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18 октября 2016, 22:47

Recognizing National Retirement Security Week (Oct. 16-22)

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​ This week, we mark National Retirement Security Week – a time to focus on what Americans can be doing to ensure they have a secure nest egg when they retire. Making the right savings decisions today will pay off in the future. And adequate retirement savings are vital not only for the financial futures of individual households, but also for the health of the economy as a whole.   Since the Great Recession, we have seen positive trends in the savings rate and financial satisfaction among Americans. That said, research also shows that too many people still are not saving enough – or at all. According to a 2016 Federal Reserve Report, 31 percent of non-retired adults have no retirement savings or pension whatsoever. Near-retirement households have median retirement savings of only $14,500, as revealed by a 2015 report from the National Institute of Retirement Security. Visit https://myra.gov/news-media/nrsw.html for more retirement savings statistics. During National Retirement Security Week, and every week, the Treasury Department encourages Americans to take full advantage of their workplace retirement savings options. Often, employer-sponsored savings options, like 401(k) plans, offer certain advantages, such as matching contributions. But these options are not available to everyone. Lack of access to employer-sponsored retirement savings plans affects many working Americans; in fact, one out of every three private industry workers lacks access to retirement benefits at work. Most workers understand the need to save, but there are other barriers that can stand in their way too. For some, fees associated with retirement savings accounts or competing financial priorities, like paying down debt, keep them from saving. myRA is one new and innovative way for working Americans to start saving for a comfortable retirement.  myRA is a retirement savings account developed especially for those who don’t have access to workplace retirement savings plans or who lack other options to save. myRA makes saving simple, safe, and affordable. ·   myRA costs nothing to open and there are no fees ·   There are no minimum contribution or balance requirements ·   Savers can choose how much to contribute1 ·   Accounts safely earn interest, and there’s no risk of losing money2 ·   Savers can withdraw the money they put in without tax and penalty2   For those who don’t have access to plans at work and are looking for an easy way save, myRA is a great option. It takes only a few minutes to sign up at myRA.gov, and contributions can be made directly from paychecks or personal checking or savings accounts. myRA has already helped thousands of people jumpstart their savings journeys. Audrey Groce, special operations manager at Glen’s Garden Market in Washington, D.C., was one of the first savers to open a myRA account. “I get joy out of saving. I am of the mind that if there’s something available that is free and helps me, why not?” says Audrey. Visit myRA.gov/news-media for stories from other savers and businesses that are encouraging their employees to save with myRA.  Open Enrollment Season Open Enrollment Season (October-January) is traditionally the time of year when many people select or make changes to their benefit options, such as healthcare, life insurance, and retirement. Throughout the season, the Treasury Department works with federal agencies, non-profit organizations, and employers in industries with historically low rates of retirement savings plan access – including retail, hospitality, and food service – to educate people on the importance of saving and to introduce myRA. Thinking Ahead to Tax Time Tax season is a key opportunity to build savings, and the Treasury Department collaborates with tax software providers, Volunteer Income Tax Assistance (VITA) programs, and other organizations to encourage tax filers to use their refunds to save with myRA. Filers are encouraged to open myRA accounts, and then to direct a portion of their refunds to their accounts when they file their returns. Eligible filers who save with myRA may be able to claim the Saver’s Tax Credit, which can lower their tax bills or increase their refunds. More Information To sign up for myRA or to learn more, visit myRA.gov. Richard Ludow is the Executive Director of myRA at the US Department of Treasury.   1Annual and lifetime contribution limits and annual earned income limits apply, as do conditions for tax-free withdrawal of earnings. Limits may be adjusted annually for cost-of-living increases. To learn about key features of a Roth IRA and for other requirements and details, go to myRA.gov/roth-ira. 2Withdraw interest earned without tax and penalty five years after your first contribution if you are over age 59 1/2 or meet certain other conditions, such as using the funds for the purchase of your first home. Accounts earn interest at the same rate as investments in the Government Securities Fund, which earned 2.04 percent in 2015 and had an average annual return of 2.94 percent over the ten-year period ending December 2015.  

