Tag Archives: Loans

Credit Card debt hits record high of $1.13 Trillion

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Important Takeaways:

  • Americans are increasingly turning to their credit cards to cover everyday expenses, with debt hitting a new record high at the end of December, according to a New York Federal Reserve report published Tuesday.
  • In the three-month period from October to December, total credit card debt surged to $1.13 trillion, an increase of $50 billion, or 4.6% from the previous quarter, according to the report. It marks the highest level on record in Fed data dating back to 2003 and the ninth consecutive annual increase.
  • There was also an uptick in borrowers who are struggling with credit card, student and auto loan payments

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Trump’s legal headaches continue as Judge rules he defrauded banks; but polling shows Americans still support him

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Important Takeaways:

  • Judge Rules Trump Defrauded Banks, Insurers While Building Real Estate Empire
  • A judge ruled Tuesday that Donald Trump committed fraud for years while building the real estate empire that catapulted him to fame and the White House, and he ordered some of the former president’s companies removed from his control and dissolved.
  • Judge Arthur Engoron, ruling in a civil lawsuit brought by New York Attorney General Letitia James, found that Trump and his company deceived banks, insurers and others by massively overvaluing his assets and exaggerating his net worth on paperwork used in making deals and securing loans.
  • Engoron ordered that some of Trump’s business licenses be rescinded as punishment, making it difficult or impossible for them to do business in New York, and said he would continue to have an independent monitor oversee Trump Organization operations.
  • If not successfully appealed, the order would strip Trump of his authority to make strategic and financial decisions over some of his key properties in the state.
  • Trump, in a series of statements, railed against the decision, calling it “un-American” and part of an ongoing plot to damage his campaign to return to the White House.
  • “My Civil rights have been violated, and some Appellate Court, whether federal or state, must reverse this horrible, un-American decision,” he wrote on his Truth Social site. He insisted his company had “done a magnificent job for New York State” and “done business perfectly,” calling it “A very sad Day for the New York State System of Justice!”
  • Under the ruling, limited liability companies that control some of Trump’s key properties, such as 40 Wall Street, will be dissolved and authority over how to run them handed over to a receiver. Trump would lose his authority over whom to hire or fire, whom to rent office space to, and other key decisions.
  • “The decision seeks to nationalize one of the most successful corporate empires in the United States and seize control of private property all while acknowledging there is zero evidence of any default, breach, late payment or any complaint of harm,” Kise said after the decision.

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Mnuchin says Main Street U.S. companies need grants, not loans

By Andrea Shalal and David Lawder

WASHINGTON (Reuters) – U.S. Treasury Secretary Steven Mnuchin on Friday defended his decision to end several of the Federal Reserve’s key pandemic lending programs on Dec. 31, saying Congress should use the money to help small U.S. companies with grants instead.

Federal Reserve Chairman Jerome Powell and Chicago Federal Reserve Bank President Charles Evans have criticized the Treasury move, saying the programs – while not being used extensively – provided an important backstop for the economy.

Mnuchin told Powell in a letter Thursday that the $455 billion allocated to Treasury under the CARES Act last spring, much of it set aside to support Fed lending to businesses, nonprofits and local governments, should be made available for Congress to reallocate.

Speaking on CNBC, Mnuchin said Congress had always intended for the lending programs to end on Dec. 31, and sought to reassure markets that the Fed and Treasury had many tools left to support the economy.

“Markets should be very comfortable that we have plenty of capacity left,” Mnuchin said, adding that the Treasury could reactivate the facilities by tapping the Exchange Stabilization Fund, a seldom-used fund housed at the department.

“To the extent these need to be reactivated, we have over $800 billion of capacity so I consider that to be a pretty good bazooka,” he said. The $800 billion would be combining the ESF and capital in remaining Federal Reserve facilities.

Mnuchin denied the move was intended to handicap the administration of Democratic President-elect Joe Biden, who will take office on Jan. 20.

“We’re not trying to hinder anything,” Mnuchin said, adding that his department would work closely with the incoming administration “if things get certified.”

He said he and White House Chief of Staff Mark Meadows would speak with congressional Republican leaders later Friday and would redouble their efforts to pass further stimulus measures.

“We want Congress to reappropriate this money,” he said.

(Reporting by Andrea Shalal and David Lawder; Editing by Chizu Nomiyama)

Size matters. Big U.S. farms get even bigger amid China trade war

By Mark Weinraub

HAZELTON, N.D. (Reuters) – As the 2018 harvest approached, North Dakota farmer Mike Appert had a problem – too many soybeans and nowhere to put them. Selling was a bad option. Prices were near-decade lows as U.S. President Donald Trump’s trade war with China weighed heavily on the market. Temporary storage would only buy him a little bit of time, particularly in an area where cold weather can damage crops stored in plastic bags.

