Bank of America says it will cut overdraft fees this year.
The country’s second-biggest bank will trim its $35 overdraft fee to $10 starting in May.
Bank of America will reduce — but not eliminate — overdraft fees for its 63 million retail customers, the biggest step by a major bank to dial back the pricey penalties, which have drawn increased scrutiny from regulators.
In May, the bank, the country’s second-biggest, will cut its fee for overdraft services to $10 from $35, it said in a statement. That fee is charged when a transaction exceeds the account’s balance and the bank covers it, allowing the payment to go through. It also will eliminate a $12 fee for transfers from linked accounts to an overdrawn account.
Starting next month, Bank of America will do away with fees for nonsufficient funds, such as when a check bounces, and will stop customers from being able to overdraw their accounts at A.T.M.s.
Some customers still want occasional access to overdraft services, Holly O’Neill, the president of retail banking at Bank of America, said in an interview Tuesday. “Just eliminating or stopping clients from using overdraft is not the solution, so that’s really why we are continuing to retain access to our clients to overdraft at a much lower fee,” she said.
Banking regulators have taken aim at overdraft practices in recent months. Rohit Chopra, the director of the Consumer Financial Protection Bureau, has said many lenders have become “hooked on overdraft fees” to feed their profits. The acting comptroller of the currency, Michael J. Hsu, has said the charges disproportionately affect vulnerable customers.
Bank of America’s plan is the most aggressive among the biggest banks, but smaller banks have gone further: Capital One and Ally Financial eliminated fees for overdrafting last year. Some lenders have introduced less-punitive alternatives to the fees, like grace periods or small short-term loans.
JPMorgan Chase, the country’s largest bank, said last month that it planned to give overdrawn customers an extra business day to raise their balances to within the $50 “overdraft cushion” that prevents fees from being charged. Even before Tuesday’s announcement, Bank of America was offering strapped customers loans of up to $500 that must be repaid over three months.
“This is a very strong program that creates both limits, guardrails and the supports that people need to get through cash crunches that are going to continue to come to many working families,” Mike Calhoun, the president of the Center for Responsible Lending, an advocacy group that promotes financial fairness, said in an interview.
The nonprofit, which was among the community groups consulted by Bank of America on the new policies, has urged all financial institutions to eliminate overdraft fees.
“Families of color are more likely to be hit with overdraft fees, even though they are less likely to have bank accounts than other customers,” he said. Because overdraft fees are a leading cause of involuntary account closures, minorities are more at risk of being pushed out of the mainstream financial system, he added.
The U.S. banking industry’s revenue from overdraft and nonsufficient funds was $15.47 billion in 2019, according to a December estimate from the consumer bureau. JPMorgan Chase, Wells Fargo, and Bank of America brought in 44 percent of the fees that year among banks with assets of more than $1 billion, the bureau said.
Bank of America declined to say how much it makes from overdraft fees. Ms. O’Neill said overdraft fees account for less than 1 percent of its total revenue, but said the changes would reduce its overdraft fee revenues “by hundreds of millions of dollars.” In the third quarter, the bank’s total revenue was $22.8 billion.
Jerome H. Powell, the Federal Reserve chair, said that a rapidly-healing economy no longer needed as much help from the central bank and emphasized that controlling inflation — which he and his colleagues can do by raising interest rates — would be a critical part of setting the stage for a long and stable expansion that boosts workers.
Mr. Powell, who is testifying before members of the Senate Banking Committee on Tuesday as he seeks confirmation for a second term as chair, confronts a complicated economic moment as he moves toward another four-year stint as head of the world’s most powerful central bank.
The economy is growing swiftly, but it has been buffeted by repeated waves of virus and by a surge in inflation that has proved stronger and longer lasting than economists had expected. Workers are finding jobs and winning wage increases, but the rising costs of housing, gas, food and furniture are pinching shoppers and tanking consumers’s confidence.