18 октября 2016, 05:41

Lessons Learned from Transparency in Corporate Bonds and Swaps

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​ This blog post is the seventh in a series on fixed income market dynamics by the Department of the Treasury to share our perspective on the available data, discuss key structural and cyclical trends, and reiterate our policy priorities. This post examines lessons learned from transparency in other markets. As noted in the Request for Information on the Evolution of the Treasury Market Structure issued earlier this year, Treasury is considering the potential benefits and costs of additional public transparency in the Treasury market.  While we recognize the Treasury market is unique in ways that could affect the applicability of experience from other markets, we are reviewing lessons learned from the introduction or enhancement of transparency in other markets as one part of our comprehensive assessment. This post evaluates experience with public transparency in the corporate bond and swaps markets. Corporate Bonds In July 2002, the National Association of Securities Dealers (NASD), which subsequently became the Financial Industry Regulatory Authority (FINRA), introduced the Trade Reporting and Compliance Engine (TRACE) to improve post-trade transparency in the corporate bond market.  New rules required NASD-member firms to report information about transactions in corporate bonds to TRACE and established public dissemination of that transaction information. Due to concerns that market participants would be unwilling to execute “block” trades if they were fully disclosed, the rules withheld the true size of “block” trades from public dissemination.  Public transparency was phased in over the following three and a half years by gradually reducing the permitted time to report and expanding the types of bonds disseminated.  The phased rollout of public transparency was designed in part to build market confidence as well as facilitate independent analysis of the effects of transparency. Subsequently, there has been considerable academic analysis of the introduction of TRACE and its effects on the corporate bond market.  Academic studies evaluated the effects of transparency by comparing market conditions before and after each phase-in of additional transparency.  NASD, in consultation with independent economists, also designed and conducted a controlled experiment on the effects of dissemination by selecting pairs of similar bonds and randomly disseminating data on only one bond in the pair, leaving the other as a control.  These studies assessed the effect of transparency on several factors including price dispersion, transaction costs, trade size, and trading volume.  While the specific focus and findings of each study differ, several themes stand out.  First, public transparency significantly reduced price dispersion and transaction costs in corporate bonds, especially for the most liquid securities.  This finding was corroborated by four separate studies (one, two, three, four) using different methodologies and covering different time periods.  This effect held even for institutional investors, whom some had argued beforehand already had sufficient knowledge of the corporate bond market.  Two of the studies estimated that transactions costs were cut roughly in half, resulting in annual transaction costs savings of $1 billion for investors.  Second, public transparency likely resulted in positive externalities to the trading “ecosystem,” including reduced barriers to entry and decreased concentration of business in the largest dealers (studies: one, two) as well as greater consistency in the valuations used by mutual funds when marking-to-market their corporate bond portfolio holdings.  Public transparency also furthered public understanding and objective analysis of the corporate bond market by providing a quality dataset for researchers.  Third, while many have expressed concerns that public transparency reduced liquidity provision in corporate bonds, often anecdotally or in theoretical studies, to date the topic has received limited empirical assessment.  One empirical study showed that the introduction of public transparency for infrequently traded high yield bonds initially resulted in a reduction in traded volumes, though there was no effect for other corporate bonds.   On the other hand, another study showed that dealer capital commitments did not decline when additional transparency was introduced.  More research is likely needed in this area.  Swaps There have also been studies on the effects of increased pre- and post-trade transparency for interest rate swaps and credit default swaps (CDS).  After the financial crisis, regulatory reforms required that certain standardized swap agreements trade on transparent platforms called swap execution facilities (SEFs) and that parties to those swaps report transaction data to publicly accessible swap data repositories (SDRs).  Initial studies suggest these changes have improved overall market liquidity.  A recent Bank of England study concluded that the SEF mandate for interest rate swaps in the United States has improved liquidity and significantly reduced execution costs compared to similar markets in Europe.   A 2014 report by the International Organization of Securities Commissions showed that post-trade transparency in the CDS market had reduced transaction costs without a reduction in market activity.  Public transparency in swaps is still relatively new, and we will continue to evaluate the effects of transparency in these markets as more evidence becomes available. Conclusion Evidence from corporate bond and swaps markets suggests that public transparency in those markets has likely reduced transactions costs and provided other benefits, while the net effect on market makers is unclear and would benefit from further evaluation.   Of course, the Treasury market differs from the corporate bond and swaps markets in many important ways, and reviewing historical experience in these markets is just one part of our comprehensive assessment of the potential costs and benefits of additional public transparency in the Treasury market.  We look forward to continuing the discussion with market participants on these important issues as part of our review of the Treasury market. James Clark is the Deputy Assistant Secretary for Federal Finance, and Brian Smith is a senior policy advisor in the Office of Capital Markets at the U.S. Treasury Department.​​

13 октября 2016, 17:16

Treasury Issues New Small Business Program Evaluations

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Treasury today issued program evaluation reports for the State Small Business Credit Initiative (SSBCI) and the Small Business Lending Fund (SBLF) detailing how the programs have provided critical resources to small businesses and communities across the country and helped strengthen the economy at the local level.  It's remarkable how far we’ve come since September 2010, when the Small Business Jobs Act first authorized SSBCI and SBLF at Treasury.  During the financial crisis, small businesses were severely constrained in terms of access to capital and credit.  Through the course of recovery, SSBCI and SBLF have collectively resulted in over $27 billion of additional capital for America’s small businesses, including an increase of $18.7 billion in small business lending reported by SBLF participants and $8.4 billion in SSBCI- supported small business lending and investing.  By enhancing small business access to credit and capital, these two programs have boosted the economic recovery and supported more than 90,000 small businesses in communities across America. Today’s reports highlight this achievement and summarize how the programs key design features worked to provide innovative and flexible solutions for small businesses, financial institutions, and state and local economies. Through SSBCI, the Treasury Department disbursed more than $1.3 billion in funds to 57 participating states, municipalities, and territories.  States have broad flexibility in how they choose to implement SSBCI programs to address the spectrum of small business financing needs from loans for microbusinesses and equipment purchases for small manufacturers to equity capital for early stage technology businesses.  Through the end of 2015, SSBCI funds spurred more than $8.4 billion in private sector lending and investments to small businesses.  States have generated $8 in new lending and investments for every $1 of federal support and business owners reported that these funds will help them retain or create more than 190,400 jobs. Importantly, many states chose to target businesses in diverse communities that often have trouble accessing capital.   More than 40 percent of lending and investment transactions are located in low to moderate income areas across the country, totaling $2.9 billion in new capital lent or invested in those communities.    With SBLF, Treasury invested more than $4 billion in 332 community banks and Community Development Loan Funds operating in more than 3,000 locations across 47 states and the District of Columbia.  The program encouraged community banks to increase their lending to small businesses through a powerful incentive structure – the more they lent to small businesses the lower the rate they paid Treasury – that worked.  Since the program’s inception, the total increase in small business lending reported by SBLF participants is $18.7 billion, and more than 90 percent of SBLF participants increased their small business lending over the course of their participation in the program.  SBLF helped give more Main Street entrepreneurs the opportunity to expand their businesses, invest in their local communities, and create new jobs.      America’s 28 million small businesses employ half of our country’s private sector workforce and have created nearly 2 out of every 3 new jobs over the last two decades.  Yet for many of the smallest businesses, youngest businesses, and businesses in underserved communities, accessing capital to start and grow is a daily challenge that continues despite the economic recovery.  Our hope is that these reports demonstrate the pivotal role SSBCI and SBLF played in supporting small businesses and local communities across the country and provide evidence to support the need for ongoing Federal funding for unique and innovative small business financing programs.  Please click on the links below to view the reports.  SSBCI Program Evaluation 10/13/2016 SSBCI Program Evaluation 2016 – Executive Summary PDF 10/13/2016 SSBCI Program Evaluation 2016 – Full Report PDF 10/13/2016 SSBCI Program Evaluation 2016 – Appendices PDF SBLF Final Impact Report Jessica Milano is Deputy Assistant Secretary for Small Business, Community Development, and Housing at the U.S Treasury Department​.​​

