JEC hearing examines how residential electrification is key to meeting climate change goals

The congressional Joint Economic Committee (JEC) held a hearing recently that looked at how home and building electrification is critical to addressing climate change and advancing economic growth.© Shutterstock The hearing, “Examining the Economic Benefits of Electrifying America’s Homes and Buildings,” revealed that there is an immediate need to engage in easily deployed, scalable climate […]

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The congressional Joint Economic Committee (JEC) held a hearing recently that looked at how home and building electrification is critical to addressing climate change and advancing economic growth.

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The hearing, “Examining the Economic Benefits of Electrifying America’s Homes and Buildings,” revealed that there is an immediate need to engage in easily deployed, scalable climate action. Further, it found that residential and building electrification is one of the surest, most cost-effective solutions, as American households account for 42 percent of energy-related carbon emissions.

The discussion detailed how the electrification of homes and businesses will reduce the burden of energy costs for families and businesses and improve public health and safety.

“These new electric appliances will be much more efficient than the fossil fuel-powered machines they are replacing. And that means significant savings for these families on their monthly utility bills. Those savings can make an enormous difference for a family living paycheck to paycheck,” said U.S. Sen. Martin Heinrich (D-NM), JEC vice chair, who presided over the hearing. “And, importantly for our climate, all of these electrified machines can be powered by all the new clean and carbon pollution-free electricity that we will generate in our new clean energy economy. This is how we can power our long-term economic recovery and save families money by solving our pressing climate challenge.”

Among the witnesses who testified at the hearing were Ari Matusiak, CEO at Rewiring America; Dr. Leah Stokes, associate professor of Political Science at the University of California, Santa Barbara; and Donnel Baird, founder and CEO at BlocPower.

“Electrifying homes and buildings is an important component of addressing the existential threat of climate change. The benefits of electrification go beyond the environmental and health benefits of lower global temperatures. These technologies help reduce residential energy costs, which boosts household disposable income – a boon to local businesses across the country – and improve public health outcomes,” JEC Chair Rep. Don Beyer (D-VA) said. “The scale of the challenges our planet is facing as a result of climate change is great. We must take this opportunity to deploy every tool at our disposal to meet the moment.”

Matusiak, one of the witnesses, said that to achieve zero emissions by 2050, America must replace or install one billion new clean energy machines across all of those households.

“Every time a water heater needs replacement in America, it presents an opportunity to install an efficient, electric heat pump alternative. Every time that opportunity is missed, we put further pressure on hitting our 2050 target. Every machine counts … We do not need to wait on any moonshot technology: it has all already been invented. We do not need to ask Americans to sacrifice or change their lifestyles to survive: indeed, their lives will improve with efficient, electric appliances and equipment.”

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CUNA voices support for inclusion of SAFE Banking Act in NDAA

The Credit Union National Administration (CUNA) wrote leaders in the U.S. House of Representatives to express its support for the inclusion of the Secure and Fair Enforcement (SAFE) Banking Act into the fiscal year 2022 National Defense Authorization Act (NDAA). © Shutterstock This week, the House Rules Committee approved the amendment to include the SAFE […]

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The Credit Union National Administration (CUNA) wrote leaders in the U.S. House of Representatives to express its support for the inclusion of the Secure and Fair Enforcement (SAFE) Banking Act into the fiscal year 2022 National Defense Authorization Act (NDAA).

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This week, the House Rules Committee approved the amendment to include the SAFE Banking Act into the NDAA. Now the amendment goes to a vote of the full House for inclusion.

The SAFE Banking Act would allow cannabis businesses in states where it is legal to access the banking system. Typically, cannabis business owners use cash in states where it is legal because they can’t get credit. This is not only inconvenient but creates public safety concerns for these owners and the communities they are in. This bill would provide a safe harbor and other protections for financial institutions serving legal, cannabis-based businesses.

“Credit unions operating in states where it is legal have members and member businesses involved in the cannabis market who need access to traditional depository and lending services, the absence of which creates a significant public safety issue,” the letter dated Sept. 21 said.

