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Stimulus checks news summary | 16 March 2023

U.S. Treasury Secretary Janet Yellen takes questions on the Biden administration's plans, following the collapse of three U.S. lenders including Silicon Valley Bank and Signature Bank, as she testifies before a Senate Finance Committee hearing on U.S. President Joe Biden's proposed budget request for fiscal year 2024, on Capitol Hill in Washington, U.S., March 16, 2023. REUTERS/Mary F. Calvert

Headlines: Thursday, March 16, 2023

- Initial unemployment claims fell by 20,000 to 192,000 last week

- First Republic Bank shares crash; bank reportedly exploring options, including sale

- The value of Credit Suisse's stock recovered after Swiss National Bank offered lifeline 

- Inflation rose 0.4 percent in February

- Biden administration moves to shore up confidence in banking system after collapse of Silicon Valley Bank

- Student-loan borrowers should have a “Plan-B” for debt forgiveness

2023 Tax Season 

- Who can claim the additional standard deduction?

- The way to access IRS transcripts to ensure a faster tax refund

- Did you receive a state stimulus check? No need to report the payment as income to the IRS. 

Read more from AS USA:

Gidget Alikpala

Initial Unemployment Claims increase by 20,000 to 192,000

Last week, initial unemployment claims fell by 20,000 to 192,000. These figures place the number of new unemployment claims at the same level recorded in late February. 

For the week ending on March 4, the total number of claims reached 1,684,000, down from 29,000 from the previous week. States with the highest number of new claims for the same week were New York (+16,244), California (+9,918), Kentucky (+2,789), Oregon (+1,276), and Ohio (+1,209). Claims decreased by the highest levels in Rhode Island (-1,687), Massachusetts (-1,134), District of Columbia (-937), Illinois (-753), and Florida (-428).

Read more from the Department of Labor.

Real wages have fallen 0.4 percent this year

The BLS announced earlier this week that real wages fell by 0.1 percent in February, following a decrease of 0.3 percent in January.

This comes as the Federal Reserve point to tightness in the labor market as a driver of inflation. While unemployment remains low, workers are not seeing real increases in purchasing power as a result. 

Compared to February 2022, real wages have fallen by an average of 1.3 percent for workers in the United States. However, there has been some movement towards closing this gap over the last few months, and it is currently down from -2.5 percent from December 2021 to December 2022.
The list of refundable and non refundable tax credits: the maximum the IRS can return to you

US families are looking at the possible credits they can use to deduct them from the taxes they have to pay this season. For some of these cases, the US Treasury may even return money to households.

There are different types of credits, which are structured in what are known as refundable and non-refundable rates. In this case, it should be mentioned that there may be a series of hybrid models that can be paid partly by the taxpayer and partly by the state to the families.

Read more

What are the similarities between the two?

The purchase of usually secure government bonds is a factor in the downfall of both companies.

With interest rates are on the rise, to levels not seen in the last two decades, the price of government bonds falls. The bonds are purchased at a fixed interest rate, making them less attractive as this increases.

However, cheaper government bonds are not a problem if they do not need to be sold. An issue for both banks with this is that they were both suffering from financial black holes and needed to recoup a lot of funds quickly. Thus, the selling of their government bonds was done at a value far below the price when purchased. While this sticking-plaster could be a tactic in the short-term, the lack of forward-thinking worries investors.

And when investors are worried, the take out their money.
Are the collapses of Credit Suisse and Silicon Valley Bank connected?

The Swiss central bank saved the future of one of the most well known credit lenders in Europe, Credit Suisse. Allegations of financial mismanagement came to a head with the release of its 2022 financial report which noted “material weakness” in its internal control over reporting. One of its biggest lenders pulled out its funding after the announcement.

While a rescue plan was found, the scare has many wondering if another financial crisis is on the horizon. The demise of Silicon Valley Bank (SVB) last week could be another indicator of more troubles ahead. Though there are links between the problems faced by the two banks, other individual factors can explain why one is no longer functioning while the other inspired a market rally on Thursday.

Read more
What can you do to stop the controversial Willow Project?

The project’s opponents however have said that it could a negative impact on local communities, as well as wildlife and their habitats. There are also concerns about the risk of oil spills and increased greenhouse gas emissions. This includes a projected 9.2 million metric tons of carbon pollution per year.

Online activism against the project has increased the past week, and if you are among those who wish to express opposition to Willow, there are some ways by which you could do it.

Read more

First Republic Bank shares crash

Another bank is in crisis: First Republic Bank shares have crashed and the company is said to be currently weighing its options.

Moody's had earlier put the bank on review for downgrade in the midst of concerns over the health of regional financial firms.

US banks being closely monitored by OCC

The US Office of the Comptroller of the Currency (OCC), which supervises national banks, is engaging in 'heightened monitoring' of national banks and coordinating with other regulators amid broader turmoil in the banking sector, a spokesperson for the bank regulator has confirmed.

In a statement, the OCC said it is "committed to ensuring that national banks remain safe and sound. In times like these, the OCC engages in heightened monitoring and coordinates with other regulatory agencies in the United States and globally to ensure that the federal banking system remains a trusted source of strength to consumers, businesses and communities".

Switzerland to hold meeting to tackle Credit Suisse crisis

European bank stocks had an initial surge today after Swiss National Bank threw a lifeline to embattled Credit Suisse.