06 октября 2016, 18:03

Helping Countries Strengthen their AML/CFT and Prudential Regimes

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​ As finance officials from around the world gather in Washington for the annual meetings of the International Monetary Fund (IMF) and World Bank, facilitating continued access to the global financial system, including through correspondent banking relationships, remains an issue of shared interest.  The U.S. Treasury Department will participate in a number of multilateral events and bilateral discussions where the twin objectives of financial transparency and financial inclusion will be front and center.  These activities will take place against the backdrop of Treasury’s continued international engagement with the G-20, the Financial Action Task Force, and the Financial Stability Board, and through regional public-private dialogues on these issues.  The goal of this multifaceted effort is to ensure a well-functioning, accessible, transparent, resilient financial system.   An important aspect of this work is providing technical assistance to countries that are committed to building strong anti-money laundering/countering the financing of terrorism (AML/CFT) and prudential oversight regimes—regimes that rely on clear requirements, effective supervision, and meaningful and proportionate enforcement.  Last month, G-20 Leaders called on member countries along with the IMF and World Bank to intensify their support of expanded technical assistance directed at these efforts.  To that end, the Treasury Department’s Office of Technical Assistance (OTA) is initiating new projects and proactively assessing requests for assistance from countries that have expressed concerns about a decline in access to correspondent banking relationships in their countries, coupled with a commitment to enhance their AML/CFT regime.  For example, in Belize, OTA will help to develop the capacity of the financial intelligence unit as the central focus of that country’s AML/CFT regime.  Similarly, a recently completed OTA assessment of the Eastern Caribbean Central Bank, which supervises banks in eight Caribbean countries, concluded that there is potential for an effective AML/CFT technical assistance engagement there.  And, in Somalia, OTA will build out its existing technical assistance engagement with the Central Bank of Somalia with the aim of facilitating remittance flows via safe and secure channels.  In all, OTA is currently executing 30 projects globally focused on helping countries strengthen their AML/CFT and prudential banking supervision regimes.   Taken together, these initiatives underscore the commitment of the Treasury Department and the U.S. government to advance the causes of financial transparency and financial inclusion, as we work to further advance a safe and sound financial system.    Larry McDonald is the Deputy Assistant Secretary for Technical Assistance Policy and Michael Pisa is a Senior Policy Expert in the Office of International Affairs at the U.S. Department of the Treasury.   ###

