Category: Regulation

ECB’s Blunt Press Statement Today Screams One Big Idea, Stagflation Has Arrived

Mary Pat Campbell

Link: https://mishtalk.com/economics/ecbs-blunt-press-statement-today-screams-one-big-idea-stagflation-has-arrived

Excerpt:

The Governing Council today decided to raise the three key ECB interest rates by 75 basis points. This major step frontloads the transition from the prevailing highly accommodative level of policy rates towards levels that will ensure the timely return of inflation to our two per cent medium-term target. Based on our current assessment, over the next several meetings we expect to raise interest rates further to dampen demand and guard against the risk of a persistent upward shift in inflation expectations.

Inflation remains far too high and is likely to stay above our target for an extended period. According to Eurostat’s flash estimate, inflation reached 9.1 per cent in August. Soaring energy and food prices, demand pressures in some sectors owing to the reopening of the economy, and supply bottlenecks are still driving up inflation. 

Price pressures have continued to strengthen and broaden across the economy and inflation may rise further in the near term.

Very high energy prices are reducing the purchasing power of people’s incomes and, although supply bottlenecks are easing, they are still constraining economic activity. In addition, the adverse geopolitical situation, especially Russia’s unjustified aggression towards Ukraine, is weighing on the confidence of businesses and consumers.

Author(s): Mike Shedlock

Publication Date: 8 Sep 2022

Publication Site: Mish Talk

The biggest Fed rate hike in 40 years? It could be coming next week.

Mary Pat Campbell

Link: https://www.marketwatch.com/story/the-biggest-fed-rate-hike-in-40-years-it-might-be-coming-11663097227

Excerpt:

After another dismal U.S. inflation report, economists at the brokerage Nomura Securities on Tuesday became the first on Wall Street DJIA, 0.12% to predict a full-percentage-point increase in the Fed’s benchmark short-term rate.

“We continue to believe markets underappreciate just how entrenched U.S. inflation has become and the magnitude of response that will likely be required from the Fed to dislodge it,” the economists at Nomura wrote in a report to clients.

The last time the Fed made such a drastic move was in the early 1980s — another period marked by sky-high inflation.

At each of the last two meetings, the monetary-policy-setting Federal Open Market Committee raised the targeted rate by 0.75 point.

Author(s): Jeffry Bartash

Publication Date: 13 Sept 2022

Publication Site: MarketWatch

SFA Update – 9/2/22

Mary Pat Campbell

Link: https://burypensions.wordpress.com/2022/09/02/sfa-update-9-2-22/

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Excerpt:

The PBGC Special Financial Assistance program for troubled multiemployer plans updated today with one new filer (Toledo Roofers Local No. 134 Pension Plan), one withdrawal (Bricklayers Union Local No. 1 Pension Fund) and one approval asking for more (Local Union No. 466 Painters, Decorators and Paperhangers Pension Plan). 

Author(s): John Bury

Publication Date: 2 Sept 2022

Publication Site: burypensions

NY Common to Review Net-Zero Readiness of Oil and Gas Firms

Mary Pat Campbell

Link: https://www.ai-cio.com/news/ny-common-to-review-net-zero-readiness-of-oil-and-gas-firms/?oly_enc_id=2359H8978023B3G

Excerpt:

The New York State Common Retirement Fund is evaluating 28 publicly traded oil and gas companies to determine if they are ready to transition to a low-carbon economy, according to a release from the state comptroller’s office.

The $272.1 billion pension fund is asking each company, which includes energy giants BP, Chevron, Exxon Mobil and Shell, to provide information on how prepared it is to transition to a net-zero economy.

….

The assessment of the pension fund’s integrated oil and gas holdings is part of its broader review of energy sector investments that it believes face significant climate risk. When DiNapoli announced in late 2020 that the pension fund would transition its portfolio to net-zero by 2040, he said the process would include completing a review of energy sector investments within four years to assess transition readiness, as well as a divestment of companies that don’t meet its climate-related investment risk standards.

Less than two years into that review process, which has so far included an evaluation of shale oil and gas, oil sands and coal companies, the pension fund has decided to divest from 55 firms that it determined were not prepared to transition to a net-zero economy.

Author(s): Michael Katz

Publication Date: 15 Aug 2022

Publication Site: ai-CIO

Democrats’ $80 billion wager: A bigger IRS will be a better IRS

Mary Pat Campbell

Link: https://www.washingtonpost.com/business/2022/08/06/inflation-reduction-act-irs/

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Excerpt:

The result is that the IRS’s prolific enforcement capabilities — which bring in on average better than $10 in revenue for every $1 spent pursuing audits — are often trained on the most economically vulnerable taxpayers.