The Fed is charged with maintaining price stability, and its officials have recently signaled that they could raise interest rates several times this year to try to cool the economy and prevent rapidly rising prices from becoming permanent. Mr. Powell — whom President Biden has nominated to a second term in his job — reiterated that commitment on Tuesday.
“If we see inflation persisting at high levels longer than expected, if we have to raise interest rates more over time, we will,” Mr. Powell said. “We will use our tools to get inflation back.”
But the central bank also has a second mandate: It is supposed to guide the economy toward full employment, a situation in which people who want to work and are able to do so can find jobs. Cooling off the economy can slow hiring, so trying to foster a strong labor market and trying to set the stage for a strong labor market can require a balancing act for policymakers.
Mr. Powell squared the two goals in his testimony, suggesting that keeping price gains under control will be critical for achieving a sustainably strong labor market.
“High inflation is a severe threat to the achievement of maximum employment,” Mr. Powell said.
If rapid price gains start to become “entrenched in our economy,” the Fed might have to react starkly to choke off runaway inflation and risk touching off a recession, Mr. Powell said. To avoid a painful policy response and to instead set the stage for a strong future labor market, it is important to control inflation, he indicated.
“That’s going to require us to use our tools, to the extent that they work on the demand side, while we also expect some help from the supply side,” Mr. Powell said.
“Supply” is how many goods and services companies are able to produce. Supply has been struggled to catch up with booming demand as the economy has reopened from the pandemic, as shipping routes are clogged, factories shut down amid virus outbreaks and employers struggle to hire to ramp up production. The “demand side” of the economy is how much people want to buy and is the part of the economy the Fed’s policies primarily impact in the near-term.
Economists increasingly expect Fed officials to make three or four interest rate increases in 2022, moves that would make borrowing expensive for households and businesses and slow down spending and growth. That could, in turn, slow hiring, keep wages from growing as swiftly, and hold down prices over time as people shop less.
The Fed’s rate increases would come on top of other moves the Fed is making to keep the economy from overheating: Officials are slowing down the big bond purchases they had been using to lower longer-term interest rates and stoke growth, and policymakers have signaled that they might begin to shrink their bond holdings this year.
If the Fed trims those balance sheet holdings, that will reinforce the move higher in interest rates, cooling off the economy further.
“The committee hasn’t made any decisions about the timing of any of that — I think we’re going to have to be both humble and a bit nimble,” Mr. Powell said.
He noted that while all members of the Fed’s policy-setting committee expect to raise interest rates this year, how many increases the central bank actually makes will depend on how the economy evolves at an uncertain moment.
The prospect that interest rates are likely to start rising soon has unnerved stock investors lately. Higher rates discourage risky investments like stocks, and can curb corporate profit growth. Wall Street’s major benchmarks moved between losses and gains as Mr. Powell spoke. The S&P 500 was slightly higher just before midday.
The Fed’s recent and decisive move toward inflation-fighting mode could be shored up by an inflation report, slated for release on Wednesday, that is expected to show the fastest growth in consumer prices since June 1982.
Lawmakers emphasized that they hoped to see a continuation in the nation’s strong labor market recovery — which last month drove unemployment back below 4 percent.
But Republicans, including Senator Patrick J. Toomey of Pennsylvania, worried that the Fed might have moved too slowly to counteract price gains thanks in part to a new, employment-focused policy approach Mr. Powell ushered in.
“I worry that the Fed’s new monetary policy framework has caused it to be behind the curve,” Mr. Toomey said. But he then praised the Fed for adjusting its stance as conditions have evolved, and inflation has shown signs of sticking around.
The Fed had initially forecast that inflation would fade, but it — like many private sector forecasters — got that wrong.
“We’re not really seeing, yet, the kind of progress essentially all forecasters really thought we’d be seeing by now,” Mr. Powell said, at least when it comes to snarled supply chains.
“People want to buy cars — carmakers can’t make any more cars, because there are no semiconductors,” he said, emphasizing what an unusual period the pandemic has been. “That’s never happened.”