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03 октября 2016, 23:48

Culture of Compliance and Casinos

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    Two years ago, Treasury’s Financial Crimes Enforcement Network (FinCEN) issued an   “Advisory to U.S. Financial Institutions on Promoting a Culture of Compliance.”  Since issuing that advisory we know that many financial institutions have taken positive steps to improve their compliance culture, but there is more to be done.   FinCEN writes and enforces the rules that financial institutions – including depository institutions such as banks, and also money services businesses and casinos – need to follow to guard against money laundering, terrorist financing, and other financial crime.  FinCEN also collects reports from financial institutions and acts as the bridge to share that information with law enforcement and regulatory investigators.    In order to maintain an effective national anti-money laundering (AML) and countering the financing of terrorism (CFT) regime, FinCEN works with financial institutions to ensure they have the appropriate systems and procedures in place. While many AML/CFT compliance deficiencies identified by U.S. authorities are corrected through cautionary letters or other guidance by the regulators to the institution’s management without the need for an enforcement action or penalty, two recent FinCEN penalties against casinos underscore our focus on instituting a culture of compliance within financial institutions.  Just this week, on October 3rd, FinCEN issued a $12 million penalty against Cantor Gaming of Nevada.  That action followed a $2.8 million penalty FinCEN issued against Hawaiian Gardens Casino of California on July 15.   To fight money laundering effectively, an organization must have trained individuals at every level and provide those individuals with the proper resources and systems needed to carry out their compliance duties.  Perhaps most importantly, compliance staff need support from the leaders of their organizations.    That wasn’t the case with Cantor Gaming and Hawaiian Gardens.  Both casinos failed to train and support their staffs.  Both casinos failed to properly file, or just did not file, the Suspicious Activity Reports (SARs) and Currency Transaction Reports (CTR), which contain valuable information used to fight financial crimes financial crimes.  Employees, and even senior managers, actually helped customers avoid having SARs and CTRs filed as the law requires.  A former Vice President of Cantor Gaming even pled guilty to a felony count of illegal gambling conspiracy in 2013 for his role as part of an illegal gambling operation. The leaders of any financial institution would benefit from reading the penalty assessments against Cantor Gaming and Hawaiian Gardens.  FinCEN reserves its penalties for the most egregious violations of its rules.     Despite these two cases, casinos appear to be steadily improving their anti-money laundering efforts.  For example, in 2010 casinos filed fewer than 14,000 SARs with FinCEN.  In 2015, casinos filed almost 50,000 SARs.  Those numbers tell us that casinos are paying more attention to their AML/CFT responsibilities.    FinCEN subject matter experts regularly attend casino industry conferences to speak about the latest illicit finance issues relevant to the industry. These experts have noted increased attendance, and interest, in panels that focus on anti-money laundering issues.  We certainly recognize and encourage these positive efforts.   A good compliance culture is one where doing the right thing is rewarded, and where “looking the other way” has consequences. FinCEN will continue to work with the casino sector on its compliance efforts, in order to ensure each casino is taking the appropriate actions to protect the gaming industry – and the greater U.S. financial system – from abuse.   Jamal El-Hindi is the Acting Director of the Financial Crimes Enforcement Network.   ###

03 октября 2016, 22:44

3 Conclusions on TARP 8 Years Later

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Eight years ago today, the Emergency Economic Stabilization Act of 2008 became law, putting the Troubled Asset Relief Program (TARP) into effect. Over the months and years that followed, Treasury has managed this unprecedented program to stabilize the economy and strengthen the recovery in ways few thought possible on October 3, 2008. On this eighth anniversary, we are reminded that this program was not only central to avoiding a financial collapse and getting the economy growing again, but that it also returned more money to taxpayers than they invested. To date, a total of $433.7 billion has been disbursed under TARP. As of August 31, cumulative collections under TARP, together with Treasury’s additional proceeds from the sale of non-TARP shares of AIG, total $442.1 billion, exceeding disbursements by $8.4 billion. A program that some once feared would lose taxpayers hundreds of billions of dollars has generated a positive return. That’s a testament to TARP’s implementation but also to the other support provided to get the economy growing—including the Recovery Act and a dozen additional fiscal measures passed from 2009 to 2012. But American taxpayers got more than just their money back with TARP too. Through Making Home Affordable (MHA), nearly 2.7 million assistance actions have helped homeowners avoid foreclosure, which in turn helped millions of their neighbors and communities by stabilizing home prices that typically fall with foreclosures. The Home Affordable Modification Program (HAMP) – the first and largest MHA program – has helped to establish a standard for mortgage modifications focused on payment reduction that has been adopted by the industry and will help homeowners avoid foreclosure long after HAMP retires. The Hardest Hit Fund (HHF) program was created in 2010 to provide $7.6 billion in TARP funds in targeted assistance to 18 states and the District of Columbia deemed hardest hit by the economic and housing market downturn. Recognizing the success of the program in stabilizing neighborhoods in these hard hit communities, Congress gave Treasury the authority to allocate an additional $2 billion late last year and the program will now continue to the end of 2020. While the housing market has strengthened across the country, HHF provides much-needed funding that will continue to help these hardest-hit communities recover. While no more taxpayer money is being invested in banks under TARP, taxpayers are still receiving a return from the investments they made to stabilize the American banking system. TARP’s bank programs have recovered $275 billion through repayments and other income, $30 billion more than originally invested. We continue to exit our investments and replace temporary government support with private capital. Under the Capital Purchase Program, Treasury invested in 707 financial institutions, 695 of which have exited the program. The impact of TARP doesn’t stop there. TARP investments helped to jumpstart the credit markets and save an estimated one million jobs in the American auto industry – an industry seeing record sales in recent years. As we look back on these results eight years later, with many of the TARP programs wound down, and assess the legacy of this historic government action, there are three clear takeaways: 1) TARP was instrumental in turning a collapsing economy around; 2) Treasury disbursed less in TARP support than was initially anticipated and even generated a positive return for taxpayers; and 3) TARP housing programs helped millions of Americans get back on their feet after the greatest economic downturn since the Great Depression and will continue to help homeowners in the years to come. Rob Runyan is a spokesperson at the U.S. Treasury Department.​​​

