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Personal Finance Weekly News Roundup October 29, 2022

Weekly Personal Finance News Roundup - OCTOBER 29, 2022

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Credit Sesame’s weekly news round up October 29, 2022. Stories, news, politics and events impacting the personal finance sector during the past week.

  1. Court puts a hold on student loan forgiveness
  2. Water bills leaving Californians awash in debt
  3. Economists support continued Fed rate hikes
  4. Fannie Mae and Freddie Mac to use expanded credit score models
  5. Consumer confidence fell in October
  6. CFPB warns that some bank fees may be illegal
  7. Non-banked population falls to new low
  8. U.S. economic growth rebounded in the third quarter

1. Court puts a hold on student loan forgiveness

The 8th U.S. Circuit Court of Appeals has put a hold on President Biden’s student loan forgiveness plan. The hold is temporary until the court can rule on a lawsuit filed by six Republican-led states that are attempting to block the program. The lawsuit claims that the President overstepped his authority by granting the debt relief. The Biden Administration has argued in response that those state governments don’t have the legal standing necessary to be heard on this matter. The Department of Education has stated that even with debt forgiveness itself on hold, it will continue to process applications so it can act swiftly once the court rules. See full article at ABCNews.com.

2. Water bills leaving Californians awash in debt

A long-term drought combined with outdated infrastructure has left Californians with sharply-higher water bills. In many cases, this has left them owing money on overdue water charges. Water costs in California have been rising rapidly for more than a decade. A survey found that 12% of Californians are behind on their water bills, with an average household debt on those bills of $500. Governor Gavin Newsome recently vetoed a bill that would have provided rate assistance to residential water customers. His reason for blocking the bill was the strain the multi-billion dollar cost would have put on the state’s budget. See article at LATimes.com.

3. Economists support continued Fed rate hikes

With the Federal Reserve scheduled to make its next interest rate decision next week, a poll of economists found that most think the Fed should continue to raise rates until inflation eases. A majority of the economists polled expect another 0.75% rate increase when the Fed meets next week. The poll found a median target of a 4.4% inflation rate to be the point at which economists think the Fed can halt its interest rate increases. Economists recognize the necessity of continued rate increases despite the heightened risk of a recession as a result. See article at Reuters.com.

4. Fannie Mae and Freddie Mac to use expanded credit score models

The Federal Housing Finance Agency (FHFA) has approved the use of new credit score models by Fannie Mae and Freddie Mac. The two mortgage finance companies make government-insured loans. The new credit score models are the FICO 10T and the VantageScore 4.0. These new models use a broader range of payment history which includes rent, utilities and telecom payments. The FHFA also announced that Fannie Mae and Freddie Mac will be cutting upfront mortgage fees for lower-income borrowers. They will make up for those cuts by raising upfront fees on most cash-out refinance loans. See full article at ABA.com.

5. Consumer confidence fell in October

The Consumer Confidence Index declined in October, following two consecutive positive months. Both components of the Index, one that measures consumers’ views of current conditions and one that measures expectations for upcoming conditions, declined. The Expectations Index declined by less, but was already below a level that has traditionally signaled an upcoming recession. See full release at Conference-Board.org.

6. CFPB warns that some bank fees may be illegal

The Consumer Finance Protection Bureau (CFPB) has issued new guidance on its interpretation of the Consumer Financial Protection Act. This guidance puts banks on notice that some of their practices may be against the law. Specifically, the CFPB is warning banks to stop charging fees to deposit account customers under two circumstances. One is where the depositor has a check from a third party bounce. The CFPB’s interpretation is that unless the depositor has repeatedly tried to deposit checks that bounce from the same source, the customer should not be penalized for someone else’s bounced check. The second circumstance is where a debit card transaction is authorized when the account has a positive balance, but subsequent transactions cause the balance to go negative. The CFPB is advising banks that they should not charge overdraft fees on transactions that were authorized when there was a sufficient balance to cover them. See full release from ConsumerFinance.gov.

7. Non-banked population falls to new low

An updated report by the FDIC found that the percentage of the U.S. adult population without access to a bank account has fallen to its lowest level since the FDIC began tracking this data in 2009. The report found that just 4.5% of households had no bank accounts. This is down from a high of 8.2% in 2011. While income plays a role, race or ethnicity seem to be even more of a factor in people remaining unbanked. See full report at FDIC.gov.

8. U.S. economic growth rebounded in the third quarter

Gross Domestic Product (GDP) grew at a 2.6% inflation-adjusted annual rate in the third quarter. That marks a return to growth after slight declines in inflation-adjusted GDP in the first two quarters of the year. GDP growth was helped by a reduction in the trade deficit, as exports grew and imports declined. The inflation-adjusted GDP number was also helped by an easing in the rate at which the Personal Consumption Expenditure Price Index rose in the third quarter. That index is the measure of inflation that the Fed prefers to use. See full release at BEA.gov.

Weekly News Headlines from Credit Sesame

Richard Barrington
Financial analyst for Credit Sesame, Richard Barrington earned his Chartered Financial Analyst designation and worked for over thirty years in the financial industry. He graduated from St. John Fisher College and joined Manning & Napier Advisors. He worked his way up to become head of marketing and client service, an owner of the firm and a member of its governing executive committee. He left the investment business in 2006 to become a financial analyst and commentator with a focus on the impact of the economy on personal finances. In that role he has appeared on Fox Business News and NPR, and has been quoted by the Wall Street Journal, the New York Times, USA Today, CNBC and many other publications.

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