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Category Archives: Financial System

Federal Reserve Board issues Report on Economic Well-Being of U.S. Households

“The Federal Reserve Board’s latest survey of the financial and economic conditions of American households – Report on the Economic Well-Being of U.S. Households in 2014 – released Wednesday finds that individuals’ overall perceptions of financial well-being improved modestly between 2013 and 2014 but their optimism about future financial prospects increased significantly. The 2014 Survey of Household Economics and Decisionmaking, provides new insight into Americans’ economic security, housing and living arrangements, banking and credit access, education and student loan debt, savings behavior, and retirement preparedness. Sixty-five percent of adult respondents consider their families to be either “doing okay” or “living comfortably” financially–an increase of 3 percentage points from the 2013 survey. Looking forward, households are increasingly optimistic. Twenty-nine percent of survey respondents say they expect their income to be higher in the year following the survey, compared to 21 percent of 2013 respondents. The survey results reveal a lack of economic preparedness among many adults. Only 53 percent of respondents indicate that they could cover a hypothetical emergency expense costing $400 without selling something or borrowing money. Thirty-one percent of respondents report going without some form of medical care in the past year because they could not afford it. The outlook for the housing market among surveyed homeowners remained generally positive, as 43 percent believe that their house increased in value over the past year and 39 percent expect home values in their neighborhood to rise in the coming year. Many renters also express an interest in buying but report financial barriers to homeownership, with half of all renters listing an inability to afford a down payment as a reason why they rent rather than own and 31 percent citing an inability to qualify for a mortgage as a reason for renting. Twenty-three percent of the adult population has some form of education debt, according to the survey. However, this debt is not exclusively student loans. Fourteen percent of those with education debt say that some of that debt is on credit cards. Individuals who did not complete an associate or bachelor’s degree, first generation students, blacks and Hispanics, and those who attended for-profit institutions, are all disproportionately likely to be behind on repaying their student loan debt. Recognizing the importance of degree completion to many outcomes, the survey explores why some individuals leave college without a degree. Family responsibilities is the most common reason, and was cited by 38 percent of all respondents who dropped out and by just less than half of women younger than 45. The survey results also suggest that many individuals are not adequately prepared for retirement. Thirty-one percent of non-retirees have no retirement savings or pension, including nearly a quarter of those older than 45. Even among individuals who are saving, fewer than half of adults with self-directed retirement savings are mostly or very confident in their ability to make the right investment decisions when managing their retirement savings. Consistent with a lack of preparedness for retirement, 38 percent of non-retired respondents say that they either do not plan to retire or plan to keep working as long as possible. Among lower-income respondents, whose household income is less than $40,000 per year, 55 percent plan to keep working as long as possible or never plan to retire. The survey was conducted on behalf of the Board in October and November 2014. More than 5,800 respondents completed the survey. The report summarizing the survey’s key findings may be found at: http://www.federalreserve.gov/communitydev/shed.htm

Nation Gains More than 4 Million Nonemployer Businesses Over Last Decade

“There were 23.0 million businesses without paid employees, or nonemployer businesses, in the United States in 2013, up 4.4 million from 2003 and 269,705, or 1.2 percent, from 2012, according to statistics released by the U.S. Census Bureau. Most industry sectors with nonemployer businesses experienced growth in the number of nonemployer establishments and receipts sinceContinue Reading

Building an Innovation-Driven Economy – The Case of BRIC and GCC Countries

Gackstatter, Steffen and Kotsemir, Maxim Nikolaevich and Meissner, Dirk, Building an Innovation-Driven Economy – The Case of BRIC and GCC Countries (July 25, 2014). Foresight, Vol. 16, Iss. 4, pp. 293-308 (2014). Available for download at SSRN: http://ssrn.com/abstract=2491488 “Purpose – The purpose of this paper is to undertake an analysis of the attempts of GulfContinue Reading

