Waiting and speculation
With a new president elected, many citizens are expressing growing concern over a multitude of issues, from housing, to equal pay, and everything in between. While it seems to be a bit more prominent with President-elect Trump, this has certainly happened with every newly elected president. The American people want to see just what the new president will do: will he introduce reform? Will things stay the same? Right now, we’re all playing the waiting game, but there is one area in which we have a bit more concern: housing, more specifically the CFPB.
We have long covered the Consumer Financial Protection Bureau (CFPB) and the different policy changes and reforms that have come down the road along the way. On the campaign trail, President-elect Trump vocally shared his dissatisfaction for the Dodd-Frank financial reforms. This makes us wonder what this could mean for the CFPB.
Is the CFPB in danger of being dissolved?
Of course, people opposing the CFPB is nothing new, but it has been making great strides in helping consumers fight back against banks. However, the threat to the CFPB doesn’t reside with President-elect Trump, but rather with the anti-CFPB legislators and the courts.
According to the Consumerist, anti-CFPB legislators have called for Congress to dismantle the agency entirely, but this would prove difficult, as it would likely require legislation that wouldn’t survive a Democratic filibuster in the Senate.
The Consumerist goes on to state that Ed Mierzwinski, of the U.S. Public Interest Research Group, noted anti-CFPB lawmakers would navigate around the possible filibuster by introducing smaller legislative efforts to slowly undermine the Bureau’s authority and its ability to enforce rules that have been deemed “too-restrictive” on the very banks foreclosing on consumers. The only difference now is that these lawmakers no longer, in theory, fear a presidential veto from President-elect Trump. A veto was a concern, along with a lack of majority numbers in the Senate, from President Obama.
Big banks take aim at CFPB
One of the most vocal opponents to the CFPB has been the Chairman of the House Financial Committee, Rep. Jeb Hensarling from Texas. Hensarling is also a potential nominee for Treasury Secretary in President-elect Trump’s administration. This could be detrimental to the CFPB.
Again, according to the Consumerist, Hensarling is also one of the most bank-backed members of Congress, second only to Paul Ryan, whose campaign received more contributions from commercial banks than any other House member.
Keep this is mind: Hensarling’s campaign and leadership PAC received around $1.9 million from the financial and real estate industries in the most recent election.
This accounts for nearly two-thirds of all money raised for the Congressman. This is pretty astounding, and it definitely explains why there is some worry regarding the dissolution of the CFPB.
The courts aren’t happy either
But as I previously stated, the major issues really aren’t with President-elect Trump or Hensarling; rather the big threat could be the courts.
The Director of the CFPB, Richard Cordray, has been a controversial figure since President Obama appointed him (after some protesting from Hensarling and others). As he was appointed for five years in 2013, he could remain Director while President-elect Trump is in office. However, there was a recent federal appeals court ruling that could undermine his position.
The Director of the CFPB is unique in that they cannot be dismissed at will by the president, unlike other agencies where there is either a multi-commissioner panel, or the authority to be removed by the president.
While this may seem unusual, it was put in place to prevent the pressure that regulated parties might try to exercise on the legislative or executive branches of government to get the Director of the CFPB removed.
The federal appeals court recently concluded that the CFPB’s structure is in fact unconstitutional because it gives one person too much authority, and said person is not directly answerable to the president. This could mean Director Cordray will be on the way out in January. If this happens, the law allows for his Deputy Director to assume the position.
However, it is more likely that the Trump administration will have a replacement in mind, and therein lies the problem and worry.
There is one more potential change to keep in mind: Congress wants to make the CFPB more accountable to lawmakers by having funds come through Congress, rather than independently from the Federal Reserve. This has been proposed before, but the potential for it to pass has never been greater than with this administration.
What will happen?
As of right now, the CFPB has paused all pending legislation in response to Trump’s victory.
Bank-backed lawmakers have tried to reform the CFPB before, but have not, by and large, been successful. Some long-awaited regulations, like arbitration rules, are still pending and will likely be dissolved if Cordray is removed from office.
The Hill reports that President-elect Trump has pledged to put a moratorium on new agency rule-makings once he takes office, which could prevent any pending regulations from getting passed.
While this is all still speculation, it seems quite likely that there will be some reform in the CFPB with a Trump presidency, but how much, or to what extent remains to be see for certain. With any luck, once President-elect Trump takes office, he’ll allow the pending regulations to pass, or at least examine them and the strides the CFPB has been making before disallowing them, or completely dissolving the CFPB all together.
What do you think? Will this be the beginning of the end for the CFPB?
Small metros may have cheaper homes, but they might not have the jobs
(BUSINESS NEWS) Study by Indeed finds that small to mid-sized metros offer higher adjusted salaries, but don’t pack your bags just yet because your job may not be there
When I told my parents how much my partner and I would be paying for rent at our new apartment, they quickly pointed out that I could purchase a home for that kind of money in my hometown.
Indeed recently published a study where they determined which cities have the highest salaries after accounting for the cost of living, an adjusted salary. Every city on the list is a small or mid-sized metro area which is why they dubbed their findings, “the small-city advantage.” No surprise to me, my hometown made the list.
My parents are right, I could literally buy a home for the amount of money I pay in rent every month to live in a large metro area. But the equation that determines where I, and many other workers should live, is more complex than salary minus housing.
