WASHINGTON, July 13 (Reuters) – The U.S. government posted a $228 billion budget deficit for June, up 156% from a year earlier as revenues continued to weaken and July benefit payments were accelerated into June, the U.S. Treasury Department said on Thursday.
The deficit compares to a June 2022 budget gap of $89 billion. June receipts fell $42 billion, or 9% from a year ago, to $418 billion, while June outlays rose $96 billion, or 18%, to $646 billion.
But some $86 billion worth of July benefit payments were made in June because July 1 fell on a weekend, and without these and other calendar adjustments, the June deficit would have been $142 billion — a 66% increase over June 2022.
For the first nine months of the 2023 fiscal year, which ends Sept. 30, receipts fell $423 billion, or 11%, from the year-ago period to $3.413 trillion. The decline was primarily driven by lower non-withheld individual income taxes due to lower capital gains in 2022 and lower year-end salary bonuses, as well as sharply higher individual tax refunds as the Internal Revenue Service cleared a backlog of unprocessed receipts.
The Federal Reserve has earned $93 billion less this year because it is paying higher interest on bank reserves and no longer has positive net income – a situation that a Treasury official said was expected to continue.
Year-to-date outlays rose $455 billion, or 10% from a year earlier to $4.805 trillion. Higher outlays for Social Security this year have been driven by cost-of-living adjustments, while the interest on the public debt so far this year has risen $131 billion, or 25%, to $652 billion due to higher interest rates.
Also driving up outlays were $52 billion in Federal Deposit Insurance Corp costs to resolve failing banks, a Treasury official said.
Reporting by David Lawder; Editing by Andrea Ricci
BERLIN/LONDON, Feb 13 (Reuters) – A Russian scheme to grant loan payment holidays to troops fighting in Ukraine, and for banks to write off the entire debt if they are killed or maimed, has added to growing pressure for the remaining overseas lenders in Russia to leave.
Almost a year since Moscow launched what it calls a “special military operation” in Ukraine, a handful of European banks, including Austria’s Raiffeisen Bank International (RBIV.VI) and Italy’s UniCredit (CRDI.MI), are still making money in Russia.
The loan relief scheme has not only triggered criticism from Ukraine’s central bank, which said it had appealed to Raiffeisen and other banks to stop doing business in Russia, but also from investors concerned about any reputational impact.
Raiffeisen and UniCredit are both deeply embedded in the Russian financial system and are the only foreign banks on the central bank’s list of 13 “systemically important credit institutions”, underscoring their importance to Russia’s economy, which is grappling with sweeping Western sanctions.
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Their role in supporting the Russian economy at a critical time for President Vladimir Putin has prompted some investors to go public with their misgivings.
“Companies should be very careful,” said Kiran Aziz, of Norwegian pension fund KLP, cautioning of a major risk that the banks could be used to “in other ways finance the war”. KLP funds hold shares in both Raiffeisen and UniCredit.
At the time the payment holiday law was going through parliament in September, Vyacheslav Volodin, the influential speaker of the lower house, made clear its importance to Russia.
“Soldiers and officers ensure the security of our country and we must be sure that they will be taken care of,” he said.
Eric Christian Pederson of Nordea Asset Management, which has more than 300 billion euros ($320 billion) under management, said he too was concerned about Raiffeisen and UniCredit’s Russian presence and had raised this with them.
The requirement that the banks grant payment holidays to soldiers “illustrates the dangers of operating in jurisdictions where companies can … be forced into actions that go directly against their corporate values,” he added.
“We feel that it is right for companies to withdraw from Russia, given its unprovoked attack on Ukraine,” said Pederson. Refinitiv data shows Nordea owns shares in UniCredit.
Banks restructured a total of 167,600 loans for military personnel or their family members, worth more than 800 million euros, between Sept. 21 and the end of last year, Russian central bank data shows.
Raiffeisen said that only 0.2% of its Russian loans are affected by the “government-imposed loan moratorium”, a sum it described as “negligible”. The bank has a total of almost 9 billion euros of loans in Russia, where it has been for more than 25 years, including to companies.
It made a net profit of roughly 3.8 billion euros last year, thanks in large part to a 2 billion euro plus profit from its Russia business.
UniCredit, which entered the Russian market almost 20 years ago when it acquired an Austrian bank, said that the rule was “mandatory under the federal law … for all banks”, declining to say how many of its loans had been forgiven.
The Italian bank added that its business in Russia was focused on companies rather than individuals. Of UniCredit’s more than 20 billion euro total revenue last year, Russia accounted for more than 1 billion euros.
But despite an initial sharp fall, UniCredit’s shares are now significantly higher than before Russia moved its troops into Ukraine on Feb. 24 last year, while Raiffeisen’s, with a more limited free float, have not recovered.
“Any profiteering on the ongoing war is not acceptable or aligned with our view of responsible investments,” said a spokesperson for Swedbank Robur, one of Scandinavia’s top investors, adding that reputational risk was a worry.
Swedbank Robur said it has stakes in both banks, but did not disclose figures.
