%1

The federal government has distributed more than half of the $410 billion in stimulus payments to individuals approved in the pandemic-relief bill signed by President Joe Biden this month, in a cash injection set to boost the U.S. economy, Bloomberg News reported. The $242 billion disbursed so far have gone to approximately 90 million households, according to a statement from the Treasury Department on Wednesday. The first payments were mostly sent by direct deposit, which some started receiving this past weekend, the Treasury said. The $1,400-per-person payments, which most Americans qualified for, are arriving amid a widening reopening of businesses across the country as vaccinations rise and coronavirus infections slow. The Treasury said that payments appeared for some people starting last Friday, but with the official payment date set at March 17, the funds might not have been accessible up to that day. The average payment so far is $2,689, the Treasury data indicate. Individuals earning up to $75,000 or couples making less than $150,000 qualify for $1,400 payments for themselves and each adult or child dependent. The payments phase out as income rises, with singles making $80,000 or couples earning $160,000 not qualifying for any aid.

The Consumer Financial Protection Bureau (CFPB) yesterday sued a student loan debt relief company, its owner, and manager for allegedly charging thousands of consumers more than $3.5 million in illegal upfront fees. The lawsuit filed in federal district court accuses California-based Student Loan Pro, Judith Noh, and Syed Gilani of violating the Telemarketing Sales Rule (TSR). FNZA Marketing, LLC, is also named as a relief defendant. Student Loan Pro, which operated from 2015 through 2019, provided federal student loan debt-relief services to consumers nationwide. The CFPB alleges that the company charged borrowers the illegal upfront fees to file paperwork on their behalf to access free debt-relief programs available to consumers with federal student loans. The CFPB’s lawsuit seeks monetary relief for consumers, and asks the court to end the illegal conduct. A copy of the complaint can be found here.

The Treasury Department and the Internal Revenue Service (IRS) have started the process of sending out the $1,400 direct payments included in President Biden's coronavirus relief law, the agencies said Friday, The Hill reported. The Biden administration has said that people will start to see the payments in their bank accounts as early as this weekend. The IRS said Friday that some people may see the payments in their accounts as pending or provisional in the coming days, ahead of the official payment date of March 17. People will be able to start to check the status of their $1,400 stimulus payments on the IRS's website on Monday, the agency said Friday. Americans will be able to look up the status of their payments using the IRS's "Get My Payment" web tool. The first batch of payments is being sent by direct deposit, and additional tranches will be distributed by direct deposit, paper check and debit cards in the coming weeks. Treasury and IRS officials said they expect people to start receiving paper checks and debit cards before the end of the month. Read more. 

In related news, President Biden is expected to tap Gene Sperling, a veteran of Democratic administrations, to lead the implementation of the $1.9 trillion coronavirus relief law, an administration official said yesterday, the Wall Street Journal reported. Sperling led the White House National Economic Council under President Bill Clinton and President Barack Obama and served as an informal adviser to Biden’s presidential campaign. Biden is set to give remarks Monday on the implementation of the law, which includes direct payments, an extension of enhanced jobless benefits and an extension of the child tax credit. Last week, he stressed the importance of the next steps, recalling that in 2009, as vice president, he took on a leading role to ensure that the Recovery Act dollars were being deployed effectively. “It’s one thing to pass the American Rescue Plan. It’s going to be another thing to implement it. It’s going to require fastidious oversight to make sure there’s no waste or fraud, and the law does what it’s designed to do,” he said. Read more. (Subscription required.) 

Americans extracted more cash from their homes through cash-out refinancings in 2020 than in any year since the financial crisis, the Wall Street Journal reported. U.S. homeowners cashed out $152.7 billion in home equity last year, a 42% increase from 2019 and the most since 2007, according to mortgage-finance giant Freddie Mac. It was a blockbuster year for mortgage originations in general as well: Lenders churned out more mortgages than ever in 2020, fueled by about $2.8 trillion in refis, according to mortgage-data firm Black Knight Inc. Some borrowers viewed cash-out refis as a way to cushion themselves against an uncertain economy last year. Others wanted to build and redecorate, and being stuck at home gave them the time to do the paperwork. Homeowners also had more equity available to tap: Though home prices tend to fall during economic downturns, they jumped during the Covid-19 recession. The median existing-home price rose to about $310,000 in December, an increase of almost 13% from December 2019. The acceleration in price growth has spread past cities to suburban and rural areas as Americans re-evaluate where they want to live during and after the pandemic. Cash-out refis got a bad rap after they exploded in the run-up to the 2008 financial crisis. Borrowers tapped their homes like they were ATMs. When home prices plunged, they were left owing more than their homes were worth. Now, in 2021, many economists expect home prices to keep growing.

The House Financial Services Subcommittee on Consumer Protection and Financial Institutions will hold a virtual hearing today at 10 a.m. EDT titled "Slipping Through the Cracks: Policy Options to Help America’s Consumer During the Pandemic." To obtain a link to the live webcast of the hearing, view the legislation to be examined and view the witness list, please click here.

A study from personal finance website WalletHub released Monday found that American credit card debt dropped by a record $83 billion last year, The Hill reported. “While 2020 was a year to forget in most respects, Americans excelled in terms of paying off credit card debt, getting rid of a record $82.9 billion in debt. This is a major accomplishment, considering that consumers have added an average of $54.2 billion in credit card debt per year over the past 10 years,” WalletHub wrote in its analysis. Though credit card debt plunged last year as most of the country went into quarantine amid the coronavirus pandemic, WalletHub notes in its report that the average household debt remains high at $8,089 and the U.S. collectively owes more than $1 trillion to credit card companies. The website compiled its report using data from the Census Bureau, Federal Reserve and TransUnion.

Twenty years ago, a new breed of energy companies promised consumers that deregulation of the electricity industry would cut their power bills. The opposite happened, the Wall Street Journal reported. U.S. consumers who signed up with retail energy companies that emerged from deregulation paid $19.2 billion more than they would have if they’d stuck with incumbent utilities from 2010 through 2019, a Wall Street Journal analysis of U.S. Energy Information Administration data found. Retail energy companies buy electricity from generators — power-plant operators, wind farms, solar-power firms—and sell it to consumers, usually over the local utilities’ wires. Giving consumers a choice between their old utilities and new rivals, the argument for deregulation went, would create competitive pricing. But in nearly every state, they have charged more than their incumbent utilities in each of the five years from 2015 through 2019, the Journal analysis found. The Journal’s analysis of power prices in 13 states and the District of Columbia excluded other states where retail companies supplied less than 1% of residential electricity in 2019. Consumers on retail plans paid $1.9 billion extra in Pennsylvania and $1.7 billion in New York during the 10-year period examined by the Journal. In 2019, consumers paid $3.1 billion more in D.C. and the 13 states together, the biggest single-year difference ever over what they would have paid their utilities. On average across D.C. and the states, retail electricity cost 14% more than utility power in 2019, an all-time high.