So Appert, who farms 48,000 acres (19,425 hectares), cut a check for $800,000 to build eight new permanent steel bins. That allowed him to hold onto his bumper crop and wait for prices to recover.

He sold half of the 456,000 bushels stored on his farm throughout the following summer, earning about $1 more per bushel and avoiding storage at nearby CHS elevators or an Archer Daniels Midland Co. processor in the area.

But most farmers do not have $800,000 to spend on steel bins, and many are going under. The number of U.S. farms fell by 12,800 to 2.029 million in 2018, the smallest ever, as the trade war pushes more farmers into retirement or bankruptcy.

Roger Hadley, who farms 1,000 acres in Indiana, was unable to plant any corn and soybeans this year after heavy rains added to farmers’ woes.

He spent most of the summer trying to plant a combination of grasses, a so-called cover crop, so he could apply for government aid and try again next year.

“The guys that got rich are getting richer,” Hadley said. “It has frustrated a lot of guys.”

In farming, size does matter. The farms left standing after the trade war will likely be some of the biggest in the business. Appert’s operations are more than 100 times bigger than the average American farm and the advantages provided by that magnitude are becoming even more critical as the trade war stretches into a second year.

The declining number of U.S. farmers could hurt the world’s top grain merchants such as ADM and Bunge, who will have fewer suppliers. Additionally, farmers will have less need to rent space in the merchants’ grain silos as big farmers like Appert have plentiful storage on their own farms.

ADM said it would continue changing to meet the needs of its customers. Bunge did not respond to an email seeking comment.

By the end of 2018, the average U.S. farm size rose to 443 acres, a 12-year high and up from 441 million in 2017, according to the latest U.S. Department of Agriculture data.

And the biggest farmers are growing their operations even more as retiring farmers choose to lease their land rather than selling it.

When land becomes available for lease, only the biggest farmers can readily shoulder the costs needed to expand.

The size of the loans smaller farmers would need to buy equipment, for example, are too big for applicants with little collateral, said Dave Kusler, president of the Bank of Hazelton in Hazelton, North Dakota.

“It is almost impossible with what the costs are,” Kuslersaid. “In this area, you can’t make a living on 1,000 acres.”

Critics say the Trump administration’s policy of compensating growers for lost sales due to the trade war pays the bigger farm operations more since payments are calculated by acres farmed.

The Environmental Working Group, a conservation organization, said in a recent study the top 1% of aid recipients received an average of more than $180,000 while the bottom 80% were paid less than $5,000 in aid.

Appert said that big farmers receive bigger outright payments but less per acre than small farms because of a $500,000 cap per farm.

‘BOOM, BOOM, BOOM’

Big farms can reap the full benefits of new high-tech equipment that boosts farm yields.

Doug Zink, who farms 35,000 acres near Carrington, North Dakota, said he likes to trade in his fleet of four combines and planters nearly every year to ensure that his equipment is under warranty, which saves thousands of dollars in maintenance costs and helps avoid breakdowns during key seeding and planting periods.

They also receive deep discounts – as much as $40,000 for some combine harvesters that can cost as much as $400,000 – allowing them to upgrade more often.

Manufacturers are increasingly willing to cut such deals to keep clients as the number of customers falls. Deere & Co <DE.N> said that it will reduce production by 20% at its facilities in Illinois and Iowa in the second of half of the year. Rival agricultural machine makers AGCO Corp <AGCO.N> and CNH Industrial <CNHI.N> have also slashed production to keep inventory in line with retail demand.

Large farms also have the easiest access to capital, with bankers still eager to provide loans to growers with plenty of collateral. “The ag trend is going to larger farms,” Kusler, the bank president in Hazelton, North Dakota, said, “The loans get much larger.”

Appert had no problem getting a loan to finance expansion.

“If you want to get a mortgage and buy a piece of land it is just boom, boom, boom,” he said.

(Reporting by Mark Weinraub; Editing by Caroline Stauffer and Marguerita Choy)

U.S. mortgage requests rise as loan rates hold near 10-month low: MBA

A view of single family homes for sale in San Marcos, California October 25, 2013. PROPERTY REUTERS/Mike Blake

(Reuters) – U.S. mortgage applications increased for the first time in five weeks as most home borrowing costs hovered near their lowest in 10 months, the Mortgage Bankers Association said on Wednesday.

The Washington-based industry group said its seasonally adjusted gauge of loan requests to buy a home and to refinance one rose 3.6 percent to 365.3 in the week ended Feb. 15. The prior week’s reading was the lowest in a month.