More than half of the agency’s audits in 2021 were directed at taxpayers with incomes less than $75,000, according to IRS data. More than 4 in 10 of its audits targeted recipients of the earned income tax credit, one of the country’s main anti-poverty measures.

Congress and the White House, when led by Republicans, have starved the IRS of resources for so long, experts say, that even with an influx of $80 billion in new funding, the agency’s ability to transform itself is far from assured.

Some of its main computers still run on programming language that dates to the 1960s, called COBOL, the IRS has repeatedly told policymakers. The program is so old that college computer science courses rarely teach it anymore, forcing the IRS to spend heavily on training new hires in antiquated systems.

The IRS has 60 discrete case management systems that do not communicate with one another.

Its staffing levels have dropped by 17 percent since 2010, including a 30 percent decline in enforcement employees, because its budget has flatlined: Adjusted for inflation, its annual appropriation from Congress is down 12 percent over the same span, at $12.6 billion this year.

Author(s): Jacob Bogage

Publication Date: 6 Aug 2022

Publication Site: Washington Post

Congressional Bill Could End Windfall Elimination

Mary Pat Campbell

Link: https://www.yahoo.com/video/congressional-bill-may-soon-end-194009302.html

Excerpt:

The wind fall elimination provision (WEP) reduces the amount of Social Security benefits people can collect if they receive a government retirement plan in addition to Social Security. It applies only to workers who did not pay Social Security taxes, and so did not earn credits toward Social Security income during their working years.

According to the Congressional Research Service, roughly 6% of workers don’t receive Social Security credits in a given year. Most are local, state and federal employees who don’t pay Social Security taxes because they qualify for government pensions instead. For example, these are federal civilian employees who receive their retirement through the Civil Service Retirement System. The rest are workers covered by alternative retirement schemes, such as Railroad Retirement, or poverty-level workers who earn too little to qualify.

…..

Government Pension Offset (GPO)

The GPO cuts the benefits issued to retirees who receive both their own Social Security payments and a spouse’s government pension payments. The GPO aims to prevent double earning by someone who begins collecting their spouse’s retirement benefits. In the case of the GPO, it reduces a recipient’s Social Security payments by two-thirds of the pension payments that they receive. For example, say that a government worker received a monthly pension of $750. After their death, their spouse is eligible to continue collecting that pension. The pension offset, however, would reduce the surviving spouse’s Social Security payments by $500 per month.

The GPO only applies when someone directly collects their spouse’s pension benefits in addition to their own Social Security benefits, such as when that spouse dies. It does not apply to a household where both people are alive and collecting their own retirement benefits. It also only applies when the government worker did not pay Social Security taxes during their working years.

…..

Almost 340 members of Congress agree that it’s time to eliminate the windfall elimination, and retired public workers could benefit by more than $6,000 per year. In 2021 Rep. Rodney Davis, R-Ill., introduced the Social Security Fairness Act. This bill would repeal the Windfall Elimination Provision (WEP) and the Government Pension Offset (GPO) from Social Security payments. If it passes public employees could see a significant bump in their retirement incomes, and it may pass soon.

At time of writing the Social Security Fairness Act had 294 sponsors in the House of Representatives. Its companion bill in the Senate had 41 sponsors. The measure has been placed on a legislative fast-track. By removing the Windfall Elimination Provision and the Government Pension Offset, this law targets two issues that public unions have long criticized.

Author(s): Erid Reed

Publication Date: 7 Aug 2022

Publication Site: Yahoo News

Rapper Fat Joe Says No One Is Making Sure Hospitals Post Their Prices

Mary Pat Campbell

Link: https://khn.org/news/article/rapper-fat-joe-hospitals-price-transparency-fact-check/

Excerpt:

Rapper Fat Joe takes on hospital industry executives in an advertisement, contending that many hospitals are disobeying a law that requires them to publicly post the prices they charge cash-paying patients and insurance companies for every service they offer.

The ad, paid for by a group called Power to the Patients, states, correctly, that hospitals must list their negotiated prices and asserts that the rule helps patients by making it harder for them to be overcharged. The ad also blames politicians and regulators because the price information is still not necessarily available.

…..

Hospitals have dragged their feet, and compliance is spotty. Studies have found that many hospitals have posted at least some data but that large shares of the facilities have failed to post everything required.

….

In early June, CMS issued penalty fines of about $1.1 million against two Georgia hospitals — Northside Hospital Atlanta and Northside Hospital Cherokee — that are owned by the same company. Those were the first fines issued under the new rules.

As of late July, the agency had sent 368 warning notices to hospitals and issued 188 corrective action plan requests to hospitals that had previously received warning notices but had not yet corrected deficiencies, according to a statement from Dr. Meena Seshamani, deputy administrator and director of the Center for Medicare.