26 сентября 2016, 21:36

Now That’s Progressive! : Closing the income inequality gap through the tax code

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​ A progressive tax system – in which those with the highest incomes who are most able to pay taxes, pay a greater percentage of their income than those with lower incomes – has been a key principle of the American income tax system.  However, in the years prior to 2008, changes in tax policy sharply reduced the progressivity of the tax code.  On Friday, the White House Council of Economic Advisors published a report highlighting how this Administration has actively worked to reverse that trend.  Since President Obama’s inauguration in January 2009, the Tax Code has become increasingly more progressive and fair. In fact, over the last seven and a half years, the average tax bill has decreased by several hundred dollars for low- and middle-income families, while taxpayers in the top 1 and 0.1 percent have seen a substantial increase in their taxes.  This has partly reversed a trend of increased income inequality since the late 1970s, with the Administration’s actions offsetting the increased after-tax income inequality by approximately 20 percent.  Today, Treasury is releasing a reportexamining the effects of recent tax law changes on inequality.     A number of tax law changes since 2009 have had an important positive effect on American families.  For example, as part of the Recovery Act championed by the Administration, these changes increased the Earned Income Tax Credit (EITC) and the Child Tax Credit to assist low-income working families and established the American Opportunity Tax Credit to make college more affordable for low and middle-income families.  All three of those tax credits were made permanent this past year after two previous temporary extensions.  Financial assistance provided by the Affordable Care Act has helped make health insurance more affordable for middle-class families and, in conjunction with the rest of the Affordable Care Act, has resulted in 20 million additional Americans gaining access to quality, affordable health care.   The Administration proposed legislation and advocated for proposals that were enacted into law that help make sure the wealthy and well-connected are paying their fair share.  As part of the American Taxpayer Relief Act in 2012, the Administration secured legislation that increased income tax rates on the highest-income individuals, raised estate tax rates, limited itemized deductions for high-income individuals, and increased the maximum tax rate on long-term capital gains and dividend income.  Parts of the ACA also imposed additional Medicare payroll taxes and established a 3.8 percent tax on net investment income for high-income individuals.    In conducting our analysis for today’s report, Treasury combined the effects of all changes in tax law during the Obama Administration and compared that to the hypothetical situation where the tax law had remained static since 2008.  Treasury found that those in the bottom third of the income distribution saved an average of about $700 to $800 in taxes each year.  Individuals with income in the middle third of the income distribution, saved roughly $200 annually.  On the flip side, individuals in the top third of the income distribution experienced a net tax increase of $1,000 and the wealthiest 0.1 percent of Americans experienced an annual tax increase of $550,000.  All these effects are the result of tax legislation enacted since the beginning of 2009.   These changes illustrate the powerful impact that progressive tax policy can have on the distribution of income and how further changes could reduce income inequality further.  Indeed, the Administration’s FY 2017 budget includes several proposals that would substantially increase the progressivity of the tax system.  These include benefits for lower-income families such as an expanded EITC for workers without children and enhanced refundability of the American Opportunity Tax Credit, as well as proposals to ensure high-income families pay their fair share, such as the proposal to eliminate the tax breaks for inherited capital assets.  While we have seen significant progress during the Obama Administration, these proposals would further close the income inequality divide.   To learn more, read the Treasury Department’s full report here.     Mark J. Mazur is the Assistant Secretary for Tax Policy at the U.S. Department of the Treasury. ###

21 сентября 2016, 17:59

Friday: Tune In To The Live Webcast of the Freedman's Bank Forum

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  ​On Friday, September 23, 2016, the U.S. Treasury Department will host the Freedman's Bank Forum to explore ways to build an economy that works for all Americans. The Forum will be webcast live on the Treasury’s website, and we invite you join us.  This Forum will bring together public, private, and nonprofit leaders to discuss strategies to improve jobs, economic opportunity, financial inclusion, and shared prosperity for all communities. The speakers and panelists will cover recent progress and new opportunities for the Obama Administration and private, non-profit, and local government sectors in fostering broad-based economic growth. They will also consider what more can be done on a variety of fronts to address economic disparities.  This Forum's name is a tribute to the Freedman's Savings and Trust Company, which was created to provide economic opportunity for newly emancipated African-Americans more than 150 years ago, and which was commemorated by the Treasury Department earlier this year. The Freedman’s Bank Forum aligns with the historical significance of the bank and its original mission – to promote economic integration and financial inclusion. Additionally, the Forum coincides with a series of events throughout the Nation’s Capital that will mark the opening of the National Museum of African American History and Culture.  A live webcast will be available here from 9:00 am – 12:30 pm EDT, on Friday, September 23, 2016.   Freedman’s Bank Forum Agenda 9:00 a.m. – 9:20 a.m.                 In Conversation with Secretary Jacob J. Lew moderated by Sharon Epperson, Senior Personal Finance Correspondent, CNBC 9:20 a.m. – 9:30 a.m.                 Roger W. Ferguson, Jr., President and CEO, TIAA 9:30 a.m. – 10:30 a.m.               Panel 1: Building Jobs and Opportunity for Communities of Color Moderator: Deputy Secretary Raskin Panelists: ·         Curley M. Dossman, Jr., Chairman of the Board, 100 Black Men of America, Inc. ·         John W. Rogers, Jr., Chairman, CEO, & Chief Investment Officer, Ariel Investments ·         Raj Chetty, Professor of Economics, Stanford 10:30 a.m. – 10:50 a.m.             Break 10:50 a.m. – 11:50 p.m.             Panel 2: Financial Inclusion and Shared Prosperity Moderator: Derek T. Dingle, Senior Vice President & Chief Content Officer, Black Enterprise                                                 Panelists: ·         John Hope Bryant, Founder, Chairman, and CEO, Operation HOPE ·         The Honorable Kasim Reed, Mayor of Atlanta Georgia ·         Kim Saunders, Founder, President and CEO, Eads Group; Board Member, National Bankers Association 11:50 p.m. – 12:00 p.m.             The Honorable Andrew J. Young, Chair, Andrew J. Young Foundation Dan Cruz is a spokesperson at the US Department of Treasury.