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Jerome H. Powell, the chair of the Federal Reserve, told lawmakers on Tuesday at his nomination hearing that the central bank was making changes to rules surrounding financial trades to prevent the kind of eyebrow-raising transactions surrounding three top Fed officials.
The Fed has come under fire for allowing central bank officials to trade securities for their own portfolios in 2020, a year in which the Fed was actively saving many asset classes and markets. That included notable trades by two of the 12 regional reserve bank presidents and the Fed’s vice chair, who is a member of the Fed’s Board of Governors in Washington.
The mere possibility that officials could have financially benefited from the privileged knowledge they had access to as policymakers has prompted outrage and lawmaker questions. All three of the officials in question have resigned early, one citing health concerns, one giving no reason and one explicitly referencing the trading issues.
Mr. Powell has repeatedly acknowledged that the trading scandal created an appearance problem for the Fed, and he and his colleagues moved quickly to establish a new set of ethics rules. On Tuesday, he suggested that those changes should preclude the types of trades that have come into question.
“We’ve really made a complete change in the way we govern purchases and sales of securities,” Mr. Powell said while testifying before members of the Senate Banking Committee on Tuesday as he sought confirmation for a second term as chair.
He noted that buying individual stocks would not be disallowed and sales must come with a 45-day notice.
“You’ve got to clear that trade — that sale — with a central body,” he said. “We don’t have a group in the center that applies these rules consistently and clearly across the whole system. We will have that now, at the Board of Governors.”
That means that “there will be no ability to time the market,” Mr. Powell added.
The New York Times reported last week that Richard H. Clarida, the Fed’s vice chair, had engaged in more extensive trades than he initially disclosed and corrected his 2020 financial disclosures in late December. Ethics experts said one of his updated trades raised questions given he sold a stock fund on Feb. 24 before repurchasing it on Feb. 27, a day before Mr. Powell announced that the central bank stood ready to help markets and the economy.
His initial disclosures had noted only the purchase of the stock fund, which the Fed had described on his behalf as a planned portfolio rebalancing. But the rapid move out of and back into stocks called that explanation into question, some experts said, and the repurchase could have put Mr. Clarida in a position to benefit as the Fed reassured markets.
Mr. Clarida announced on Monday that he planned to step down two weeks ahead of his planned departure at the end of the month, without giving a reason.
The Fed’s new notice period would probably prevent future trades like the rapid-fire one Mr. Clarida made.
Mr. Powell noted that the Fed’s old approach to policing trading activity among its personnel had been in place for a long time, noting that weaknesses had only recently surfaced — and had are being rectified.
“The old system was in place for decades on end, and then suddenly it was revealed as insufficient,” he said, calling the new system “easily the toughest in government.”
Stocks on Wall Street rose on Tuesday, resuming a rally that began late Monday as technology stocks recovered from an early swoon.
The S&P 500 was up about half a percent in midday trading, while the Nasdaq composite jumped more than 1 percent. Each had dropped about half a percent in early trading.
On Monday, the Nasdaq composite fell close to 3 percent before rebounding and ending the day with a slight gain.
The market’s recovery on Monday was another example of the resilience stocks have shown throughout most of the pandemic, even as hospitalizations from Covid-19 climb to new highs, but analysts cautioned that recently volatility in tech stocks could soon become a problem for investors.
Many tech stocks that were early pandemic winners, like Netflix and Zoom, remain well below their highs, and the Nasdaq is close to being 10 percent below its last peak, a psychological threshold on Wall Street called a “correction” that serves as a marker of stock investors’ changed mood.
“There is nothing magical about drawing the line at 10 percent other than it makes people realize that stocks don’t always go up,” said Vincent Reinhart, the chief economist of Dreyfus and Mellon.
Tuesday’s gains came as Jerome H. Powell testified in front of the Senate Banking Committee as part of the confirmation process for a second four-year term as the chair of the Federal Reserve.