Larger institutional investors, including France’s Amundi and Norway’s sovereign wealth fund, which advocates responsible investing, declined to comment when asked for their views.
WINDOW CLOSING?
Some foreign banks have made relatively quick exits.
France’s Societe Generale (SOGN.PA) severed its Russia ties in May by selling Rosbank (ROSB.MM) to businessman Vladimir Potanin’s Interros Group.
But the continued presence of two of Europe’s biggest banks is attracting the attention of regulators at the European Central Bank (ECB), one person familiar with the matter said.
Andrea Enria, the ECB’s chief supervisor, said the window to quit was “closing a bit” because Russian authorities were taking a more “hostile” approach. But he also voiced support for any bank wanting to reduce their business there or leave.
Raiffeisen and UniCredit confirmed they were in discussions about Russia with the ECB.
UniCredit said it kept the ECB “fully and regularly up to date on our strategy of orderly de-risking our exposure to Russia”.
But with money still to be made, Raiffeisen saw profit from its business in Russia more than triple last year.
Meanwhile, Russian savers lodged more than 20 billion euros with the bank, which offers a place to deposit funds with fewer sanctions risks.
This means there is no great impetus for banks to leave Russia, despite regulatory pressure.
And in Austria, which has close historical and economic ties to eastern Europe and Russia, politicians are largely silent on Raiffeisen’s continuing Russian presence, which in recent months prompted protests outside its headquarters.
Johann Strobl, Raiffeisen’s CEO, has said he is examining options for the Russian business, although points out that any move is complicated, having earlier said that the bank is not “a sausage stand” that could be closed overnight.
For some the question is more about morality than money.
Heinrich Schaller, head of RBI’s third largest shareholder Raiffeisenlandesbank Oberoesterreich and deputy chairman of Raiffeisen, is among those to have aired doubts about staying.
“Of course it is a question of morals,” he said recently. “No doubt about it.”
Whatever shareholders may say, a decree by Putin is likely to make getting out of Russia difficult. It banned investors from so-called unfriendly countries from selling shares in banks, unless the Russian President grants an exemption.
($1 = 0.9376 euros)
Additional reporting by Alexandra Schwarz-Goerlich in Vienna and Tom Sims in Frankfurt; Writing by John O’Donnell; Editing by Alexander Smith
Nov 4 (Reuters) – U.S. Supreme Court Justice Amy Coney Barrett on Friday again declined to block President Joe Biden’s plan to cancel billions of dollars in student debt, this time in a challenge brought by two Indiana borrowers, even as a lower court considers whether to lift a freeze it imposed on the program in a different case.
Barrett denied an emergency request by the Indiana borrowers, represented by a conservative legal group, to bar the U.S. Department of Education from implementing the Democratic president’s plan to forgive debt held by qualified people who had taken loans to pay for college.
Barrett on Oct. 20 denied a similar request by a Wisconsin taxpayers organization represented by another conservative legal group. The justice acted in the cases because she is the justice assigned to handle certain emergency requests from a group of states that includes Indiana and Wisconsin.
The St. Louis-based 8th U.S. Circuit Court of Appeals on Oct. 21 put the policy on hold in yet another conservative challenge by six Republican-led states while it considered their request for injunction pending their appeal of their case’s dismissal. That request remains pending.
Biden’s plan, unveiled in August, was designed to forgive up to $10,000 in student loan debt for borrowers making less than $125,000 per year, or $250,000 for married couples. Borrowers who received Pell Grants to benefit lower-income college students would have up to $20,000 of their debt canceled.
The non-partisan Congressional Budget Office in September calculated that debt forgiveness would eliminate about $430 billion of the $1.6 trillion in outstanding student debt and that more than 40 million Americans would be eligible to benefit.
The policy fulfilled a promise Biden made during the 2020 presidential campaign to help debt-saddled former college students. Democrats hope the policy will boost support for them in Tuesday’s midterm elections in which control of Congress is at stake.
Friday’s case was filed by two borrowers, Frank Garrison and Noel Johnson, represented by the conservative Pacific Legal Foundation, and claimed they would be irreparably harmed if some of their student loans were automatically forgiven because they would face increased state tax liabilities.
Soon after they sued, the Department of Education created an opt-out option for borrowers. U.S. District Judge Richard Young on Oct. 21 dismissed the case, finding that the debt forgiveness program did not injure Garrison and Johnson.
The Chicago-based 7th U.S. Circuit Court of Appeals on Oct. 28 declined to block the plan while Garrison and Johnson pursued an appeal, noting that the program is “not compulsory” and that the plaintiffs could avoid tax liability simply by opting out.
Caleb Kruckenberg, a lawyer at the Pacific Legal Foundation, in a statement expressed disappointment that Barrett declined to block the plan while his clients pursued their appeal but said they will “continue to fight this program in court.”
“Practically since this program was announced, the administration has sought to avoid judicial scrutiny,” he said. “Thus far they have succeeded. But that does not change the fact that this program is illegal from stem to stern.”
Reporting by Nate Raymond in Boston; editing by Jonathan Oatis and Rosalba O’Brien
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