February 11, 2021
The Gateway For Payroll Data
Congress has only begun its study of financial technologies

The impact of the COVID-19 crisis has brought economic disparities amongst Americans further to the forefront of our national discourse. During this time of economic hardship however, financial technology — or “fintech” — has shown tremendous promise to remedy many of these disparities and extend to all Americans greater control of their financial situation if given a proper regulatory environment.

As ranking member of the House Financial Services Committee’s Taskforce on Financial Technology, our focus over the past two years was designed around the impact that fintech has on policy issues ranging from lending, payments, data privacy, real-time payments, alternative data in credit scoring, and international perspectives on regulation. When laws and regulations are crafted and updated to reflect innovation in any sector of our economy, the American people are afforded greater choice, fairer prices, and far more control over their future. Americans deserve to access to technologies that can provide them a better life, but we must also ensure these innovations do not reinforce or even expand existing disparities.

Paving the Payments Future
Americans spent their stimulus checks on rent, utility bills

Majority of Americans used stimulus cash to either pay for rent or cover their utility bills

As congressional Democrats debate which Americans should receive a third stimulus check in the latest coronavirus relief package, new data shows how recipients of the $600 payments distributed at the beginning of January spent the money.

According to a report published by Apartment Guide, a majority of Americans -- roughly 38% -- used the cash to either pay for rent or cover their utility bills.

A significant number of adults also stashed the money away for future use: Close to 15% of respondents said they put the money into a savings account.

About 12% of respondents indicated they had used the money to buy food or groceries, including ordering from restaurants, and another 12% said they would put the money toward paying down credit card debt.

Important reminders before filing 2020 tax returns
IR-2021-23, January 27, 2021

WASHINGTON — Following an unpredictable year with many changes and challenges, the Internal Revenue Service today shared important reminders for taxpayers who are about to file their 2020 federal tax returns.

Choose direct deposit
The safest, most accurate and fastest way to get a refund is to electronically file and choose direct deposit. Direct deposit means any tax refund is electronically deposited for free into a taxpayer's financial account.

State and Local Governments Relied on Debt for Budgetary Help In 2020

More borrowing likely in 2021, market analysts suggest

State and local governments have sought a variety of ways to cope with the fiscal fallout of the COVID-19 pandemic and recession, including borrowing on the municipal bond market. But municipal bonds are commonly used to pay for major, long-lasting projects, so whether—and how—to use them to borrow for immediate budgetary relief can be a challenging question for government officials.

Matt Fabian is a partner and Lisa Washburn is chief credit officer and managing director with Municipal Market Analytics (MMA), a research and consulting firm that specializes in the U.S. municipal bond market. Founded in 1995, the company—which has worked with The Pew Charitable Trusts to support Pew’s research on state fiscal health—helps investment firms, banks, and financial advisers navigate the nearly $4 trillion market. This interview with Fabian and Washburn has been edited for clarity and length.

Tax season tips: Don’t forget this above-the-line deduction

Lawmakers provided a special, temporary deduction for some individuals who made cash donations to charity in 2020

Individuals who donated to qualifying charities last year may be eligible for a special tax deduction – even if they don’t itemize.

The CARES Act provided for a temporary above-the-line deduction of up to $300 for people who made cash donations to charity in 2020 and also plan to claim the standard deduction.

Starting in 2021, the deduction was extended and enhanced, including a deduction of up to $600 for joint filers.

Marianela Collado, a certified financial planner at financial planning firm Tobias Financial Advisors, told FOX Business that some individuals who are claiming the standard deduction may not be aware of the provision and may fail to send the information to their accountant or report it themselves.

Essential workers comprise about half of all workers in low-paid occupations. They deserve a $15 minimum wage.

The COVID-19 pandemic has inspired an outpouring of gratitude for essential workers, whose critical and often low-paid work has kept the country functioning. Millions of these essential workers have risked their health on the COVID-19 frontline, while thousands have lost their lives.

For months, leaders in Washington have said it is not enough just to praise essential workers—we must also pay them. In the long run, the best way for Congress to do this is to—finally—raise the federal minimum wage to $15 per hour.

As part of the American Rescue Plan, the Biden administration proposed raising the federal minimum wage to $15 per hour, specifically citing the sacrifices of essential workers. But the fate of the proposed increase in the Senate remains unclear; late last night, senators passed an amendment to prohibit a higher minimum wage during a pandemic.