“Inclusion of the SAFE Banking Act puts in place necessary protections to bring revenue from state-sanctioned cannabis businesses into the financial services mainstream and, as a result, keeping communities safe,” CUNA President and CEO Jim Nussle wrote in a letter to House Speaker Nancy Pelosi (D-CA) and Minority Leader Kevin McCarthy (R-CA).

The amendment was offered by U.S. Reps. Ed Perlmutter (D-CO), Nydia Velázquez (D-NY), Warren Davidson (R-OH), Lou Correa (D-CA), Earl Blumenauer (D-OR), David Joyce (R-OH), and Barbara Lee (D-CA).

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Warner, Himes introduce Portable Retirement and Investment Account Act

A pair of lawmakers have introduced a measure they said seeks to create accessible, universal, portable retirement and investment accounts while also modernizing the nation’s retirement system.© Shutterstock Sen. Mark Warner (D-VA) and Rep. Jim Himes (D-CT) said their bill, the Portable Retirement and Investment Account (PRIA) Act of 2021, would bring more people into […]

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A pair of lawmakers have introduced a measure they said seeks to create accessible, universal, portable retirement and investment accounts while also modernizing the nation’s retirement system.

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Sen. Mark Warner (D-VA) and Rep. Jim Himes (D-CT) said their bill, the Portable Retirement and Investment Account (PRIA) Act of 2021, would bring more people into the retirement system and make it easier for Americans to save.

“Americans are more likely to change jobs and be engaged in non-traditional forms of work than they were a generation ago, but our policies haven’t kept up with these shifts,” Warner said. “As more and more Americans hold multiple jobs across a career, a year, and even a day, PRIA will provide more workers with access to flexible, portable benefits such as retirement savings that will carry with them from employer to employer and gig to gig.”

Via the legislation, each American will receive a PRIA when they receive a Social Security Number and the PRIAs will be administered by an independent board — managed by selected financial institutions.

Upon creation of the initial account, account holders are presented the option of choosing investment opportunities from a qualified financial institution, per the measure.

“The current retirement system isn’t working for all Americans,” Himes said. “The options to which American workers have access can differ significantly based on their area of employment and the systems can be needlessly confusing. In addition, many Americans lose access to retirement savings vehicles if they lose their jobs, and gig, contract, and part-time workers are often ineligible. PRIA changes all of this.”

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Democratic senators voice concerns about Special Purpose Acquisition Companies

Several Democratic U.S. senators are raising concerns about what they call abuses by the creators and operators of Special Purpose Acquisition Companies, or SPACs.© Shutterstock Sens. Elizabeth Warren (D-MA), Sherrod Brown (D-OH), Tina Smith (D-MN), and Chris Van Hollen (D-MD) expressed their concerns via letter to six creators of prominent SPACs, which are publicly traded […]

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Several Democratic U.S. senators are raising concerns about what they call abuses by the creators and operators of Special Purpose Acquisition Companies, or SPACs.

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Sens. Elizabeth Warren (D-MA), Sherrod Brown (D-OH), Tina Smith (D-MN), and Chris Van Hollen (D-MD) expressed their concerns via letter to six creators of prominent SPACs, which are publicly traded shell companies that raise money to buy private companies and take them public.

Their concerns are centered on whether industry insiders may be able to take advantage of retail investors throughout the SPAC process to the benefit of large institutional investors such as hedge funds, venture capital insiders, and investment banks.

“We seek information about your use of SPACs in order to understand what sort of Congressional or regulatory action may be necessary to better protect investors and market integrity and ensure a fair, orderly, and efficient marketplace,” wrote the senators to each of the SPAC creators. “We are concerned about the misaligned incentives between SPACs’ creators and early investors on the one hand, and retail investors on the other.”

