Aaron Klein
@Aarondklein
Followers
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Following
745
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591
Statuses
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Come for FinTech/FinReg policy. Stay for MoCo ramblings. Senior Fellow @brookingsecon Former @USTreasury @SenateBanking . Always Maryland, banned by Russia.
Silver Spring, MD
Joined January 2014
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Pinned Tweet
By mandating real-time payments new legislation by
@ChrisVanHollen
@SenWarren
@RepPressley
will make it less expensive to be poor, saving Americansn who live paycheck to paycheck billions in overdrafts, payday loans, check cashing, late fees, interest.
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American police killed 1,042 people in the past year. In Japan, the cops killed nobody. In the United Kingdom, just three people died during encounters with cops.
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Harvard had a $39 Billion endowment that is allowed to keep almost all interest on a tax free basis while donations receive tax-deduction status.
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Unlimited deposit insurance is regressive economics and a betrayal of the New Deal’s core principle: government is there to protect ordinary Americans not the wealthy. My latest in today’s
@WSJ
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Deficits of this size with 4% unemployment and insufficient
#infrastructure
investment, yet people are talking tax cuts?
U.S. ran $666 billion deficit in fiscal 2017, the sixth highest on record, Treasury says
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You’re not going to believe this but when
#CFPB
Director Cordray was nominated by President Obama, he was confirmed by the Senate on a bipartisan basis with 66 votes.
You're not going to believe this, but when Obama (unconstitutionally) appointed Richard Cordray as CFPB director, Rep. Lowey cheered. Signed letter: 'We are writing to thank you for taking the decisive action to appoint Richard Cordray...'
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Counting 150 + million votes is almost taking as long as depositing a check.
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Bailing out VC and Big Tech. Identities of the 10 large companies who got hundreds of millions to billions of taxpayer bailouts when SVB failed. Kanzhun is a Chinese tech firm. Marqeta is a FinTech. IntraFi is supposed to keep customer funds fully insured — that’s intriguing.
WHOA. The FDIC accidentally posted an un-redacted document showing that the big VC firm Sequoia had $1 billion on deposit at SVB when it collapsed
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When it comes to government support everyone wants to be systemically important.
When it comes to government regulation no one says they are systemically important.
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Why is non-profit
#creditunion
@golden1cu
making $24 million in overdraft fees off its members who run out of money and spending it on stadium naming rights?
My latest in
@politico
finds they are not alone. Many credit unions are hooked into overdraft.
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Celebrating my banishment from Russia with Ukrainian vodka. Cheers
@StephenAtHome
@jimmykimmel
@sethmeyers
hope you do the same.
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Armed Forces Bank made 76% of its profit on overdraft fees last year. That's $125 of overdraft fees per insured account.
Our men and women in uniform deserve better banking than that.
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One of the consistently worst takes is that a lack of bank branches or hours causes people to be unbanked.
In truth the answer is far simpler. Basic bank accounts are too expensive.
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Silicon Valley Bank was the largest counter-party of SF FHLB, at 20% of its total advances. Second on the list, First Republic Bank. Not pictured, Silvergate who blew up to $4billion in advances before failling. If this feels familiar, it is. Look who borrowed from FHLBs in 2007.
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When the
@federalreserve
put up $30 billion to help JMPC buy Bear Stearns there was no itemized list of toxic assets the government was buying to help JMPC.
Jamie Dimon says if lawmakers plan to raise taxes he would want an itemized list of what the money would be spent on
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To those who thought
#trump
would support
#infrastructure
:
#Budget2017
proposes to cut $1 out of every $8 for
@USDOT
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.
@Harvard
has 250% more legacy undergrads than African Americans. Want to show change: end legacy admissions preference.
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The Fed bailed out trillions in investments including junk bonds, juiced the housing market through trillions of mortgages and yet the argument is inflation is due to $1500 checks send to families.
I think I I have a pretty unique view on the pandemic and inflation.
Why?
Because I never stopped traveling.
I got Covid in June 2020. Was awful. 104 temp for two days. Hit me while driving to Wisconsin. Slept in the car at one point. Didn’t announce it on air…
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Fact check: False. Silicon Valley Bank included $3 billion bailing out one of the world's largest stable coin issuers. We have no idea what would have happened in crypto had SVB been allowed to fail.