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15 сентября 2016, 20:47

Treasury-Funded Evaluation of My Classroom Economy Curriculum Makes the Grade

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​ The Treasury Department’s Financial Empowerment Innovation Fund supports the development, testing, and evaluation of new products and services that make safe and affordable financial services available to more Americans.  We are pleased to share today the results of a recent research contract that was funded by the Treasury Innovation Fund.   The Center for Financial Security at the University of Wisconsin-Madison today released results of a rigorous evaluation of the My Classroom Economy curriculum, an innovative method for teaching elementary school students the fundamentals of financial decision-making.    An important area of Innovation Fund research focuses on methods that strengthen consumers’ abilities for making informed and effective financial choices.  Treasury has a particular interest in testing and evaluating innovative classroom based curricula and other strategies that help young people become savvy consumers of financial services.   Using the My Classroom Economy approach, teachers embed financial topics and financial decision-making in the everyday classroom approach.   Rather than teaching financial topics as a stand-alone subject, the teachers establish a classroom-based economy that is integrated into many aspects of the day.  Teachers assign student jobs from which the students earn classroom “dollars.”  Students use the classroom dollars to pay for basic items such as to rent or purchase their desks and to purchase items from a school store.   The research findings are positive, with participating youth increasing their financial knowledge and budgeting behavior. The research also found that youth whose teachers used the My Classroom Economy method were more likely to engage in financial behavior outside of school, such as having bank or credit union accounts.   In addition, the evaluation found that the My Classroom Economy approach is appealing to teachers because it is easily integrated into the school day without taking time away from core learning requirements and does not require extensive teacher training.   The My Classroom Economy evaluation was implemented in the 2015-2016 school year at 24 elementary schools in the School District of Palm Beach County, Florida.  A total of 1,972 students in 115 classrooms, along with their teachers and parents participated in the research project.   This research builds on previous Treasury-funded studies on new approaches for increasing financial capability skills including the 2014 “Financial Education and Account Access Among Elementary Students” study which found positive effects of a separate elementary school curriculum in which students were provided access to bank accounts.     More Information   The Center for Financial Security will host a special webinar to announce the evaluation findings and discuss the research at noon - 1:00 p.m. CST on Wednesday, September 21, 2016.  Please register today,  and tune in to the free webinar to learn more about the project.   Download the Research Brief and the Final Research Report for more details.    The My Classroom Economy curriculum is available free of charge and is downloadable from www.myclassroomeconomy.org   Melissa Koide is the Deputy Assistant Secretary for Consumer Policy at the U.S. Department of the Treasury​.

15 сентября 2016, 18:20

The Collapse of Lehman Revisited: Eight Years of Progress Toward a Stronger Economy and Financial System

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Today marks eight years since the collapse of Lehman Brothers – a bankruptcy that sent shockwaves through the global financial system and helped thrust our economy into the worst recession since the Great Depression. It was an unprecedented failure brought on by shoddy mortgage practices, poor underwriting standards, and a financial system that had become increasingly divorced from the business of serving everyday Americans.  Eight years later, our economy has turned around and we’ve made enormous progress creating a more stable and secure financial system. Our businesses have added more than 15 million jobs since early 2010. The unemployment rate has dropped to 4.9 percent. Wages have increased at an annual rate of 2.8 percent this year. And as we learned from this week’s Census report, in 2015, real median household income grew 5.2 percent, the fastest rate on record. A key reason our financial system has become stronger since the crisis is the Dodd-Frank Wall Street Reform and Consumer Protection Act – the most sweeping set of reforms to the financial system since the Great Depression. Today, banks have added more than $700 billion in capital to help guard against unexpected losses.  The derivatives market has been pulled out of the shadows. The Consumer Financial Protection Bureau (CFPB) has put in place new safeguards and saved consumers billions. The Financial Stability Oversight Council (FSOC) is looking across the system to respond to emerging threats to financial stability.  These are clear markers of progress, but more work remains. Enacting Wall Street Reform wasn’t simply an accomplishment – it was a commitment. As recent enforcement actions by the CFPB make clear, we have to remain vigilant and continue to guard against efforts to chip away at the reforms and protections we’ve put in place. The fact is, for all the progress we’ve made since the crisis, some remain determined to turn back the clock to 2008.   That’s why as we mark this anniversary, we will continue to defend against any measures that would leave our country more vulnerable to another financial crisis, and we remain focused on creating a strong and safe financial system that supports economic growth. You can read more about the progress we’ve made here. ​​​Rob Friedlander is a Spokesperson at the Treasury Department​.