“Mortgage rates held steady on mixed economic news, as core inflation remained firm, while retail sales in December were much weaker than expected. However, overall application activity picked up over the week,” Joel Kan, MBA’s associate vice president of industry surveys and forecasts, said in a statement.

Interest rates on 30-year fixed-rate mortgages with conforming loan balances of $484,350 or less ticked up to 4.66 percent from the prior week’s 4.65 percent, which was the lowest since March 2, 2018.

U.S. Treasury yields, which are benchmarks for most mortgages, rose last week as underlying inflation trends remained intact and traders reduced their safe-haven bond holdings on optimism that China and the United States would resolve their trade conflict.

The other mortgage rates that MBA tracks were unchanged to 8 basis points higher on the week.

“Most rates remained close to 10-month lows, which allowed some borrowers with an incentive to refinance to capitalize,” Kan said.

The group’s seasonally adjusted barometer on home refinancing requests rose 6.4 percent to 1,084.4.

The refinance share of total mortgage applications was 41.7 percent last week, compared with 41.8 percent the prior week.

MBA’s seasonally adjusted gauge on applications to buy a home, which is seen as a proxy on future housing activity, climbed 1.7 percent at 232.7 last week.

(Reporting by Richard Leong in New York; Editing by Jeffrey Benkoe)

Chicago school system plans to borrow up to $389 million

FILE PHOTO: Chicago Mayor Rahm Emanuel speaks during the U.S.-China Joint Commission on Commerce and Trade Investment Luncheon Program in Chicago, Illinois, U.S., on December 17, 2014. REUTERS/Andrew Nelles/File Photo

By Dave McKinney

CHICAGO (Reuters) – Chicago’s cash-strapped public school system plans to seek up to $389 million in short-term loans to avoid closing schools early for the summer and to make required pension payments next month, the mayor’s office said on Friday.

The fix will be secured through short-term financing against $467 million in delayed block grant funding by Illinois’ fiscally paralyzed state government, which has not passed a full-year operating budget in 23 months.

Escalating pension payments have led to drained reserves, debt dependency and junk bond ratings for Chicago Public Schools.

The planned borrowing follows Republican Governor Bruce Rauner’s veto in December of legislation that would have funneled $215 million in state funds to the nation’s third-largest school system to help it make a required $721 million pension payment next month.

A school-funding overhaul that would direct more money to Chicago’s schools passed the Illinois Senate this week but drew immediate criticism from Rauner’s education chief, casting serious doubts on the measure’s long-term prospects.

Absent any movement in the state legislature on school funding, Chicago Mayor Rahm Emanuel described the borrowing plans as a short-term bridge.

“While we work with state lawmakers on long-term solutions to Illinois’ education funding challenges, in the short-term, (we) are doing what is necessary to keep our students in the classroom and on the path to a brighter future,” Emanuel said in a statement.

Terms of the borrowing were not immediately known. The Emanuel-appointed Chicago school board expects to vote on the new borrowing authority at its May 24 meeting.

The grant money upon which the borrowing will be secured is part of $1.1 billion in state payments Illinois owes to more than 400 school systems. The state has been unable to distribute those grant payments because of the unrelenting budget stalemate.

The mayor’s office said CPS expects to receive its allotment of state grant funds in “coming months.” But Abdon Pallasch, a spokesman for Illinois Comptroller Susana Mendoza, said on Friday his office has no idea when the money will be disbursed.

Rauner’s office did not have an immediate reaction to CPS’s new borrowing.

(Editing by Chizu Nomiyama and Matthew Lewis)

Some Chase branches in Seattle closed by protests over pipeline loans

Native American leaders and climate activists demonstrate outside of a Chase Bank location, to oppose the Keystone XL pipeline, in Seattle, Washington, U.S. May 8, 2017. REUTERS/David Ryder

By Tom James

SEATTLE (Reuters) – Native American leaders and climate activists protested at several Chase branches in Seattle on Monday, forcing them to close temporarily as demonstrators demanded the bank not lend to projects like the Keystone XL oil pipeline.

Police said 26 people were arrested by late afternoon. Activists said they disrupted operations at 11 Chase branches, and two other branches closed as well.

Darcy Donahoe-Wilmot, a spokeswoman for Chase, which is a unit of JP Morgan Chase & Co, declined to comment.

At a branch in downtown Seattle, about 50 protesters occupied the main lobby, where they made speeches, sang songs, held signs and banners and even ordered a tall stack of pizzas before police blocked the doors.

At another Seattle branch, a handful of protesters went inside while two others locked themselves by their necks to the front doors with bicycle locks.