@GaryGensler
4️⃣ Unlike banks and the entire western financial system, crypto has never had a central bank bailout. In fact, central banks are actively conspiring against it. And yet its price is fast approaching all time highs having survived countless crises on its own
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Congrats to everyone who deposited a payment on Friday May 28 and finally has their money available today, 5 days later.
Luckily no one lives paycheck to paycheck or had any bills due on June 1, so this doesn’t matter.
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Overdraft fees have become a reverse robin hood where a 8% of customers pay 80% of overdrafts in effect generating billions of profits for banks and subsidizing 'free checking' for people who always have $1,000 in their bank account.
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President Biden is right to attack junk fees. Non-optional “fees” are >50% of face value of ticket. Transparent prices are key to competition.
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FedNow is a realtime payment system. The rest of the world has had realtime payments systems for decades. America's failure to do so costs working pool billions in overdrafts, payday loans, late fees.
It has ZERO to do with Central Bank Digital Currency.
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Raising the deposit insurance limit is about the rich protecting their money at your expense.
* Mnuchin Says Deposit Insurance Should Be as Much as $25 Million
(via
@business
@johnspall247
) $KRE $XLF
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Raising deposit insurance limit from $250k to what? $1Mill? It isn’t the issue these are corporate depositors with tens to hundreds of millions. And temporary? Please if you do it once markets will expect it again.
Unless you support unlimited deposit insurance oppose this.
NEW—
@RepJoshG
is circulating this letter, which, among other things, calls on congress/regulators to raise the limit on deposit insurance.
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Look at data not press release.
4% of the loans made accounted for 44.5% of the dollars spent.
Median loan (by dollar size) was nearly $1 million.
This was not to the smallest businesses.
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I worked in Congress when Al-Qaeda terrorists tried to fly a plane into it. When a crazy person sent anthrax, another ricin.
This is completely different and in many ways more terrifying. True domestic terrorism, stoked by the President, against the Congress.
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Financial education is not the answer to student debt.
Reducing the cost of college is.
There is no good reason why college is 45% more expensive today than 10 years ago.
Treasury Dept. says student-debt crisis is so bad that financial education should be mandatory for college students
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Speed of bank run on SVB was about customers being large tech firms not about 'social media'. Powell's answer focusing on speed, instead of nature of depositor base, shows they still don't get it.
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Why is
@JohnsHopkins
“unable” to be need blind in admissions with its current $3.8 billion endowment?
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Brave take by
@PATreasury
on limits of financial literacy.
You can't budget your way out of lost income, delayed paychecks triggering overdrafts, or many more ways the system is rigged against those without money in favor of those with $$$.
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America has about 10,000 banks and credit unions. The Fed took 10+ years deciding whether to build it and then 4+ years to buildFedNow. Today it launched with…. 35 banks and credit unions.😩
@federalreserve
announces that its new system for instant payments, the FedNow® Service, is now live (1/4):
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Makes you wonder why
@federalreserve
bought $16.5 million of
@UnitedHealthGrp
corporate debt this quarter to “help stabilize the economy for working people” 🤔
UnitedHealth Group posted $6.6 billion of profit in its "COVID quarter." That obliterated Wall Street's projections and was by far the health care giant's most profitable quarter ever.
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You spent $72 Million over 4 years to build a gorgeous aquatic center with a pool just for kids that’s only open 4 hours a week because you say you can’t hire enough life guards in Feb in a county w/>1mill people and a ton of outdoor pools. 😰
@Aarondklein
@MontCoExec
Thank you for your feedback. As we continue to add staff, we plan to open up more recreation swims. We also continue to host lifeguard classes at the center to increase staffing.
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Financial literacy is too often sold as a fix for problems that are rooted in variable and insufficient income.
Those living paycheck to paycheck often spend more time developing and sticking to a budget more than the wealthy.
There's a fundamental problem teaching people who don’t have enough money to fix a flat tire to save for retirement
@ConsumerFed
Investor Protection head
@BarbaraRoper1
says
@janetnovack
@dcjretiresecure
@Michael_S_Barr
@edmpirg
@Aarondklein
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If the majority of your profits come from overdraft fees you aren’t a bank, you are a check cashed with a charter. My latest finds a handful of these institutions operating, apparently with regulators blessing. Will that change?