01 сентября 2016, 20:16

Examining Changes in Non-Residential Asset-Backed Securities Markets

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This blog post is the sixth in a series on fixed income market dynamics by the Department of the Treasury to share our perspective on the available data, discuss key structural and cyclical trends, and reiterate our policy priorities. This post examines the non-residential asset-backed securities markets. Vibrant, responsible securitization has constituted an important financing tool in the U.S. economy in recent decades.  In these asset-backed securities (“ABS”), a group of traditional credit instruments, such as consumer or business loans, are pooled together to create tradable securities.  While ABS represents just one of the many sources of credit for the economy, its role in expanding the availability of capital can have benefits for both businesses and consumers.  It can also benefit the financial system by diversifying the credit risk inherent in the underlying assets and enabling risk to be more efficiently allocated to capital providers. Unlike Treasuries, however, the ABS market is not one homogenous asset class. It encompasses securitization structures backed by a variety of asset classes, from consumer debt to commercial real estate mortgages.  During the financial crisis, after a period of abundant liquidity financed with high degrees of leverage, some ABS asset classes experienced stress, the most significant examples being in the private label mortgage market and asset-backed commercial paper. Key reforms have since been enacted to bolster the structure of securitizations and increase transparency.  In this blog post, we focus on the non-residential ABS market, namely commercial mortgage-backed securities (“CMBS”), collateralized loan obligations (“CLO”) and consumer loan ABS (“Consumer ABS”).  These securities generally had more modest impairment during the credit crisis and continue to serve as an important financing tool for originators of consumer and business loans. While the data remains somewhat limited, we explore how this market has evolved in recent years, current issuance trends, and structural factors that bear continued monitoring.  Our focus as we evaluate this sector is on the stability of liquidity and market functioning, even when broader market conditions are stressed.  Trends in Non-Residential ABS Issuance in the non-residential ABS market, particularly CMBS and CLO, increased significantly in the years leading up to the financial crisis in 2008 – similar to the rise in residential mortgage securitizations.  In certain ABS markets, a lack of incentive alignment and information asymmetry contributed to loosening lending standards and the eventual stress that the market experienced.  Since the crisis, issuance of non-residential ABS has generally rebounded (Figure 1). Liquidity, however, continues to be a topic of concern for market participants. Underlying trends differ by asset class, with significant transitions occurring in certain market structures. Below we examine these recent trends, particularly in the CMBS and CLO markets, in greater detail. Figure 1: Historical US Asset Back Securities Issuance (Source: Standard & Poor’s)   Commercial Mortgage-Backed Securities ​Private label CMBS issuance of $36 billion year to date is down approximately 45 percent from 2015, the post-crisis peak. In addition, both CMBS trade volume (Figure 2) and average trade size (Figure 3) have declined in recent years. Figure 2: CMBS Trade Volume (Source: Federal Reserve, TRACE, J.P. Morgan)   Figure 3: CMBS Average Trade Size (Source: J.P. Morgan) CMBS is just one of several funding vehicles for commercial real estate, and some have pointed to the relative attractiveness of other financing sources, in terms of certainty of execution and pricing irrespective of prevailing market conditions, as at least partially driving the decline in CMBS issuance. As Figure 4 shows, small and large domestic banks, international financial institutions, government agencies, insurance companies, and public market vehicles (included here in “other”) such as real estate investment trusts (REITs) have all stepped in as viable funding alternatives.  Figure 4: US Commercial Mortgage Market (Source: Federal Reserve, Trepp,    Goldman Sachs)   The CMBS market is also undergoing transition as participants evaluate different structures to comply with the Dodd-Frank Act’s risk retention rule that goes into effect for non-residential ABS in December 2016. The risk retention rule is intended to align incentives between securitizers and investors by requiring that securitizers maintain “skin in the game.” The first conduit CMBS transaction compliant with the new risk retention rule closed in early August 2016 and generated significant investor interest, pricing at levels that were considerably tighter than that of other recently issued conduit deals. While the effect that the risk retention rule will have on the CMBS market remains unclear, some market participants suggested that investors were favorably inclined towards the transaction in part due to expectations of more prudent underwriting, as demonstrated by the lower loan-to-value level in the transaction, and greater liquidity support from the securitizer banks that are required, per the risk retention rule, to retain a 5-percent interest in the securitization until the loans backing the security are fully defeased. Collateralized Loan Obligations ​While there was record CLO issuance in 2014 and 2015, issuance is down nearly 50 percent year to date to approximately $36 billion.  Anecdotal reports have pointed to a decline in CLO liquidity; however, traded volume relative to the size of the outstanding market (i.e. market turnover) has been relatively flat over recent years (Figure 5), and although average trade size has declined it has been offset by increased trade count (Figure 6). Figure 5: US CLO Secondary Market Turnover (Source: Morgan Stanley, Intex, TRACE)     Figure 6: US CLO Average Trade Size and Trade Count (Source: Morgan Stanley) ​The recent decline in CLO issuance appears to have been driven in part by lower merger and acquisition and leveraged buyout activity (Figure 7), which is a key source of leveraged loans that CLOs securitize. Figure 7: LBO/M&A as Percentage of New Loans Launched (Source: S&P LCD,  Morgan Stanley) ​The CLO market is also preparing for the year-end deadline for new transactions to include the required 5 percent risk retention.  Compared to the CMBS market, implementation of the risk retention rules began earlier in the CLO space, with a number of compliant deals being completed over the past year (Figure 8). However, market participants remain focused on how the remainder of the market will implement risk retention going forward and this will warrant continued monitoring. Figure 8: Risk Retention Compliant US Deals (Source: Citigroup, LCD, Creditflux, Bloomberg)     Consumer ABS ​Issuance in Consumer ABS is down approximately 12 percent year to date to $133 billion, with reduced issuance across asset classes. Market participants have pointed to lower liquidity as a result of the decrease in primary dealer inventory and, as Figure 9 shows, trading volume in Consumer ABS has trended lower. However, as addressed in previous blog posts in this series, the relationship between inventories and liquidity is not straightforward. Figure 9: Consumer ABS Monthly Trading Volume (Source: Bank of America Merrill Lynch, TRACE) ​Issuances in auto ABS, which was least affected by the financial crisis, and credit card ABS are each down nearly 12 percent year to date, while student loan ABS is lower by over 20 percent. ABS has become a less significant source of financing for student loans in particular over the past few years, given that the direct federal student loan program, which does not rely upon ABS financing, has become the largest issuer of new student loans. As Figure 10 shows however, overall access to credit for consumers remains relatively robust. Figure 10: Non-Mortgage Consumer Debt Outstanding (Source: Morgan Stanley, Federal Reserve) Looking Forward The non-residential ABS sector is currently in a state of transition, particularly as it relates to the CMBS and CLO markets. As a result of the financial crisis, important reforms were put in place to address the shortcomings that plagued certain securitization structures. The reforms, including the Dodd-Frank Act’s risk retention rule and the SEC’s amendments to Regulation AB to increase disclosure and reporting requirements for ABS, were designed to facilitate securitization as a viable source of credit in the economy while increasing incentive alignment, allowing investors to better understand the underlying assets and risks inherent in securitizations and reducing risks to the financial system as a whole. Some form of risk retention was already prevalent in certain non-mortgage asset classes prior to the crisis.  Securitizers’ retained stake in credit card securitizations and the retained subordinated securities held by issuers of auto ABS are two such examples. Due in part to these structural features, both of these asset classes generally proved more resilient to stress during the financial crisis.   In advance of December’s effective date on the risk retention rule for non-residential ABS, securitizers have been experimenting with a number of different risk retention compliant transactions, which will be critical to the successful transition of the industry to the new regulatory framework. Given the likely impact of these and other reforms, we and other interested parties will need time to assess any longer term effects on activity in these markets. As a general matter, however, efforts that promote the efficient and dependable allocation of economic resources and risk taking should be a positive for resilient and liquid markets. Initial evidence from the emerging risk retention transactions indicates that the reforms are a significant step in that direction. Securitized products remain an integral part of the diverse financing channels available to American consumers and businesses. It will be important to continue to monitor the ongoing changes in underlying collateral and deal structures to better understand any emerging risks. Jake Liebschutz is the Director of the Office of Capital Markets and Amyn Moolji is a senior policy advisor in the Office of Capital Markets at the U.S. Treasury Department.​