The letters were sent to Howard Lutnick, chairman and CEO of Cantor Fitzgerald; Michael Klein, founder of M. Klein & Associates; Tilman Fertitta, chairman and CEO of Fertitta Entertainment; Chamath Palihapitiya, co-founder and CEO of The Social+Capital Partnership; David Hamamoto, CEO and chairman of DiamondHead Holdings; and Stephen Girsky, managing partner at VectoIQ.

Specifically, among the concerns raised by lawmakers is that SPAC creators, or “sponsors,” have incentives to quickly strike merger deals, regardless of the quality of the deal or of the company to be acquired. Another potential issue is that early investors (often investment banks and hedge funds) are essentially guaranteed risk-free investments. In addition, they are worried that both sponsors and early investors profit from hyperbolic, pre-merger claims about the company to be acquired while retail investors who purchase shares based on those hyperbolic claims are often left with devalued shares.

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Bank Policy Institute issues statement to House on consumer data security

The Bank Policy Institute (BPI), a nonpartisan public policy, research and advocacy group representing banks and their customers, issued a statement this week on consumer data security in advance of a U.S. House Committee on Financial Services Task Force on Financial Technology hearing on Sept. 21.© Shutterstock While consumers should be able to use their […]

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The Bank Policy Institute (BPI), a nonpartisan public policy, research and advocacy group representing banks and their customers, issued a statement this week on consumer data security in advance of a U.S. House Committee on Financial Services Task Force on Financial Technology hearing on Sept. 21.

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While consumers should be able to use their preferred applications to manage spending and other financial matters, they should not have to forfeit data security and privacy, BPI officials said. The group offers three key recommendations: consumer financial data should be safe and secure regardless of who holds it; informed consumer consent should be obtained; and consumers should have control over the type and amount of information shared.

“BPI supports consumers’ ability to access and share their personal financial data,” BPI wrote in the statement. “It is of paramount importance that this data is shared based on informed consumer consent and effective consumer control over the type and amount of information that is shared and that the data is maintained in a safe and secure manner regardless of where, why or with whom that data is maintained.”

There are approximately 120 different data aggregators in the United States, according to BPI. They are in the business of collecting data through a variety of practices, some of which, such as screen scraping, pose data security risks to consumers. Screen scraping allows third parties to harvest a wide swath of consumer data, often far in excess of the information needed to offer a specific service or product. Some estimates indicate that the largest U.S. aggregators may hold in their possession the financial information of millions of consumers, creating a prime target for malicious actors and a significant risk for consumer privacy.

BPI argues that the industry should eliminate screen scraping practices and transfer data more securely via an Application Programming Interface (API). The use of APIs would help to empower and protect consumers by ensuring their control over who has access to their data, how much data is shared and when data sharing authorization is terminated with third parties.

In addition, BPI calls upon the Consumer Financial Protection Bureau to use its authority to apply existing data security and privacy standards to data aggregators. Further, it suggests the FFIEC examination guidance as a useful framework for information security requirements for these providers. These changes would reduce instances of serious fraud and enhance consumer data security.

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CME Group to launch sustainable clearing service for derivatives industry

CME Group, which runs several leading derivatives exchanges, announced the launch of the derivatives industry’s first-ever Sustainable Clearing service on Sept. 27.© Shutterstock This new service will help market participants track and report on how their hedging activities are advancing their sustainability goals. Sustainable derivatives encompass both the trading of products such as carbon offsets, […]

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CME Group, which runs several leading derivatives exchanges, announced the launch of the derivatives industry’s first-ever Sustainable Clearing service on Sept. 27.

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This new service will help market participants track and report on how their hedging activities are advancing their sustainability goals. Sustainable derivatives encompass both the trading of products such as carbon offsets, battery metals and bioenergy as well as interest rate and foreign exchange futures hedging activity that is carried out to support a sustainable business.

“Sustainability continues to be an increasing priority for our global clients as they significantly expand both the risk management that they provide to green businesses and environmental projects,” Julie Winkler, chief commercial officer of CME Group, said. “This new framework for clearing sustainable derivatives will make it easier for our clients to measure the impact of their support for sustainable activities and can be part of the solution to encourage further growth in this key sector as the economy transitions to net-zero emissions.”