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My mom started her PhD at 54 and graduated at 70. Learning keeps you young!
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Capitalism doesn’t work if the wealthy can never lose their money. One reason why we need to keep deposit insurance limited.
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Janet Yellen is a true public servant, a brilliant woman, with a track record of great success. She is also a fantastic colleague, kind and generous with her time and wisdom.
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I did wake up dying to be asked what the real story of how the FDIC deposit insurance cap was raised to $250K.
Thank you
@NPR
@planetmoney
for asking. Now the world knows.
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.
@Alan_Krueger
was my teacher, my supporter, my boss, and most of all my friend. His great contributions to America, economics,
@Princeton
, and his friends and family will always live on.
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Can we please retire the trope that people are unbanked because of bank location and hours?
The
@FDICgov
asked unbanked people why they don't have accounts. The answer is simple: bank accounts are expensive if you don't have $$$. Fees not hours!
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America’s failure to adopt real-time payments was a conscience decision by the Fed. The result is hundreds of billions taken from people living paycheck to paycheck and given to banks, payday lenders, and check cashers.
With the Federal Reserve finally rolling out its first ever real-time retail payments system, keep in mind that it's 50 years behind the Japanese, who brought out their own instant payments system – Zengin – back in 1973.
A nice intro to Zengin:
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Before bailing out private airlines we should support public transit and
@Amtrak
who are taking massive losses.
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When the Fed wants to do something, like bail outs it finds creative legal workarounds, invents shell companies called Maiden Lane, etc…
When the Fed doesn’t want to do something, like provide direct accounts to all Americans it cites legal impediments.
The Fed’s paper, while stressing that no final decisions about a digital currency have been reached, said it would likely follow an “intermediated model” under which banks or payment firms would create accounts or digital wallets.
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Classic MoCo fail. Build a beautiful kids indoor swim area for a ton of money and then only have it open for 2 hours, 2 days a week. Painful to watch my kids get excited and then be cleared out at 3pm for no reason.
@MontCoExec
corruption hurting kids yet again.
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Fannie and Freddie have been in conservatorship longer than Brittany Spears. The future of
#housingfinance
can't be like this forever?
@BrookingsEcon
will discuss
@CRLMike
's proposal and hear from a diverse panel of experts on 2/23. Click below to join:
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Crazy story in
@FDICgov
testimony about preventing disorderly collapse of Signature Bank "was accomplished with minutes to spare before the Federal Reserve’s wire room closed."
Why does the Fed's wire room close at 4pm? Read this
@GeorgeSelg
and I wrote:
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Correct. The Fed lent 29:1 against the subprime dreck from Bear Sterns. The Fed’s overly tight criteria for Main Street businesses and muni’s far more deleterious to economy than this move by Treasury.
The point is the Fed needing to get capital from Treasury to lend is a useless accounting fiction
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Amazing that
@federalreserve
Chair Powell has allowed
@DallasFed
@BostonFed
to not release the dates of financial trades that he is now criticizing as improper, but accepting as within the rules. Without knowing when the trades were made how can pulic faith be restored?
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Senator Paul S. Sarbanes was the most brilliant, kind soul whose service to Maryland and the nation was pure in purpose: to help people.
It was the greatest honor and privilege of my life to work for him.
#SarbanesWay
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PPP was a grant disguised as a loan.
TARP for banks was a loan disguised as a grant.
One was full of fraud, ran up hundreds of billions in national debt, and was tremendously popular.
The other was tightly administrated, turned a profits, and was despised by the public. 🤯
Congressman Clyde had $156,697 of debt forgiven from a PPP loan.
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If only there were an entity in charge of regulating bank holding companies and their affiliated businesses from problematic tying behavior with the bank……
Reports indicate that SVB used ties in their loan business aggressively - this means that customers that received debt financing were legally obligated to lend that money back again to SVB through deposits. /2
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Remember when
#Republicans
had complete control of government, argued for tax simplification and left us w/7 different brackets?
New: Rates in GOP Tax Overhaul:
10%
12%
22%
24%
32%
35%
37%
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Nothing to see here folks says Fed IG while then Boston Fed President incorrectly reports his buying and selling of individual Chinese stocks of more than $50,000 each.
