Tag Archives: Financial

Austria Threatens to Quit Effort to Create an EU Financial Tax

Austria Threatens to Quit Effort to Create an EU Financial Tax(Bloomberg) — Sign up here to receive the Davos Diary, a special daily newsletter that will run from Jan. 20-24.Austria’s new finance minister dismissed a proposal by his German counterpart on how to tax financial trades in the European Union, throwing the years-long effort into disarray.“We want a common, broad financial transaction tax. We’re ready to talk, but the current proposal is the opposite of what was originally intended,” Austria’s Gernot Bluemel told journalists on his way into a meeting of EU finance ministers in Brussels. Without a new a approach, the country will leave the group of 10 still working on the plan, he said.Germany’s Olaf Scholz tabled a “final proposal” for the levy in December that focused on stock purchases, after talks on a broader version of the tax had failed. Bluemel, who was sworn in along with the rest of Austria’s new government this month, said this approach would damage the real economy while letting “speculators” off the hook.The European Commission first proposed a financial-transaction tax in 2011 to make sure the industry made a “fair contribution” after taxpayers bore most of the costs of the financial crisis. When some member states opposed the plan, a smaller group sought a compromise under “enhanced cooperation” rules. Austria, Belgium, France, Germany, Greece, Italy, Portugal, Slovakia, Slovenia and Spain are still at the table.Scholz said he still expects an agreement with other European countries on the issue, indicating that some countries are willing to join the group. After years of discussion, “everybody who’s been involved knows what’s possible and what isn’t,” he said. Under EU rules on enhanced cooperation, at least 9 countries are needed for a coordinated approach. Scholz’s proposal foresees a tax rate of 0.2%, which would apply to acquisitions of shares issued by companies based in one of the participating countries and whose market capitalization exceeds 1 billion euros ($ 1.1 billion).(Updates with comment from Scholz in fifth paragraph.)To contact the reporter on this story: Alexander Weber in Brussels at aweber45@bloomberg.netTo contact the editors responsible for this story: Dale Crofts at dcrofts@bloomberg.net, Richard BravoFor more articles like this, please visit us at bloomberg.comSubscribe now to stay ahead with the most trusted business news source.©2020 Bloomberg L.P.



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Elizabeth Warren reveals she earned $2 million from 30 years of private legal work as she feuds with Pete Buttigieg over financial transparency

Elizabeth Warren reveals she earned $  2 million from 30 years of private legal work as she feuds with Pete Buttigieg over financial transparencyButtigieg's campaign has honed in Warren's previous private legal work, seeking to cast her as a "corporate lawyer" at odds her campaign message.



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Pope's bodyguard resigns over new financial leaks scandal

Pope's bodyguard resigns over new financial leaks scandalThe Vatican’s latest scandal claimed its first victim Monday as Pope Francis’ chief bodyguard resigned over the leak of a Vatican police flyer identifying five employees who were suspended as part of a financial investigation. The Vatican said its police chief, Domenico Giani, bore no responsibility for the leaked flyer but resigned to avoid disrupting the investigation and “out of love for the church and faithfulness” to the pope. Giani, a 20-year veteran of the Vatican’s security services, has stood by Francis’ side and jogged alongside his popemobile during hundreds of public appearances and foreign trips.



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Fighting GM puts a financial squeeze on striking union workers

Fighting GM puts a financial squeeze on striking union workersBOWLING GREEN, Ky. – (Reuters) – While striking workers at General Motors Co’s U.S. auto plants continue walking picket lines for a third week to demand better pay and benefits, the financial pressure has mounted for union members like Frank Lee. Analysts estimate that GM could lose $ 1 billion from the labor dispute that began on Sept. 16 and is now the longest nationwide strike at the automaker since 1970. For GM, which had $ 24 billion in cash and marketable securities as of June 30, that cost is likely manageable.



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UPDATE 2-Vatican financial control office director, four others suspended – report

UPDATE 2-Vatican financial control office director, four others suspended - reportFive Vatican employees, including the number two at the Vatican’s Financial Information Authority (AIF) and a monsignor, have been suspended following a police raid, the Italian magazine L’Espresso reported on Tuesday. The scandal, affecting two departments at the heart of the Vatican, was the first after several years of relative calm in which reforms enacted by Pope Francis appeared to be taking root. A Vatican spokesman said he had no immediate comment on the report.



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The Treasury’s Housing Plan Would Pave the Way for Another Financial Crisis