“If we see inflation persisting at high levels longer than expected, if we have to raise interest rates more over time, we will,” Mr. Powell said. “We will use our tools to get inflation back.”
Many economists expect the Fed to raise interest rates, possibly as soon as March.
In a single day over the holidays, nearly one in three United Airlines employees called in sick at Newark Liberty International Airport, a major hub for the airline, the company’s chief executive said on Tuesday.
The revelation, which came in a memo to staff from the airline’s chief executive, Scott Kirby, helps explain why U.S. airlines have had to cancel more than more than 27,000 flights, or about 8 percent of all scheduled trips, over two weeks starting the day before Christmas, according to FlightAware, a data tracking service. Employees calling in sick and storms that delivered strong winds, rains and in some cases record snowfall at airports nationwide wreaked havoc on United and other companies and stranded many travelers.
Overall, about 3,000 United Airlines employees — more than 4 percent of its work force — have recently tested positive for the coronavirus, Mr. Kirby said in his memo. The vast majority are not working, and United is cutting its flight schedule to manage the shortage.
“Our frontline teams continue to put in a tremendous effort during what I know is an incredibly challenging and stressful time — the Omicron surge has put a strain on our operation, resulting in customer disruptions during a busy holiday season,” he said.
In the two-week period starting just before Christmas, United canceled more than 2,500 flights. SkyWest Airlines, which operates shorter flights for major carriers including United, canceled more than 4,600 trips over that period, more than any other airline. Southwest Airlines was close behind with more than 4,000 flights.
United was one of the first major companies in the United States to impose a vaccine mandate, with nearly all of its workers now vaccinated. Mr. Kirby said that the policy was working.
No vaccinated employees are hospitalized and the hospitalization rate among United employees since the mandate went into effect in the fall has been far lower than that of the general population, he said. Before the requirement, more than one United employee died each week from the virus, on average, Mr. Kirby said. The airline has gone eight weeks without a single virus-related death among vaccinated employees.
“In dealing with Covid, zero is the word that matters — zero deaths and zero hospitalizations for vaccinated employees,” he said. “And while I know that some people still disagree with our policy, United is proving that requiring the vaccine is the right thing to do because it saves lives.”
The flight cancellations have continued into this week as airlines preemptively adjust schedules to manage fallout from the holiday disruptions and staffing problems, though the number has fallen steadily in recent days. More than 650 flights on Tuesday were canceled, about 150 of them operated by United.
Boeing said on Tuesday that it received 79 new orders for planes in December, capping its best year of sales since 2018 as it tried to move past a prolonged crisis caused by two crashes of the 737 Max jet.
The company sold a net 535 new planes last year after factoring in cancellations, a big turnaround from 2020 when cancellations exceeded new sales by 471 planes and just ahead of its chief rival, Airbus, the European aviation giant. But Boeing delivered 340 aircraft to customers, far fewer than Airbus.
In addition to the Max crisis, the company’s performance has also been dented by quality concerns about its 787 Dreamliner that forced Boeing to slow production and suspend deliveries of that plane.
About two-thirds of the planes sold last year were variants of the Max, which regulators around the world grounded for nearly two years after the crashes, which killed a total of 346 people. Boeing’s December orders included the sale of 50 Max jets to Allegiant Air in what amounted to a big shift by the budget airline, which typically buys used planes.
Since the Federal Aviation Administration allowed the Max to fly again in late 2020, the plane has been used for just over 300,000 flights carrying paying passengers, with about 475 of the planes in circulation, the company said.
Boeing also sold a record 84 freighter planes last year, reflecting strong demand for air cargo. At the start of this year, the company had 4,250 orders in its backlog, about 80 percent of which are for the Max.
Airbus, which is based in France, said on Monday that it sold 507 planes last year and delivered more than 600. It has an order backlog of 7,082 planes.
WASHINGTON — The World Bank said on Tuesday that the pace of global economic growth was expected to slow in 2022, as new waves of the pandemic collide with rising prices and snarled supply chains, blunting the momentum of last year’s recovery.
