A review of the banking tax cut reveals a loss in jobs and a decline in loans.
August 07, 2018
Trump officials increase state autonomy over waterways. In a memo issued by The Army Corps of Engineers, the Trump administration has relinquished federal jurisdiction over certain water bodies and encouraged states and tribes to take over this responsibility. The memo sought to clarify the conditions under which the Federal government could transfer these duties to states under the Clean Water Act in regards to streams and wetlands. Officials claimed that these actions are a part of President Trump’s larger efforts to improve infrastructure development by “providing states and tribes the clarity they need to better balance their environmental protection mission with their economic development goals.” Past observations have found that even with federal oversight, states are often better at overseeing permitting, and so this memo encourages more states to apply for these responsibilities and streamline development and conservationist efforts. [The Hill]
Amid trade disputes, President Trump is scheduled to dine with business leaders.President Trump is expected to meet with the leaders of various companies that have been affected by the ongoing trade dispute between countries such as Mexico, Canada, and the EU. Some of these industry leaders represent executives from several organizations that have been superficially impacted by Trump’s tariffs on paper, steel and aluminum such as International Paper, Boeing, Fiat Chrysler and even PepsiCo. It is unclear what sort of conversation will occur, but President Trump is expected to continue to defend his protectionist trade actions as he has in recent weeks. [The Hill]
Despite Tax Cuts for banks, loan growth slows and 3,200 jobs were lost. In light of the December corporate tax cuts, Bloomberg examined 23 banks that were subject to the annual Federal Reserve’s stress test to measure the initial effects of this increased cash flow. These slashes reduced the corporate rate from 35% to 25%. They found that in just the first half of 2018, the firms on average saved $388 million based on declines in their reported tax rates. However, they also found that these groups have collectively eliminated 3,200 jobs. Furthermore, the loan growth rate was found to have declined by half from 1.8% to 0.9%. However, banks are still hesitant to jump to conclusions regarding what this reflects about the tax cuts. For example, David Turner, the CFO at Regions Financial Corp. points out that although the growth rate for loans has not increased, it could just be that customers don’t need as much financing at the moment because they just got tax cuts of their own. Ultimately, shareholders were the greatest beneficiaries of these tax cuts. After increased profits observed in the first half of the year, banks indicated that they would be increasing dividends and other payouts by more than $28 billion. There were other winners as well; some banks pledged to increase charity donations and to better finance and support bankers and staff. [Bloomberg]