State of Senior Hunger in America 2013: An Annual Report

“The National Foundation to End Senior Hunger (NFESH) has released a study, entitled State of Senior Hunger in America 2013: An Annual Report, conducted by Dr. James P. Ziliak and Dr. Craig G. Gundersen. Commissioned by NFESH, this report reveals that 15.5 percent of seniors or 9.6 million individuals age 60 or older in theContinue Reading

Are Survey Expectations Theory-Consistent? The Role of Central Bank Communication and News

Lena Drager, Michael J. Lamla, and Damjan Pfajfar (2015). Are Survey Expectations Theory-Consistent? The Role of Central Bank Communication and News, Finance and Economics Discussion Series 2015-035. Washington: Board of Governors of the Federal Reserve System, http://dx.doi.org/10.17016/FEDS.2015.035. “In this paper we analyze whether central bank communication can facilitate the understanding of key economic concepts. UsingContinue Reading

SIGAR Quarterly Report to Congress on Afghanistan Reconstruction

Special Inspector General for Afghanistan Reconstruction Quarterly Report to Congress, April 30, 2015 “As a result of a SIGAR investigation that uncovered corruption in the award of a nearly $1 billion, multi-year Afghan Ministry of Defense (MOD) fuel contract, SIGAR has developed a relationship with the new Afghan national-unity government that promises to create uniqueContinue Reading

Regulatory change and monetary policy

CGFS Papers No 54 Regulatory change and monetary policy – Report submitted by a Working Group established by the Committee on the Global Financial System and the Markets Committee. The Group was chaired by Ulrich Bindseil (European Central Bank) and William R Nelson (Federal Reserve Board). May 2015. “Financial regulation is evolving, as policymakers seekContinue Reading

Historic Survey of Financial Services Professionals Reveals Widespread Disregard for Ethics

News release: “Labaton Sucharow LLP, which established the nation’s first practice exclusively dedicated to representing SEC whistleblowers, today announced the results of its collaborative survey with the University of Notre Dame’s Mendoza College of Business: The Street, The Bull and The Crisis. The survey, the most expansive of its kind, polled more than 1,200 U.S.Continue Reading

WSJ Graphics – Greece’s Debt Due: What Greece Owes When

Greece is negotiating with its eurozone creditors to get more aid before the indebted government runs out of cash. Here’s what Greece owes, when, by Charles Forelle, Pat Minczeski and Elliot Bentley, laast updated May 22, 2015 at 10:00 a.m. ET. Published Feb. 19, 2015 at 2:09 p.m. ET.

How Much for a Haircut? Illiquidity, Secondary Markets, and the Value of Private Equity

“Bollen, Nicolas P. B. and Sensoy, Berk A., How Much for a Haircut? Illiquidity, Secondary Markets, and the Value of Private Equity (May 17, 2015). Fisher College of Business Working Paper No. 2015-03-08. Available for download at SSRN: http://ssrn.com/abstract=2608549 “Limited partners (LPs) of private equity funds commit to invest with significant uncertainty regarding the timingContinue Reading

What Do Private Equity Firms Say They Do?

Gompers, Paul A. and Kaplan, Steven N. and Mukharlyamov, Vladimir, What Do Private Equity Firms Say They Do? (April 27, 2015). Harvard Business School Finance Working Paper No. 15-081; Harvard Business School Entrepreneurial Management Working Paper No. 15-081. Available for download at SSRN: http://ssrn.com/abstract=2600524 or http://dx.doi.org/10.2139/ssrn.2600524 “We survey 79 private equity investors with combined AUMContinue Reading

New GAO Reports – Federal Home Loan Banks, Medicare

Federal Home Loan Banks: Collateral Requirements Discourage Some Community Development Financial Institutions from Seeking Membership, GAO-15-352: Published: Apr 23, 2015. Publicly Released: May 22, 2015: “Collateral requirements rather than membership requirements discouraged some nondepository community development financial institutions (CDFI)—loan or venture capital funds—from seeking membership in the Federal Home Loan Bank (FHLBank) System. CDFIs areContinue Reading