However, the uptick didn't last long, with gains trimmed later in the day. The Swiss government is set to hold a meeting on the crisis.

In the U.S., stock futures are showing a small downturn.
Silicon Valley Bank collapse explained: which companies are affected by SVB failure?

Along with big names like Etsy and Roku, hundreds of smaller companies will be impacted by the collapse of Silicon Vally Bank, and some may not survive.

AS USA's Maite Knorr-Evans looks at the fall-out from the SVB failure.

Gidget Alikpala
How does FDIC insurance work? Are all bank accounts insured by the FDIC?

AS USA's Maite Knorr-Evans takes a look at the protections that the Federal Deposit Insurance Corporation offers to customers of the Silicon Valley Bank, which collapsed late last week.

Gidget Alikpala
Requirements to receive up to $2,000 for the Mortgage Interest Tax Credit (MCC)

First-time homebuyers may be eligible to receive financial assistance with their mortgage payments through the Mortgage Interest Tax Credit (MCC). The program is targeted at low- and moderate-income families to help them afford homeownership by offsetting a portion of the amount they owe in mortgage interest.

AS USA's Greg Heilman has the full lowdown.

Gidget Alikpala

European markets higher Thursday

Regional investors have heaved a sigh of relief after the Swiss National Bank said it would provide a liquidity backstop to beleaguered bank Credit Suisse.

Shares of Credit Suisse shot up by as much as 30% in early trade on the news, before settling to a 23% increase around 9 a.m. London time.

Most sectors and major bourses opened on a positive note, with gains led by a rally in bank stocks.
What is happening with Credit Suisse, who controls its capital and why are CDS so important?

Turmoil in the banking sector continued into Wednesday with Credit Suisse leading the day’s headlines. The refusal of its largest shareholder to increase the Swiss bank’s capital caused its shares to plummet by nearly a quarter on the Zurich Stock Exchange. However, the Swiss National Bank said it would provide a liquidity backstop, and the crisis has been averted for now.

Read more on what caused the value of the giant to fall

Gidget Alikpala
How is the failure of SVB affecting mortgage rates?

The failure of Silicon Valley Bank at the end of last week was the largest bank collapse since the 2008 financial crisis and the second largest in US history. The demise of the financial institution which caters to tech start-ups and venture capitalists sent shockwaves through the economy and prompted emergency measures from the White House to prevent contagion.

One of the knock-on effects of the turmoil in the banking sector was a drop in mortgage rates which have been rising steadily in recent weeks. The mini banking crisis that played out between Thursday and Tuesday saw the popular 30-year fixed-rate mortgage drop nearly half a percent by Monday. However, the panic in financial markets has eased and mortgage rates across the board were higher on Tuesday but still below their peak last week.

Read Greg Heilman's full coverage to understand how the SVB failure will impact the Federal Reserve's decision to raise rates, which will have impacts on the mortgage market. 

Gidget Alikpala
What are the biggest US banks by volume of deposits? Are bigger banks better or riskier?

At a minimum, workers should be aware that the federal government, through the Federal Deposit Insurance Corporation (FDIC), ensures up to $250,000 for most checking, savings, or retirement accounts.

There are just under 5,000 banks with more than 81,000 branches where depositors are protected in case a bank collapses. When selecting a bank or opting into a private retirement account like a 401(k) or an IRA, you can ask either bank employees or your employer if up to $250,000 will be insured by the FDIC.

To better understand the SVB collapse and how the event reflects on the safety of the financial sector, check out the story from Maite Knorr-Evans.

Gidget Alikpala

Key inflation measure showed wholesale prices dropped in February

Wholesale price inflation slowed dramatically in February according to Producer Price Index data released by the Labor Department on Wednesday. Year-on-year prices rose just 4.6% last month, experts expected a 5.4% increase, down from January’s revised number of 5.7%.

Month-over-month the price that America’s producers get paid for goods and services was 0.1% lower, compared with rise of 0.6% revised figure for January. It had been predicted to increase by 0.3%.

Mortgage rates reverse course after SVB failure knocks half a percent off 30-yr fixed

The mini banking crisis that unfolded at the end of last week sent shockwaves through the banking sector. It also raised hopes that the Federal Reserve would hold off raising interest rates by 50 basis points when policymakers meet next week.

As mortgage rates are closely tied to the cost of borrowing for banks, that meant good news for homebuyers in the form of cheaper home loans. Between Thursday and Monday the rate on a 30-year fixed-rate mortgage dropped by nearly half a percent reversing a weeks-long upward trend.

However, emergency measures to shore up financial institutions have restored confidence in the banking sector and calmed investors nerves. On Tuesday mortgage rates rose once again but the daily average is still more than a quarter below their high last week.

Welcome to AS USA's live blog on inflation relief and financial news

Good morning and welcome to AS USA's live blog on inflation relief and financial news for Thursday, March 16, 2023.

Throughout the day we will bring you the latest updates on measures being taking to bring down inflation and provide relief to Americans coping with rising prices. As well, the emergency measures to shore up the US banking system to avert a crisis after two major bank failures.

Also, we'll keep you informed on the 2023 tax season and tax credits to keep in mind when filing this year.

Gidget Alikpala

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