All participating futures commission merchants will be given the Sustainable Clearing eligibility criteria to identify and tag their sustainable trades. The criteria will be aligned to external standards, such as the International Capital Markets Association (ICMA) Social & Green Bond Principles.

“This innovative clearing offering makes it simple for firms to track their sustainable derivatives positions by seamlessly integrating reporting into their existing workflows,” Sunil Cutinho, president of CME Clearing, said. “Our solution ensures that all sustainable trades continue to benefit from our established risk management approach, including full margin offsets where applicable, which creates efficiencies for clients and end users.”

The criteria and governance of Sustainable Clearing will be administered by CME Benchmark Administration, an independent legal entity within CME Group.

“As a firm believer in how finance can catalyse a positive impact on our environment, Standard Chartered is delighted to have contributed to CME’s Sustainable Clearing solution and support the sustainable agenda of market participants,” Mick Hill, global product owner of Exchange Traded Derivatives at Standard Chartered Bank, said.

CME Group owns several exchanges including the Chicago Mercantile Exchange, Chicago Board of Trade (CBOT), and the New York Mercantile Exchange.

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MBA looking to reduce the racial homeownership gap

The Mortgage Bankers Association (MBA) has introduced a new policy initiative seeking to reduce the racial homeownership gap.© Shutterstock The MBAʻs Building Generational Wealth Through Homeownership would provide industry leadership and direction regarding the targeted endeavor — supporting efforts to develop sustainable homeownership opportunities for communities of color while also spurring equitable and responsible minority […]

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The Mortgage Bankers Association (MBA) has introduced a new policy initiative seeking to reduce the racial homeownership gap.

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The MBAʻs Building Generational Wealth Through Homeownership would provide industry leadership and direction regarding the targeted endeavor — supporting efforts to develop sustainable homeownership opportunities for communities of color while also spurring equitable and responsible minority borrower lending.

“Homeownership is often the largest source of intergenerational wealth for families. MBA’s new policy initiative serves as a perfect foundation to level the playing field,” Susan Stewart, 2021 MBA Chairman and CEO at SWBC Mortgage Corporation, said. “The mortgage industry has a responsibility to promote minority homeownership by partnering with key stakeholders to remove barriers and support financial education and counseling, with a goal to close the racial homeownership gap and increase generational wealth among minority households.”

MBA President and CEO Bob Broeksmit said the organization is positioned to harness internal and external resources to help more minority families become homeowners.

“Through industry advocacy and partnerships with housing experts, consumer groups, nonprofits, and civil rights organizations, our industry will focus on eliminating obstacles and shaping policy to promote and increase minority homeownership,” he said.

The Building Generational Wealth Through Homeownership stems from
CONVERGENCE, which was developed by the MBA’s Minority Homeownership Joint Task Force.

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Financial industry groups urge Congress not to advance new tax reporting proposal

More than 40 leading financial and banking industry groups are urging Congress not to move forward with a proposal that would establish an expanded new tax information reporting regime.© Shutterstock The proposal, under consideration as a part of the reconciliation package, would directly impact most Americans and small businesses with an account at a financial […]

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More than 40 leading financial and banking industry groups are urging Congress not to move forward with a proposal that would establish an expanded new tax information reporting regime.

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The proposal, under consideration as a part of the reconciliation package, would directly impact most Americans and small businesses with an account at a financial institution, the groups said.

“This proposal, as described by the Department of Treasury, would require financial institutions and other providers of financial services to track and submit to the IRS information on the inflows and outflows of every account above a de minimis threshold of $600 during the year, including breakdowns for cash. While the stated goal of this vast data collection is to uncover tax dodging by the wealthy, this proposal is not remotely targeted to that purpose or that population,” the groups wrote in a Sept. 17 letter to Speaker of the House Nancy Pelosi (D-CA), Minority Leader Kevin McCarthy (R-CA) and members of the U.S. House of Representatives.

