico have supported efforts to store nuclear waste on an interim basis but governors of those states have opposed the idea. More

Isbank and Denizbank on Monday announced separately they had suspended the use of Mir after Washington expanded its sanctions last week to include the head of the entity running the payment system, which is popular with the tens of thousands of Russian tourists who arrived in Turkey this year.The suspension by two of the five Turkish banks that had been using Mir reflect their efforts to avoid the financial cross-fire between the West and Russia, as the Turkish government takes a balanced diplomatic stance. “The steps these banks took make a lot of sense. Cutting off Mir is one of the best ways to protect a bank from the sanctions risk that comes from doing business with Russia,” the U.S. official said, speaking on condition of anonymity. “We expect more banks to cut off Mir because they don’t want to risk being on the wrong side of the coalition’s sanctions.” Washington and its allies have imposed several rafts of sanctions targeting Moscow following Russia’s Feb. 24 invasion of Ukraine, including targeting Russian banks and President Vladimir Putin.NATO member Turkey opposes Western sanctions on Russia on principle and has close ties with both Moscow and Kyiv, its Black Sea neighbors. It also condemned Russia’s invasion and sent armed drones to Ukraine as part of its diplomatic balance.Yet Western nations are growing concerned over increased economic ties between Turkey and Russia, diplomats say, particularly after several meetings between leaders Tayyip Erdogan and Vladimir Putin, including last week in Uzbekistan.Last month the U.S. Treasury sent a letter to big Turkish businesses warning they risked penalties if they maintained commercial ties with sanctioned Russians. More

In a big week for monetary policy, the US Federal Reserve and Bank of England are under pressure to show they are serious about tackling stubbornly high inflation. Last week’s US inflation figure for August of 8.3 per cent — above expectations and still near 40-year highs — spooked the financial markets. A slight fall to 9.9 per cent in the UK in August was also hardly cause for celebration. While both central banks have been rapidly raising interest rates this year to rein back demand, this week they will set policy amid an increasingly frail growth outlook. Increasing the cost of credit further will hurt already ailing households and businesses, but both central banks will need to hold firm.In America, a drop in price growth over the summer from a 9.1 per cent peak in June had generated some optimism. News of easing global supply chain pressures and high retail inventories gave hope that price growth would be tamed quickly. But the case for the Fed to go slower on rate increases at its meeting on Wednesday, after its 75 basis point increase in July, has not strengthened. Core inflation — which strips out volatile items like energy and food — pushed higher last month and shows the US economy is still overheating. The labour market remains resilient too, with high demand for workers sustaining upwards pressure on wages. The US has however been relatively less affected by the energy inflation ravaging Europe. In Britain, the government’s recent plan to cap energy bills for households and businesses, with more details of the latter due to be unveiled on Wednesday, should help to lower near-term inflation. But the package — estimated to cost around £150bn — risks keeping demand and inflation higher over the medium term. This boosts the case for the Bank of England to continue to decisively raise rates on Thursday. Indeed, further stimulus, in the form of tax cuts expected to be unveiled at Friday’s “mini-Budget”, will give a jolt to spending too.Wage pressures also remain firm in the UK: unemployment has fallen to its lowest rate since 1974, while high levels of inactivity continue to strain the labour supply. Indeed, at 5.5 per cent, wage growth remains inconsistent with the BoE’s 2 per cent inflation target. The collapse of sterling to a 37-year low last week against the dollar, which adds imported price pressures, also means the BoE will need to be wary of falling too far behind the Fed.The challenge for both central banks is raising rates while recession risks remain strong. While the US economy has shown some resilience, business activity has been losing momentum. In the UK, the energy package will cushion the impact of surging energy prices, but many will still face a testing winter. Global headwinds from Europe’s energy crisis and China’s ongoing Covid-19 lockdowns will also damp growth prospects in the months ahead. Higher interest rates will only add to the pain.Yet the risk of high inflation becoming entrenched is the greater danger. The longer it stays elevated the greater the damage it will do to households and businesses. While inflation expectations have fallen recently, US consumers still expect it to be over twice the Fed’s target in a year’s time. Many will be looking for officials’ interest rate projections to signal a robust monetary policy for the rest of 2022 and potentially into 2023. Meanwhile, in the UK, public satisfaction with the BoE’s handling of inflation recently fell to its lowest on record.Both central banks need to bolster their credibility, after falling behind the curve on inflation. Acting firmly and quickly now will be important — especially as the damping growth outlook may make rate rises harder to pull off in the near future. More

The Dutch government has raised the country’s minimum wage by 10 per cent, as lower paid workers grapple with the impact of the soaring cost of food and fuel and housing. The measure, the centrepiece of an €18bn aid package to help households cope with rising inflation and energy prices, was unveiled in the budget on Tuesday.King Willem-Alexander, who outlined the government plan in his annual Speech from the Throne, an address to parliament that precedes the budget, said: “It is a painful reality that more and more people in the Netherlands are struggling to pay their rent, grocery bills, health insurance and energy bill.” Several European countries, including France, Germany, Italy and Spain have announced minimum wage increases, but the Dutch measure — a rise from €1,756 a month — is the highest jump. Social benefits, including child allowances and pensions, will rise and income taxes will fall slightly to combat the surge in price pressures. Inflation hit 12 per cent in the year to August and is expected to remain high next year despite a cap on energy prices. The Dutch government is joining many countries in imposing a windfall tax on firms extracting oil and gas, after thrashing out a deal with industry on Monday night. EU governments in recent weeks have been locked in negotiations on how to structure an EU-wide windfall tax and price cap on energy companies and the Netherlands is likely to set the level in line with that. Energy prices across Europe have surged following Russia’s invasion of Ukraine at the end of February. The budget also prolonged cuts on transport fuel duty until next July, costing €1.2bn. The king acknowledged that the measures, aimed primarily at low- and middle-income households, could not prevent some from being worse off. “Even with a package of this magnitude, not everyone can be compensated fully for all the price rises,” he said. To fund the package, corporation taxes will rise. The oil and gas windfall tax will raise about €2.8bn in 2023 and 2024 combined. Bumper revenues from the Groningen gasfield will also help fund the measures.Finance minister Sigrid Kaag has also shifted spending from other departments, delaying plans to recruit more teachers.The budget deficit will be 3 per cent in 2023, just within EU fiscal rules, with debt falling to 49.5 per cent of gross domestic product because of inflation.Frank van Es, a senior economist with Rabobank in Utrecht, said the support for households could increase price pressures. “It is a quite expansionary budget that will drive up inflation,” he said. “They have overcompensated for the shock from energy prices.”Rabobank expects 5 per cent inflation and just 0.2 per cent growth next year, against government forecasts of 2.6 per cent inflation and 1.5 per cent growth. The Netherlands Bureau for Economic Policy Analysis, a government agency, has calculated that up to 1mn people are at risk of falling into poverty as a result of rising prices. More