30 августа 2016, 22:08

Complementary Goals - Protecting the Financial System from Abuse and Expanding Access to the Financial System

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​ Correspondent banking relationships serve as important arteries within the global financial system.  By enabling money to flow both within and across economies, they improve livelihoods, bring more people into the financial system and foster global economic growth.  These relationships enable banks to facilitate international trade, conduct cross-border business and charitable activities, send remittances, and provide access to U.S. dollar financing.  They are essential to maintaining an inclusive and open financial system, and we are fully committed to safeguarding that system from abuse.   In order to do this, the United States maintains an effective anti-money laundering (AML) and countering the financing of terrorism (CFT) regime, which rests on clear requirements, strong and effective supervision, and meaningful and proportionate enforcement.   As part of that effort, today Treasury and U.S. Federal Banking Agencies, including the Federal Reserve Board, Federal Deposit Insurance Corporation, National Credit Union Administration, and Office of the Comptroller of the Currency issued a “Joint Fact Sheet on Foreign Correspondent Banking” to further clarify Treasury's and the Agencies' supervisory and enforcement posture regarding AML/CFT and sanctions in the area of correspondent banking.   The Fact Sheet highlights the efforts of U.S. authorities to implement a fair and effective regime when it comes to enforcement of AML/CFT and sanctions violations. Importantly, this regime is not one of “zero tolerance.”  In fact, as the Fact Sheet notes, about 95 percent of AML/CFT and sanctions compliance deficiencies identified by U.S. authorities are corrected through cautionary letters or other guidance by the regulators to the institution’s management without the need for an enforcement action or penalty.   In limited instances, when financial institutions fail to take corrective action, or when serious violations occur, federal banking agencies may take a formal enforcement action, such as a civil money penalty.  The rare but highly visible cases of large monetary penalties or settlements for AML/CFT and sanctions violations have generally involved a sustained pattern of reckless or willful violations over a period of multiple years and a failure by the institutions’ senior management to respond to warning signs that their actions were illegal.  These large cases did not represent small or unintentional mistakes.   Further, the Fact Sheet dispels certain myths about U.S. supervisory expectations. Notably, it confirms that there is no general expectation for banks to conduct due diligence on the individual customers of foreign financial institutions.   The Treasury Department recognizes the critical role that the U.S. financial system plays in the global economy, and firmly believes that expanding access to that system and protecting it from abuse are mutually-reinforcing goals.  Along with our colleagues in the federal banking agencies, we are committed to ensuring a well-functioning, accessible, transparent, resilient, safe, and sound financial system.   Nathan Sheets is the Under Secretary for International Affairs, Adam Szubin is the Acting Under Secretary for Terrorism and Financial Intelligence, and Amias Gerety is the Acting Assistant Secretary for Financial Institutions at the U.S. Department of the Treasury.   ###