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If Covid can’t stop the inane practice of signing for credit cards what will?
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New legislation to mandate real-time payments would reduce income inequality by empowering people through access to their own money.
Progressives should embrace this approach by
@ChrisVanHollen
@SenWarren
@AyannaPressley
@RepChuyGarcia
. Here's why:
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No fooling, today is my 5 year anniversary
@BrookingsInst
@BrookingsEcon
. Amazing how quickly time flies when you are having fun.
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Wonderful to see notes of kindness for Alan Krueger who would have shared in today’s Nobel Prize if alive.
Alan combined his ground breaking research with incredibly public service
@WhiteHouseCEA
@USTreasury
@USDOL
.
A man in the nation’s service and in service of humanity.
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40% of the Harvard freshman class is legacy and the Supreme Court thinks the admissions problem is race. 🤔
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America has just under 5,000 banks and roughly the same number of credit unions. Some should fail every year. We’d have a bigger problem if no bank ever failed.
Banks take different risks, different business models. SVB was at outlier, with very few regular people as customers
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Dirty little secret:
@USTreasury
sent this money on Friday. But America's pathetically slow payment system run by the
@federalreserve
couldn't deliver it to people's wallets until Wednesday.
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My elementary school PTA spent $886 in credit card/payment/bank fees. That’s 25% of its expenses for the year. And a disgrace to our payment system.
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When idiots talk about things they know nothing about you get this video.
FedNow is an upgrade to Fed ACH which is a technological dinosaur that's why it takes 2-6 days for your check to clear. It has nothing to do with any of what this guy is talking about.
The Federal Reserve's new FedNow service is a whole new system that's faster and better than traditional banking! And it also gives the Fed the power to track (and eventually control) your purchases! How fun...
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Taxing elite university endowments unless they let in more poor students was a good idea when
@RichardvReeves
and I proposed it a year ago.
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Is this story was processed like a check it wouldn’t be available to read until sometime between next Monday night and Thursday — and no one could tell you exactly when it’d be there.
Your Friday night read: Big banks are preparing to go to war against the Federal Reserve, which is poised to announce that it will develop a new instant payments system to compete with the lenders’ own nascent version.
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The
@bankofengland
launched a realtime payment system in 2008 after 18 months. The
@federalreserve
is in its 8th year and is still more than 18 months away. Meanwhile $100Billion + in overdraft fees have been racked up as we wait...
Shonda Clay, the Federal Reserve’s payments improvement director, recently sat down for a Q&A on the role, plans for continued engagement with stakeholders and what excites her for the year ahead. Read more:
#payments
#FederalReserve
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FedNow is an upgrade to the Fed’s ancient payment system that transfers Commercial Bank Digital Currency. It is NOT Central Bank Digital Currency. Please stop spreading misinformation
@RobertKennedyJr
. Delete this post.
The Fed just announced it will introduce its “FedNow” Central Bank Digital Currency (CBDC) in July. CBDCs grease the slippery slope to financial slavery and political tyranny.
While cash transactions are anonymous, a
#CBDC
will allow the government to surveil all our private…
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The
@federalreserve
failed to regulate SVB or apply stronger standards to First Republic.
The Fed failed to write regulation over subprime mortgages even when Congress required it to in 1994.
Time to rethink whether the Fed should regulate banks.
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"When I first got into politics, I quickly recognized two different kinds of politicians. There were justice politicians and there were power politicians, and Sen. Paul Sarbanes, to me, epitomized what it meant to be a justice politician."
@RepRaskin
captures truth.
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Debating overdraft fees
@SenWarren
is correct that
@jpmorgan
generated 7x
@Citibank
in overdraft fees per account in 2019.
A handful of small banks generate way more in overdraft fees per account that JPMC. Here's whoe they are:
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Great points by
@SheilaBair2013
in
@FT
those bailed out at SVB included big tech, VCS, and other sophisticated companies. The
@FDICgov
could have made 60%+ of money available to make payroll. Read her great take here:
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The story shouldn't end here. Why did the General Counsels of both Regional Fed Banks permit the trading in the first place? Where was the Board of Gov oversight to allow this? Stopping bad behavior voluntarily only after public outcry is not a path to structural accountability.