The Treasury’s Housing Plan Would Pave the Way for Another Financial CrisisTreasury’s plan for releasing Fannie Mae and Freddie Mac from their conservatorships is missing only one thing: a good reason for doing it. The dangers the two companies will create for the U.S. economy will far outweigh whatever benefits Treasury sees.Under the plan, Fannie and Freddie will be fully recapitalized — probably by allowing them to keep all or a portion of their profits and by selling shares to the public. However they are recapitalized, Treasury makes clear that they will continue to be backed by the government — a benefit for which they will be required to pay.The Treasury says the purpose of their recapitalization is to protect the taxpayers in the event that the two firms fail again. But that makes little sense. The taxpayers would not have to be protected if the companies were adequately capitalized and operated without government backing.Indeed, it should have been clear by now that government backing for private profit-seeking firms is a clear and present danger to the stability of the U.S. financial system. Government support enables companies to raise virtually unlimited debt while taking financial risks that the market would routinely deny to firms that operate without it.Nor, it seems, has Treasury considered what kind of business Fannie and Freddie will likely pursue as government-backed profit-seeking firms.When Fannie and Freddie had minimal capitalization and a free but “implicit” government guarantee, profitability was easy. Most of the housing finance market was open to them, and they could set their pricing at levels others could not match. That enabled them to drive competitors out of any portion of the market that they wanted to dominate. By the early 2000s they were acquiring and securitizing — or holding in portfolio — about 50 percent of all U.S. mortgages.They will not be able to do this under Treasury’s plan. The demands for profitability from their shareholders, coupled with the cost of their government backing, is almost certain to eliminate the pricing advantages that allowed them to dominate the housing finance market before the financial crisis.Still, their government support will allow them to earn significant profits in a different way — by taking on the risks of subprime and other high-cost mortgage loans. That business would make effective use of their government backing and — at least for a while — earn the profits that their shareholders will demand.The Treasury plan warns Fannie and Freddie that they will have to earn “less than the return on other activities” when they acquire the mortgages of “low-and-moderate-income families.” But this only means that they will have to earn more on the middle-class mortgages that are the heart of the housing finance market.This is an open invitation to create another financial crisis. If we learned anything from the 2008 mortgage market collapse, it is that once a government-backed entity begins to accept mortgages with low down payments and high debt-to-income ratios, the entire market begins to shift in that direction.Middle-class homebuyers, who could otherwise afford the down payments and other terms of a prime mortgage, seek out the opportunity to buy a larger home with a low or no downpayment.Only a firm with government backing could pursue this business, but it will be a plausible profit-making activity for Fannie and Freddie once they are released from the conservatorships and free to exploit their government guarantee. In the midst of the housing boom in the early 2000s, Fannie’s staff noted that 37 percent of the subprime mortgages they were acquiring — ostensibly to meet the government’s affordable-housing goals — were going to homebuyers above median income.The results were clearly on view in 2008, when a collapse in the home-mortgage system brought on by the prevalence of weak and risky mortgages produced a monumental financial crisis. Fool me once, shame on you; fool me twice, shame on me.Given this potential outcome, why is the Treasury proposing this plan? There is no obvious need for a government-backed profit-making firm in today’s housing finance market. FHA could assume the important role of helping low- and moderate-income families buy their first home.We would all be better off if the Federal Housing Finance Agency — the GSEs’ regulator and conservator — simply decided to withdraw them gradually from the market. As their conservator, FHFA has the power to do this by reducing the size of the mortgages they are permitted to buy until they are no longer significant players in housing finance. Banks and private securitizers would then easily take their place, most likely focusing solely on prime mortgages.In that case, of course, today’s speculators in Fannie and Freddie stock would be the losers, but the taxpayers and the financial markets would be saved from a major future loss.Why this hasn’t already happened in a conservative administration remains an enduring mystery.



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How Undocumented Students Can Access Financial Aid for College

How Undocumented Students Can Access Financial Aid for CollegeOne of the first roadblocks undocumented immigrant youths living in the U.S. might face because of their status is learning they are ineligible for federal financial aid like student loans and the Pell Grant, used to pay for college. When Damian, an undocumented immigrant who preferred to only give his first name, decided he wanted to study beyond high school, he relied on private scholarships and paid out of pocket to cover the remaining tuition bills at a local community college. Achieving a community college education required sacrifices, like working 12-hour weekend shifts instead of spending time with friends and eating at McDonald’s on a daily basis.



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Palestinian president fires advisers as financial crisis hits

Palestinian president fires advisers as financial crisis hitsPalestinian president Mahmud Abbas has fired all of his advisers, his office said Monday, amid a financial crisis in the occupied West Bank that has prompted deep salary cuts. Abbas’s office did not provide further details on the number of advisers or the costs involved, pointing only to a brief statement issued through official Palestinian news agency WAFA. The move comes amid a spending crunch following Israel’s decision in February to withhold around $ 10 million a month in tax transfers.



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WRAPUP 5-China says U.S. currency manipulator labelling could cause chaos in financial markets

WRAPUP 5-China says U.S. currency manipulator labelling could cause chaos in financial marketsBEIJING/SHANGHAI, Aug 6 (Reuters) – China’s central bank said on Tuesday that Washington’s decision to label Beijing as a currency manipulator would “severely damage international financial order and cause chaos in financial markets”. Washington’s decision to ratchet up currency tensions on Monday would also “prevent a global economic and trade recovery,” the People’s Bank of China (PBOC) said in the country’s first official response to the latest U.S. salvo in the two sides’ rapidly escalating trade war.



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Hong Kong financial workers stage flash protest

Hong Kong financial workers stage flash protestHundreds of financial workers braved pouring rain to gather in central Hong Kong Thursday, giving that sector’s support to mass protests that have roiled the territory for weeks. According to organisers on the messaging app Telegram, workers from around 80 banks gathered at Chater Gardens in the heart of the financial district and more than 700 workers posted photos of their staff cards to declare they would also join a city-wide strike called for next Monday.



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