Category Archives: Finance

Company Men: The 200-year legal struggle that led to Citizens United and gave corporations the rights of people

Source: Kim Phillips-Fein, New Republic, Vol. 249, no. 4, April 2018

More than 100 years ago, at the height of the last Gilded Age, Congress passed its first law prohibiting corporations from spending money to influence election campaigns. From the start, the wealthy chafed against this limit, and some sought to test it in court. Alcohol manufacturers—terrified of high taxes and Prohibition—might not have seemed the ideal candidates to take on this fight. But they were nonetheless the first to challenge the law, contributing cash to candidates in state and federal races and then arguing that any effort to keep money out of politics was no less than an unconstitutional limitation on free speech.

At that time, state and federal courts rejected these arguments out of hand. To the Michigan Supreme Court, for example, it was self-evident that a local brewery had no “right to participate” in elections. The company, wrote the chief justice in a 1914 decision, was created not to engage in politics, but “for the purpose of manufacturing beer.” In a different case involving the Brewers Association, a federal court ruled that corporations “are not citizens of the United States,” and that as far as the franchise went, they must “at all times be held subservient to the government and the citizenship of which it is composed.”

Yet the beermakers finally had their day in 2010, when the Supreme Court issued its ruling in Citizens United. In a reversal of last century’s common sense, the Court found that corporations did have free speech rights after all and that campaign finance laws placed an intolerable restriction on those rights….

2017 Workplace Benefits Report

Source: Bank of America Merrill Lynch, ARKRNPFQ, 2017

From the summary:
Bank of America Merrill Lynch works with employers across the country to help provide employee education, guidance and retirement plan solutions that help employees take charge of their financial lives. As part of this ongoing effort, we conduct an annual study — the Workplace Benefits Report (WBR) — to talk to employers and employees about retirement readiness and larger financial wellness topics. Our current report examines how employees feel about their financial situation and the role employers play in supporting their overall financial wellness.

On behalf of Bank of America Merrill Lynch, Boston Research Technologies conducted an online survey with a national sample of 1,242 employees between September 22, 2016 to October 7, 2016. Understanding the ever-evolving retirement landscape, monitoring and keeping abreast of these key indicators and opinions, helps us empower employers to stay ahead of the curve while helping meet the varied needs of their employees.

Related:
/2017_WBRInfographic_R6_060217.pdf”>Infographic Presentation
Millennials Supplement
Healthcare Supplement

The perk your employer is most likely to give you, and it’s not a raise
Source: Maria Lamagna, Marketwatch, March 27, 2018

When You Can’t Afford to Go Bankrupt

Source: Paul Kiel, ProPublica, March 2, 2018

There’s ample evidence many people don’t file for bankruptcy simply because they can’t pay an attorney. It’s a fixable problem.

Related:
How the Bankruptcy System Is Failing Black Americans
Source: Paul Kiel with Hannah Fresques, ProPublica and the Atlantic, September 27, 2017

Black people struggling with debts are far less likely than their white peers to gain lasting relief from bankruptcy, according to a ProPublica analysis. Primarily to blame is a style of bankruptcy practiced by lawyers in the South.

TOO BROKE FOR BANKRUPTCY: How Bankruptcy Fails Those Who Need It Most
Source: ProPublica, 2017

Warning: Short-Term Health Plans = Higher Premiums for Older Adults

Source: Jane Sung and Lina Walker, AARP Blog, Thinking Policy, March 21, 2018

You might have thought that efforts to unravel the Affordable Care Act (ACA) were over, but newly proposed regulations and legislation are once again threatening to have similar harmful effects for older adults ages 50-64 who rely on individual market coverage. On February 21, 2018, the Trump Administration proposed new federal rules calling for significant expansion of a category of insurance products known as “short-term limited duration” insurance plans. More recently, Congress is considering legislation that would block states, who typically regulate these plans, from taking steps to protect consumers from the harms of these proposed federal rules once they are finalized. Unfortunately, these changes would result in much higher premiums for older adults and people with preexisting health conditions buying individual policies through the ACA Marketplace.

U.S. And Canadian Not-For-Profit Transportation Infrastructure Enterprises: Methodologies And Assumptions

Source: S&P Global Ratings, March 12, 2018
(subscription required)

S&P Global Ratings is publishing its methodology for assigning ratings and related credit products to U.S. and Canadian not-for-profit airports, ports, toll facilities, or parking systems (transportation infrastructure enterprises, enterprises, or entities), and for debt secured by specific revenue streams tied to special facility projects or by demand tied to transportation infrastructure.