“In addition to the significant privacy concerns, it would create tremendous liability for all affected parties by requiring the collection of financial information for nearly every American without proper explanation of how the IRS will store, protect, and use this enormous trove of personal financial information. We believe that this program is costly for all parties, not fit for purpose, and loaded with potential for unintended and serious negative consequences,” the letter said.

It was signed by more than 40 associations including the Consumer Bankers Association (CBA), the American Bankers Association (ABA), the Independent Community Bankers of America (ICBA), and SIFMA, among others.

In addition, they said the new reporting regime would undermine efforts long underway to strengthen financial inclusion, especially among underserved populations.

“Privacy concerns are cited as one of the top reasons why individuals choose not to open financial accounts and participate in the financial system. This proposal would almost certainly undermine efforts to reach vulnerable populations and unbanked households,” the letter said.

The groups also wrote that, “The American people feel strongly about their right to privacy, and it is not reasonable to undermine their financial privacy without a clearly articulated purpose.”

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Community banks oppose proposed changes to SBAʻs loan program

The Independent Community Bankers of America (ICBA) has voiced its opposition to proposed changes to the Small Business Administration’s 7(a) loan program.© Shutterstock On Sept. 9, the U.S. House Small Business Committee approved a bill to deliver $25 billion in funding to invest in small business programs, including a provision that includes nearly $4.5 billion […]

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The Independent Community Bankers of America (ICBA) has voiced its opposition to proposed changes to the Small Business Administration’s 7(a) loan program.

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On Sept. 9, the U.S. House Small Business Committee approved a bill to deliver $25 billion in funding to invest in small business programs, including a provision that includes nearly $4.5 billion to fund a direct loan product under the current 7(a) lending program administered by the SBA.

ICBA President and CEO Rebeca Romero Rainey said her organization strongly opposes this particular proposal, as this would put the SBA in competition with community banks.

“As the nation’s leading small-business lenders, community banks are prolific 7(a) lenders, make up the majority of SBA lenders, and accounted for nearly 60 percent of Paycheck Protection Program loans,” Rainey said. “Establishing a direct lending program to compete with 7(a) private-sector experts would needlessly risk diminishing participation in the program while putting taxpayer dollars at risk. With a month left in fiscal 2021, the SBA has already guaranteed a record $30.1 billion in lending, with financing for the 7(a) program funded by user fees. Instead of expanding the SBA into direct lending, policymakers should update the 7(a) program’s federal credit subsidy rate to better reflect its low default rate and to help avoid disruptions to the program.”

Rainey said that ICBA will continue to work with policymakers to maximize the effectiveness of the 7(a) program for the small businesses they serve.

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Tax Foundation analysis examines impact of corporate tax rate increase

According to the Tax Foundation, the proposed corporate tax increase included in the Build Back Better Act, which was advanced by the U.S. House Ways and Means Committee this week, is higher than it may seem. © Shutterstock In a recent blog post, authors Alex Muresianu and Eric York pointed out while the reconciliation bill […]

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According to the Tax Foundation, the proposed corporate tax increase included in the Build Back Better Act, which was advanced by the U.S. House Ways and Means Committee this week, is higher than it may seem.

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In a recent blog post, authors Alex Muresianu and Eric York pointed out while the reconciliation bill would increase the top federal corporate tax rate from 21 percent to 26.5 percent, most companies would face a higher tax rate than 26.5 percent. This is because most states also levy a corporate income tax.

Including the average state corporate tax rate, they wrote, the U.S. would have an average corporate tax rate of 30.9 percent. This would be the third-highest corporate tax rate in the Organisation for Economic Co-operation and Development (OECD), behind only Colombia and Portugal.

“Under current law, the U.S. is right in line with OECD peer countries, and actually near the middle of the pack as far as corporate taxation goes. Returning to near the top of the OECD in corporate tax rates would be costly for a few reasons: it would disincentivize investment and encourage firms to shift profits and locate elsewhere, resulting in fewer job opportunities for Americans and less tax revenue for the U.S. government,” Muresianu and York wrote.

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