This projection underscores the stubborn nature of the public health crisis, which is widening inequality around the world. The pandemic is taking an especially brutal toll on developing countries, largely owing to rickety health care infrastructure and low vaccination rates.
“The Covid-19 crisis wiped out years of progress in poverty reduction,” David Malpass, the World Bank president, wrote in an introduction to the report. “As government’s fiscal space has narrowed, many households in developing countries have suffered severe employment and earning losses — with women, the unskilled and informal workers hit the hardest.”
Global growth is expected to slow to 4.1 percent this year, from 5.5 percent in 2021, according to the World Bank. Output is expected to be weaker, and inflation is likely to be hotter than previously thought.
The World Bank said growth rates in most emerging markets and developing economies outside East Asia and the Pacific would return to their prepandemic levels, still falling short of what would be needed to recoup losses during the pandemic’s first two years. The slowdown in these regions will be more abrupt than what advanced economies will experience, leading to what the World Bank describes as “substantial scarring” to output.
Income inequality is widening both within and between countries, the World Bank said, and could become entrenched if disruptions to education systems persist and if high national debt hinders the ability of nations to support their low-income populations. Globally, the prospect of higher interest rates and withdrawal of fiscal support could take a toll on low-income countries while they are already vulnerable.
Growth in the world’s two largest economies, the United States and China, is poised to moderate considerably. The World Bank said that the recently passed infrastructure law would do little to buttress growth in the United States in the near term and that pandemic restrictions were curbing consumer spending and residential investment in China.
The World Bank is recommending stronger debt relief initiatives to help poor countries as well as urging support for policies that will strengthen their financial systems and improve local infrastructure in ways that will spur growth. Easing global supply chain bottlenecks, particularly for Covid vaccine doses, will be crucial.
“At the start of 2022 the supply of vaccines is increasing appreciably, but new variants and vaccine deployment bottlenecks remain major obstacles,” Mr. Malpass said.
Citadel Securities, the powerful trading firm that serves brokerage firms like Robinhood, said on Tuesday that it had sold a stake to the venture capital firms Sequoia Capital and Paradigm for $1.15 billion, uniting an established financial giant with two top Silicon Valley investors.
The deal, which values Citadel Securities at about $22 billion, is the first outside investment in the firm, which was founded two decades ago by the billionaire Kenneth C. Griffin, who runs the multibillion-dollar hedge fund Citadel.
It’s a bet on disrupting Wall Street. Citadel Securities has become a trading giant, dominating market making for stocks and options. Its institutional business now has more than 1,600 clients, while it also works with consumer-facing brokerage firms like Robinhood.
“Citadel Securities has carved out a unique place in the financial markets through its ability to absorb and price risk using techniques and capabilities from far outside the traditional world of Wall Street,” Alfred Lin, a Sequoia partner who will take a seat on Citadel Securities’ board, said in a statement.
Sequoia is one of Silicon Valley’s top venture firms, having backed the likes of Apple, DoorDash and WhatsApp. Paradigm was founded by Fred Ehrsam, a co-founder of the cryptocurrency exchange Coinbase, and Matt Huang, who led crypto investments at Sequoia.
Citadel Securities has been criticized for its relationship with Robinhood, where it pays the firm for the right to process users’ trades, which some say could create conflicts of interest. Sequoia is also an investor in Robinhood.
Mr. Huang of Paradigm said that Citadel Securities would move into more markets and asset classes, “including crypto.” Mr. Griffin has mixed feelings about crypto, so this is a noteworthy aside.
Mr. Griffin, whose net worth was most recently estimated at $21 billion, is believed to own about 85 percent of the securities unit, according to Bloomberg. If that’s the case, his stake in Citadel Securities alone would be valued at some $18 billion.
The National Labor Relations Board announced Monday that it had certified a victory for a union at a second Starbucks store in the Buffalo area, where votes were tallied in December but remained inconclusive as the union challenged the ballots of several employees it said did not work at the store.