“I have a personal responsibility to make sure we have a livable climate,” said a protester who locked herself to the door and would only identify herself as 21-year-old Andrea from Olympia, Washington.

Organizers of the protests aimed to dissuade Chase from lending to the companies behind two major oil infrastructure projects, the Keystone XL pipeline and Trans Mountain Pipeline expansion, and tar sands oil production in general. Protesters said they were fighting global warming.

Keystone XL is a project of TransCanada Corp and Trans Mountain Pipeline is a project of Kinder Morgan Inc.

These efforts echo similar efforts with other banks as activists have shifted to targeting the financial backers of the pipelines rather than sites like the Dakota Access Pipeline in North Dakota, where thousands protested last year.

Bank are more sensitive to bad publicity than the pipeline companies, said Seattle city council member Mike O’Brien, who participated in one of the protests on Monday.

“It’s a relatively small percentage of their overall portfolio,” protest organizer Ahmed Gaya said of the banks’ stakes in various oil and gas pipelines. “If you can make that very small part … have a vastly disproportionate effect on their public image, that’s very persuasive.”

In April, Citigroup executives conceded they had approved investments in the Dakota pipeline too quickly after a noisy protest at its annual shareholder meeting, while Greenpeace activists protested Credit Suisse’s dealings with companies behind the same pipeline. The previous month, Dutch bank ING Groep agreed to sell its $120 million share of a loan for the Dakota pipeline.

(Reporting by Tom James, Editing by Ben Klayman and Cynthia Osterman)

Nepal quake survivors struggle with debt, raising trafficking fears

By Rina Chandran

KATHMANDU (Thomson Reuters Foundation) – Hundreds of Nepalis who had borrowed money to rebuild their lives after two earthquakes left them homeless are at risk of being trafficked or duped into selling their kidneys to pay off their debts, an international development organization said.

Nepal received $4.1 billion in pledges from donors for reconstruction after quakes last April and May killed 9,000 people, injured at least 22,000 and damaged or destroyed more than 900,000 houses in the Himalayan nation.

More than a year on, reconstruction has been slow with unrest over a new constitution adding to the delays. Unable to find work, hundreds of Nepalis are deep in debt, the Asia Foundation said on Tuesday.

“Their ability to pay is very limited and indebtedness makes them more vulnerable to exploitation,” said Nandita Baruah, Asia Foundation’s deputy country representative in Kathmandu.

“Their desperation makes them take greater risks, such as sending their children away for what they think are better lives, or even selling their kidneys,” she told the Thomson Reuters Foundation in an interview.

“We’re going to see an uptick in people moving out to earn money as their debts become due. Some of them will be trafficked,” Baruah added.

Nepal’s economy is highly dependent on remittances sent back by its migrant workers, which make up about 30 percent of its gross domestic product.

Following the earthquakes, hundreds of migrant workers returned to Nepal to help their families.

Many are likely to have paid their employers to be allowed to return home, going without wages for several months while spending money on rebuilding, Baruah said.

“These are workers who pay 200,000-500,000 rupees ($1,850-$4,640) to go abroad in the first place, and are very likely still paying off that debt,” she said.

“The quakes exacerbated their indebtedness,” she said.

BORDER CHECKS

Activists say there are signs of an increase in the number of Nepali women and children being trafficked after last year’s disaster.

Anti-trafficking charity Maiti Nepal said it stopped 745 women and children – suspected victims of human trafficking – at the Nepal-India border in the three months following the earthquakes.

That compares with 615 such interceptions in the three months before the quakes, their data showed.

Nepal is both a source and a destination country for victims of human trafficking with some 8,500 Nepalis trafficked every year, according to the country’s human rights commission.

Women are typically trafficked for sex work, domestic work and forced marriages to India, the Middle East, China and South Korea – while men are made to work in construction, as drivers and in hotels in India, the Middle East and Southeast Asia.

Some victims are duped into selling their kidneys and brought to India, where a chronic organ shortage has fueled a black-market trade in illegal transplants, activists say.

Nepal’s economy is forecast by the Asian Development Bank to have grown only about 1.5 percent in the fiscal year to mid-July after reconstruction delays and trade disruptions. A recovery is dependent on the pace of reconstruction, it said.

“Now, the aid will also stop flowing. We’re going to see more migration, more trafficking,” said Baruah.

“Those who have taken on debt don’t have options,” she said.

(Reporting by Rina Chandran @rinachandran, Editing by Katie Nguyen. Please credit the Thomson Reuters Foundation, the charitable arm of Thomson Reuters, that covers humanitarian news, women’s rights, trafficking, corruption and climate change. Visit news.trust.org to see more stories.)