Eric Rosengren and Robert Kaplan, the heads of the Boston and Dallas Federal Reserve banks, will sell their individual stock holdings by Sept. 30 via
@markets
@catarinasaraiva
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Great thread by
@CaitlinLong_
. The more you dig on Fed Master Accounts the more it’s clear the system is ad hoc and deeply broken.
@ProfJulieHill
has proven this too in her work.
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Why are payments so slow in America and real-time in Europe, UK, China, Japan….
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Making all checks clear within 1 day would reduce demand for check cashers by 55% among the 70% of check cashing customers with bank accounts -- great new paper by
@aaronsojourner
makes clear the importance of faster payments.
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While government shut down drives people to payday loans,
@CFPB
eliminating rule that requires borrowers to be able to repay them. Making America Predatory Again.
The CFPB is expected to eliminate underwriting requirements for payday loans when it issues a new proposal in the next two weeks. The move would be a victory for payday lenders who have fought all efforts regulate small-dollar loans.
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Trump has learned the key lesson in life: inherit well. Job growth began under Obama when he rescued America’s economy from the collapse under Bush.
#SOTU
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Trump’s tax bill instituted a tiny tax on wealthy university endowments. It should be increased and directed to incentivizing lower cost of college as
@RichardvReeves
and I proposed:
“Universities get massive tax breaks for massive endowments,” Biden said. “These huge multi-billion-dollar endowments are tax free,” he explained. “But too many of these universities don’t use the money to help with tuition and student debt. Instead, these universities use the…
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About to jump on
@CNBC
talking Silicon Valley Bank. This was HUGE failure of bank supervision by the
@federalreserve
.
As
@PeterContiBrown
brilliantly points out supervision is very different than regulation.
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Artificial Intelligence, Big Data, and Machine Learning are challenging anti-discrimination rules in lending. My latest explores
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Key policy called for by
@JoeBiden
in today's speech: real-time payments: "Instead of waiting days for checks to clear, low-income people will have instant access to money they are owed, ending an existing, costly burden to cash-constrained families."
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This would be a game changer for people living paycheck to paycheck. Save them billions from overdrafts, check cashiers, payday lenders...
Have you ever deposited a check—then had to wait days for it to hit your bank account? My bill with Rep.
@AyannaPressley
will help eliminate that wait time and make a huge difference for Americans with bills to pay.
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A snapshot of Americans banking and credit status:
94% have a bank account
45% subprime credit
40% prime credit
25% underbanked
15% unscored by credit system (thin/no file)
6% unbanked
Stop using the term 'unbanked' to mean the 60% of people who are not prime.
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Millions of middle class families deposit a check today, but won't be able to access the $$ until Monday or Tuesday. For many that will cost them in overdraft, maybe pay day, late fees... It doesn't have to be that way.
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Fun times on
@MeetThePress
as I asked where was the
@federalreserve
in supervising Silicon Valley Bank?
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Waiting for regulators to be as concerned about people getting hit with overdrafts because their companies were late with payday as they are with multi billion companies with UNinsured deposits getting 100% of their money immediately.
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I’m old enough to remember when the banking industry said
#DoddFrank
would make banking unprofitable.
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How can a credit union charge $18 million in overdraft fees, pay its CEO $12 million, buy stadium naming rights, and still be considered a 'non-profit' helping people? Ask San Diego County Credit Union and its other brand NICU, because we all see this:
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The strength to capture the magic of your child in light of this tragedy.
@RepRaskin
and Sarah Bloom are tremendous parents and the world is a better place for Tommy having shared it with us.
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“Politics is a team sport ... There is a point, though, at which that expectation turns from a mix of loyalty and pragmatism into something more sinister, a blind devotion that serves to enable criminal conduct.”
Must read by
@JWVerret
in
@TheAtlantic
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None of the thirty-five most African American cities in America meets the Fed’s criteria for direct municipal assistance.
@CamilleBusette
and I share some solutions the
@federalreserve
can implement to fix this:
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No fooling, today marks 8 years
@BrookingsEcon
. So thankful to all my excellent colleagues who make
@BrookingsInst
an amazing place to work.
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Modernizing our currency is long very due. Replacing Andrew Jackson with Maryland's best, Harriet Tubman is the right move.
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