One-third of small businesses say they won't survive without more COVID aid

30% of small businesses say they need more relief from the federal government

Without a fresh round of COVID-19 aid from the federal government, about a third of the nation's pandemic-stricken small businesses are warning they won't be able to survive.

That's according to a new report published by the Federal Reserve, which found that sales for 88% of small businesses have not yet returned to pre-crisis levels. About one in three -- roughly 30% -- of businesses said they expected they could not stay afloat without further assistance from the government, according to the report from the U.S. central bank’s 12 regional offices.

The Small Business Credit Survey was conducted in September and October of last year, before Congress passed the latest $900 billion coronavirus relief package and relaunched the Paycheck Protection Program. But the report, based on responses from close to 10,000 businesses with fewer than 500 employees, underscores the extent of the pain inflicted on small businesses by the pandemic and lockdown measures implemented to curb the spread of the virus.

In the Red: Overdrafts, Payday Lending and the Underbanked by Harvard Business School Working Knowledge

Low-income customers turn to payday lenders and check cashers for basic financial needs when traditional banks push them out of the system through high overdraft fees and other penalties. Reducing overdraft fees improves consumers’ overall financial health and access to cheaper credit.

Author Abstract

The reordering of transactions from “high-to-low” is a controversial bank practice thought to maximize fees paid by low-income customers on overdrawn accounts. We exploit multiple class-action lawsuits resulting in mandatory changes to this practice, coupled with payday lending data, to show that after banks cease high-to-low reordering, low-income individuals reduce borrowing from alternative lenders. These consumers increase consumption, experience long-term improvements in overall financial health, and gain access to lower-cost loans in the traditional system. These findings highlight that aggressive bank practices create a demand for alternative financial services, highlighting an important link between the traditional and alternative financial systems.

"We suggest that low income consumers may turn to the alternative system for good reason – if traditional banks do not necessarily serve them well. We argue
that banks can therefore play a role in “pushing” customers out of the traditional system and into the alternative system"

"Our findings provide evidence of a link between overdraft credit provided by traditional banks and alternative credit provided by institutions such as payday lenders."

Nearly half of U.S. workers suffer from mental health issues since Covid-19 pandemic hit, report finds

If you’re stressed out, anxious or feeling lonely, you are not alone.

Nearly half of American workers have been suffering from mental health issues since the Covid-19 pandemic began, at a significant cost to their well-being and potentially to their employer’s bottom line.

There has been a significant jump in full-time U.S. workers dealing with mental health issues in the last 12 months, according to a report from the Portland, Oregon-based insurance company The Standard.

Local Jail Spending Grew 13% Over a Decade, Despite Falling Crime

New analysis shines light on the cost of maintaining large jail populations

The nationwide economic downturn caused by COVID-19 has left U.S. counties with an estimated $202 billion in budget shortfalls for the current fiscal year. New research from The Pew Charitable Trusts suggests that localities may want to examine jail spending as they look for ways to curb costs in the coming months and years.

Pew’s analysis of public data illustrates that jail costs rose for at least a decade, even during a period of falling crime rates and admissions to jail. The study also notes that meaningful reductions in jail populations, which have remained large and stagnant despite declines in crime, could help localities control their corrections expenses.

Debit Card Use Increasing Online, But Credit Cards Remain More Popular

PayPal and mobile wallets see even higher growth rates

  • Since the pandemic began, 14.9% of consumers have used their debit cards more than previously and 16.3% have used their credit cards more.
  • Credit cards remain the most popular way to pay online, cited by more than 4 in 10 consumers surveyed. 
  • Credit cards offer better fraud protection, which is a major motivation for many to use credit over debit. 
  • Though not as popular as debit and credit, PayPal saw the largest net increase in usage, with mobile wallets close behind.

Regional Banks Accelerate Modernization Through FinTech

For large, global financial institutions (FIs), modernizing is no easy feat.

Bogged down by legacy infrastructure, big banks often find that FinTech collaboration wins in the “build-versus-buy” debate as a more agile way to digitize and bring competitive products to market.

This week’s examination of the latest in bank-FinTech collaboration, however, finds regional banks are quickly embracing the FinTech partnership model, too, with a focus on Paycheck Protection Program (PPP) loans, linking small- to medium-sized businesses (SMBs) to Zelle, or simply upgrading their internal systems to become more agile, future-proofed institutions.

Alternative Financial Service Providers Association
315 Tuscarora St., Lewiston, NY 14092