Author(s): Julie Appleby

Publication Date: 10 Aug 2022

Publication Site: Kaiser Health News

SFA Update – One Refiler; One Approval

Mary Pat Campbell

Link: https://burypensions.wordpress.com/2022/08/05/sfa-update-one-refiler-one-approval/

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Excerpt:

The PBGC Special Financial Assistance program for troubled multiemployer plans weekend update showed one approval (Pension Plan of the Printers League – Graphic Communications International Union Local 119B out of East Farmingdale, NY) and a plan that withdrew their application last week (Local 966 Pension Plan out of Cresskill, NJ) is back and asking for over $8 million less.

Author(s): John Bury

Publication Date: 5 Aug 2022

Publication Site: burypensions

Governor Moves to Bar Florida SBA From ESG Investing

Mary Pat Campbell

Link: https://www.ai-cio.com/news/governor-moves-to-bar-florida-sba-from-esg-investing/

Excerpt:

The latest anti-ESG onslaught from Republican state officials is Florida Governor Ron DeSantis’ campaign to forbid the Florida State Board of Administration from adopting environmental, social and governance investing tenets. At the moment, SBA doesn’t appear to be a devotee of ESG.

The governor, an outspoken conservative, plans to propose at an SBA meeting on August 15 that the body’s fiduciary duties must exclude ESG. “From Wall Street banks to massive asset managers and big tech companies, we have seen the corporate elite use their economic power to impose policies on the country that they could not achieve at the ballot box,” DeSantis said in a statement.

DeSantis, a possible GOP presidential contender in 2024, declared that “we are protecting Floridians from woke capital and asserting the authority of our constitutional system over ideological corporate power.” He also plans to push through legislation banning the SBA from making ESG-themed investments and requiring them to focus on maximizing returns.

Author(s): Larry Light

Publication Date: 5 Aug 2022

Publication Site: ai-CIO

Citizens must be accurately informed for government to work

Mary Pat Campbell

Link: https://www.news-gazette.com/opinion/columns/sheila-weinberg-citizens-must-be-accurately-informed-for-government-to-work/article_5d93e9cf-73c5-54c9-b762-133f91a94824.html

Excerpt:

An example of questionable disclosure practices is found in the Illinois budgeting and financial reporting process, specifically regarding pension contributions. In 1994, then-Gov. Jim Edgar led an effort to pass a bipartisan bill to solve the state’s $15 billion pension deficit. The plan would resolve the deficit within 50 years. The plan was structured to pay down the debt very slowly in the first 15 years and accelerate at the end. This ensured that sitting politicians in the early days of the plan would not be required to make the necessary tax increases or budget cuts to pay down the debt in a meaningful way.

This program is shown in charts to look like a skateboard ramp, appropriately named the “Edgar Ramp.” The problem is, the plan doesn’t work.

It is so unsuccessful that the Illinois pension deficit has grown from $15 billion to $317 billion as of June 30, 2020, according to Moody’s Investors Service. The state’s latest bond offering document emphasizes, “The state’s contributions to the retirement systems, while in conformity with state law, have been less than the contributions necessary to fully fund the retirement systems as calculated by the actuaries of the retirement systems.”

The latest Illinois Annual Comprehensive Financial Report discloses cash-flow problems, significantly underfunded pension obligations, other post-retirement benefit deficits and multiple references to debt-obligation bonds.

Author(s): Shiela Weinberg

Publication Date: 7 Aug 2022

Publication Site: News Gazette

Justice Department Ends Investigation of Pennsylvania PSERS

Mary Pat Campbell

Link: https://www.ai-cio.com/news/justice-department-ends-investigation-of-pennsylvania-psers/

Excerpt:

The Department of Justice has dropped its investigation into the Pennsylvania Public School Employees’ Retirement System, said Chris Santa Maria, chairman of the $75.9 billion pension fund’s board of trustees, in a statement. PSERS made no further comment on the matter.

The pension fund had been under investigation by the Justice Department since at least May of last year, when subpoenas indicated that the FBI and prosecutors were seeking evidence of kickbacks and bribes at PSERS.

The subpoenas were reportedly looking for information from the pension fund, its executive director, chief financial officer, chief auditing officer and deputy CIO. The court orders reportedly showed that the FBI and prosecutors were probing possible “honest services fraud” and wire fraud.

….

According to a report released earlier this year following an internal investigation, PSERS investment consultant Aon took responsibility for the accounting error. The report includes a letter from Aon to Grossman that said the firm had become aware of data corruption in some sub-composite market values, cashflows and returns for April 2015.

Aon attributed the data corruption to an error by an analyst in uploading net asset value and cashflow data into the performance system it uses. The company said the data corruption impacted “a few asset class composites” in the public markets.

Author(s): Michael Katz

Publication Date: 3 Aug 2022

Publication Site: ai-CIO