The labor board declared the union the winner at another Buffalo-area store when it counted the votes on Dec. 9, and the union lost an election at a third store.
The board agreed with the union that the challenged ballots should not count, giving the union a 15-to-9 win. None of the other roughly 9,000 company-operated Starbucks locations in the United States have a union.
Labor experts have said that establishing a second unionized store in the same market could provide a significant boost to the union, Starbucks Workers United. The union is part of Workers United, an affiliate of the giant Service Employees International Union.
Under U.S. labor law, employers are obligated to bargain in good faith with a union that has won an N.L.R.B. election, but they are not required to reach agreement on a contract. As a result, winning a contract often requires unions to apply economic pressure such as a work stoppage, something that a second store could make more potent.
The newly unionized store, near the Buffalo airport, filed for a union election in late August, along with the two other stores that voted in December. The union has formally objected to the outcome of the election that it lost, and that objection is pending before the labor board.
Starbucks has 10 business days to request an appeal of the decision announced on Monday. If the request was filed and denied, the result would become final. A company spokesman said that Starbucks was evaluating whether or not to appeal and that it believed its employees’ voices should be heard.
Throughout the union campaign last year, Starbucks dispatched out-of-town managers and a top executive to Buffalo in what it said was an attempt to fix operational issues like understaffing and the poor layout of certain stores. The officials often questioned employees about their workplaces and helped with menial tasks like throwing out garbage.
Several union supporters said they were intimidated by the presence of the officials and were disoriented by other disruptions to their work lives, such as the company’s decision to temporarily close certain stores and send employees to other locations.
Since the initial victory in Buffalo, workers at several other Starbucks stores throughout the country have filed for union elections, including in Boston, Chicago, Seattle and Knoxville, Tenn.
“Today we put an end to Starbucks’s delay attempts and formed our union,” Alexis Rizzo, a shift supervisor at the second unionized location, said in a statement, adding: “We demand that Starbucks stop their union busting in Buffalo and across the nation immediately. No other partners should have to endure what we went through to have a voice on the job.”
Starbucks has denied that it has sought to intimidate employees, but it has said it prefers that its employees not unionize.
Last week, the federal labor board scheduled an election for a Starbucks store in Mesa, Ariz., where workers had filed paperwork in November. Ballots in the election will be mailed out on Friday and will be due back by Jan. 28. Workers at more than 10 other locations, including three in the Buffalo area, are still awaiting decisions from the board on if and when it will set election dates.
Reporting to work has always meant accepting a variety of unpleasantries: commutes, pre-coffee chitchat, people who would like you to do what they tell you to do even if it’s not yet 10 a.m.
But for some, the last year has rebalanced the power seesaw between worker and boss. Maybe it was the surge of people quitting: A record high 4.5 million Americans voluntarily left their jobs in November. Maybe it was the ebbing will-they-won’t-they tides of return to office plans. Whatever the change, more workers are feeling empowered to call out their managers, Emma Goldberg writes for The New York Times.
The scrutiny of workplace behavior comes after several years of prominent conversation about appropriate office conduct. The #MeToo movement propelled dozens of executives to step down after accusations of sexual assault. The Black Lives Matter protests after the killing of George Floyd prompted corporate leaders to issue apologies for past discriminatory behaviors and the lack of racial diversity in their work forces and to pledge to make amends.
And increasingly, as people’s work routines have been upended by the pandemic, they’ve begun to question the thrum of unpleasantness and accumulation of indignities they used to shrug off as part of the office deal.
“The tolerance for dealing with jerky bosses has decreased,” said Angelina Darrisaw, chief executive of the firm C-Suite Coach, who saw interest in her executive coaching services rise last year. “You can’t just wake up and lead people,” she added. “Companies are thinking about how do we make sure our managers are actually equipped to manage.”
Today in the On Tech newsletter, Shira Ovide writes that the speed by which electric vehicles have taken over Norway has stunned even the cars’ enthusiasts.