Related:
Criteria FAQ: An Overview Of Criteria For Rating U.S. And Canadian Not-For-Profit Transportation Infrastructure Enterprises
Source: S&P Global Ratings, March 12, 2018
(subscription required)

Criteria: U.S. And Canadian Not-For-Profit Acute Care Health Care Organizations

Source: Jennifer J. Soule, S&P Global Ratings, March 19, 2018
(subscription required)

S&P Global Ratings is publishing its methodology for assigning ratings to U.S. and Canadian not-for-profit acute care stand-alone hospitals and health care systems. Our methodology classifies the primary credit factors that we review as part of either the enterprise profile or the financial profile. While many of an organization’s activities affect both profiles, we believe our approach clearly identifies the various ways that strategic and operational activities affect an organization.

The Macroeconomic Effects of Student Debt Cancellation

Source: Scott Fullwiler, Stephanie Kelton, Catherine Ruetschlin, and Marshall Steinbaum, Levy Economics Institute of Bard College, February 2018

From the summary:
Among the more ambitious policies that have been proposed to address the problem of escalating student loan debt are various forms of debt cancellation. In this report, Scott Fullwiler, Research Associate Stephanie Kelton, Catherine Ruetschlin, and Marshall Steinbaum examine the likely macroeconomic impacts of a one-time, federally funded cancellation of all outstanding student debt.

The report analyzes households’ mounting reliance on debt to finance higher education, including the distributive implications of student debt and debt cancellation; describes the financial mechanics required to carry out the cancellation of debt held by the Department of Education (which makes up the vast majority of student loans outstanding) as well as privately owned student debt; and uses two macroeconometric models to provide a plausible range for the likely impacts of student debt cancellation on key economic variables over a 10-year horizon.

The authors find that cancellation would have a meaningful stimulus effect, characterized by greater economic activity as measured by GDP and employment, with only moderate effects on the federal budget deficit, interest rates, and inflation (while state budgets improve). These results suggest that policies like student debt cancellation can be a viable part of a needed reorientation of US higher education policy.

Medicaid and Financial Health

Source: Kenneth Brevoort, Daniel Grodzicki, Martin B. Hackmann, National Bureau of Economic Research (NBER), NBER Working Paper No. 24002, November 2017
(subscription required)

From the abstract:
This paper investigates the effects of the Medicaid expansion provision of the Affordable Care Act (ACA) on households’ financial health. Our findings indicate that, in addition to reducing the incidence of unpaid medical bills, the reform provided substantial indirect financial benefits to households. Using a nationally representative panel of 5 million credit records, we find that the expansion reduced unpaid medical bills sent to collection by $3.4 billion in its first two years, prevented new delinquencies, and improved credit scores. Using data on credit offers and pricing, we document that improvements in households’ financial health led to better terms for available credit valued at $520 million per year. We calculate that the financial benefits of Medicaid double when considering these indirect benefits in addition to the direct reduction in out-of-pocket expenditures.

Pension Plan Types and Financial Literacy in Later Life

Source: Yang Li, Jeffrey A Burr, Edward Alan Miller, The Gerontologist, Advance Articles, September 9, 2017
(subscription required)

From the abstract:
Background and Objectives:
The ongoing shift from defined benefit (DB) to defined contribution (DC) pension plans means that middle-aged and older adults are increasingly being called upon to manage their own fiscal security in retirement. Yet, half of older Americans are financially illiterate, lacking the knowledge and skills to manage financial resources. This study investigates whether pension plan types are associated with varying levels of financial literacy among older Americans.

Research Design and Methods:
Cross-sectional analyses of the 2010 Health and Retirement Study (HRS) (n = 1,281) using logistic and linear regression models were employed to investigate the association between different pension plans and multiple indicators of financial literacy. The potential moderating effect of gender was also examined.

Results:
Respondents with DC plans, with or without additional DB plans, were more likely to correctly answer various financial literacy questions, in comparison with respondents with DB plans only. Men with both DC and DB plans scored significantly higher on the financial literacy index than women with both types of plans, relative to respondents with DB plans only.

Discussion and Implications:
Middle-aged and older adults, who are incentivized by participation in DC plans to manage financial resources and decide where to invest pension funds, tend to self-educate to improve financial knowledge and skills, thereby resulting in greater financial literacy. This finding suggests that traditional financial education programs may not be the only means of achieving financial literacy. Further consideration should be given to providing older adults with continued, long-term exposure to financial decision-making opportunities.