Banking, Insurance, and Financial Services

As an increase in subsidized student loan interest rates from 3.4% to 6.8% is looming, the amount of student debt continues to increase.  

The Federal Reserve Bank of New York's Household Debt and Credit Report for the first quarter of 2013 shows that 16.2% of Americans have student debt, with variation among states.  ...

A new study related to climate change moves the debate from the science of it all to its impact on the economy.  The report— “Insurer Climate Risk Disclosure Survey,” by Ceres, a nonprofit group advocating for sustainability leadership—takes a look at how not including the risks associated with climate change may affect the business of insurance companies. “The insurance sector is a key driver to our overall economy,” said Mindy Lubber, president of Ceres.

Two years ago, Congress passed, and the president signed the Dodd-Frank Wall Street Reform and Consumer Protection Act into law. A response to the financial meltdown in 2008, Dodd-Frank initiated one of the most significant restructurings of financial regulations since the Great Depression, and a great deal of the reforms hinged on states’ relationships and regulatory authority over financial institutions. Now, with the law in effect and the federal rule-making process well under way, some states are using their new authorities in unpredicted—and unprecedented—ways.

A settlement between U.S. states and the nation’s largest mortgage lenders over foreclosure abuses is a go as every state but one—Oklahoma—has signed on to the deal. The settlement is described by U.S. Attorney General Eric Holder as the “largest joint federal-state civil settlement in the history of this nation."  The settlement is between 49 state attorneys general, the Justice Department, the U.S. Department of Housing and five major banks. The exact value of the settlement is unclear, but could range from $26 billion to upwards of $39 billion. 

The Southern Legislative Conference has released its latest Regional Resource - Municipal Bonds: Trends in 2011. The Resource examines how the municipal bond market fared in 2011, if fears expressed by certain experts regarding widespread bond defaults were realized, if investors shed their holdings in municipal bonds and fled to other asset categories and a number of related topics.

Rates of foreclosure are at levels not seen the 1930s, and some communities in the Midwest have been particularly hard hit by a rise in the number of blighted properties. States are responding with new measures and investigations designed to help troubled communities and homeowners.

President Barack Obama on Sept. 8 addressed a joint session of Congress to roll out the American Jobs Act. In the wake of a still stagnant recovery, the bill includes a combination of tax breaks and new spending designed to give the economy a booster shot and hopefully put more people back to work.  If passed by Congress, the bill would provide more than $35 billion to state and local governments to retain or rehire teachers and public safety officials. The tax measures used to pay for the bill, however, may ultimately come back to bite the very state and local governments it is designed to support.

July 21, 2011 marked one year since Congress passed the Dodd-Frank Wall Street Reform and Consumer Protection Act, the most significant retooling of the financial system since the Great Depression.  This policy brief considers states’ regulatory role under Dodd-Frank, with attention to two issues:  1) the standard governing federal preemption of state consumer finance laws, and 2) state oversight of mid-sized investment advisors.  Each is an example of how Dodd-Frank sought to “reset” the balance between state and federal financial regulators, and to preserve states’ regulatory authority in the financial services industry.      

Some observers claim federal preemption of state predatory lending laws disrupted the mortgage market and precipitated the 2008 financial crisis.  Efforts to reform the financial system emphasized preservation of States’ regulatory authority over state and national banks.  However, a federal agency recently proposed regulations that would continue to preempt state consumer financial protection laws, prompting criticism from the Treasury Department, members of Congress, and advocates of state bank supervision.        

Financial reporting and auditing professionals ensure that the public has a clear view of the health and viability of state governments. They are keepers of the public trust. Today, however, these professionals face more demands than ever and have fewer resources than ever to support their important efforts. Cumbersome, and often burdensome, processes and financial limitations are now colliding with a multi-faceted push for financial reporting that is faster, cheaper and better. Can states sustain current efforts, and even go beyond, pushing the limits of their capacity to provide speed, economy and quality?