Indeed’s study also shows that bigger metros have faster job growth and lower unemployment compared to these small to mid-sized metros. This is why the number one city on their list, Brownsville-Harlingen, TX, also has a higher unemployment rate than the national average. Some of the other cities on the list are Fort Smith, AR-OK, Toledo, OH, Laredo, TX, and Rockford, IL.
These areas are cheaper to live in, in part, because they may not offer the kind of job opportunities, and therefore social mobility, you see in larger metro areas. Sure, I could make my money go further in my hometown, but the chances of me finding a job in my industry there are smaller.
Your field of work does matter when considering whether or not the “small-city advantage” could work for you. If you work in tech or finance, two traditionally high-paying fields, then this advantage doesn’t apply.
“Before adjusting for living costs, typical technology salaries are 27% higher in two-million-plus metros than metros with fewer than 250,000 people. Even after adjusting for those costs, tech salaries are still 5% higher in the largest metros than in the smallest ones,” finds Indeed.
If a huge tech company offering thousands of high-paying jobs moved into a city like Brownsville-Harlingen, TX, over time it would get more expensive to live there. This is why people were freaking out so much when Amazon was trying to decide where to locate HQ2. It’s the hamster wheel that is currently driving income inequality in some of America’s largest major metro areas.
Finding the right place to call home is never going to be a single factor decision. Yes, salary is a huge factor, as is the cost of living, but there are also lifestyle factors to consider. What kind of opportunities would you have in this city? How much will it cost to move there? How will this effect the other members of your household?
It’s nice to play the ‘ditch the corporate world and buy a country house’ fantasy after a long day at work, but the reality is far more complex.
Catch is a must-have finance management app for freelancers
(BUSINESS FINANCE) Catch is a new app that allows freelancers and people without benefits to determine their best options, with great automatic features.
Working as a freelancer is something that just meshes well with my personality. I love having the ability to take on a variety of different projects and work in different facets of the communication industry.
Unfortunately, my one semester of high school economics did not fully prepare me for the financial aspect of freelancing. Figuring out what to deduct, how to do 1099 taxes, and properly save in general was something I’ve had to learn as I go.
However, as I always say, in this day and age, there is someone out there who has a solution to your problem.
Such is the case with Catch, which is a tool that is perfect for freelancers as it helps with automated tax withholding, health insurance, and the other head-scratchers in between.
After signing up, you build a plan by using custom recommendations to get the benefits that will help you the most. Catch will tell you about the coverage you need, whether you work for yourself, a boss, or multiple bosses.
All of your benefits will be put into one place and will be ready when you are. You’ll be able to see your savings grow the more you work and use Catch. As time goes on, Catch will offer suggestions to help you prepare for the future.
From there, you can set aside money automatically. After getting paid, Catch confirms your benefits plan and will automatically put money away for taxes, time off, and retirement.
All of this helps to rid yourself of freelance financial blind spots, and Catch’s official Guide allows you to see a personal screenshot of the full benefits landscape. In addition to seeing all of your coverage at a glance, you’re also able to learn what coverage you need and why, sign up for new benefits in minutes, and easily report existing benefits.
Additionally, you’re able to see a people-centric view of your plan on the platform by adding in spouses, dependents, beneficiaries, and trusted contacts. With this information in place, you’re able to choose the plan that works best for you; allowing you to edit as needed, check savings instantly, and view full paycheck and contribution history.
And as your life evolves, Catch is there to help with the transition. The platform offers recommendations for how benefits and coverage can change with things like: job relocation, getting married, starting a family, or starting a new job.
As Catch says, it’s “peace of mind at the palm of your hand.” This is definitely something for freelancers to consider as part of their financial strategy.
6 questions to ask when considering a startup accelerator
(BUSINESS FINANCE) Accelerators can help change startups from unknowns to leaders in the industry, but does your startup need one and if so which one?
When I’m advising startups, I often hear the question: “which accelerator is the best fit for me?” (Besides the obvious YC or Techstars.)
First off, I’ll ask if your company would benefit from an accelerator, or if you need to pursue something for early early stage companies before you achieve more market validation, like an incubator. (Side note: If you’re curious about incubators, here is a comparison of the two.)
If you’re new to these terms, here’s a brief recap on startup accelerators:
Startup accelerators are for companies with established co-founders and market validation – companies can be anywhere from pre-revenue/self-funded, or even have raised at least $1M.
Most programs can last anywhere from 10 weeks to 3-4 months. With many top accelerators like YC and Techstars, you’ll be expected to move to the city where it’s hosted and spend 40+ hours a week minimum in their dedicated coworking space, and several accelerators will often offer housing stipends to make the move easier. These programs typically conclude with a demo day to pitch your product to a variety of community leaders, angel, and institutional investors.
If your product has achieved market validation and is in a place where you’re ready to scale, congrats!
Before you commit to an accelerator, ask yourself and the program these six questions:
1. What kind of mentorship is available?
By and large, one of the most valuable portions of an accelerator is the networking with peers and mentors. Ask what kind of mentors are available to you as a part of a program, and ask their specific involvement and the opportunities to connect. These mentors will be crucial in guiding your company’s growth. Even if they aren’t in the same industry or have solved a similar problem that your company is trying to achieve, their advice and connections could prove to be invaluable.
2. What are the perks?
You’re giving up a lot of equity to be in a program, but it doesn’t come without its perks. Many programs offer not only a cash investment or stipend for housing or other growth costs, but programs like Techstars offer free services such as web hosting costs (an upwards of ~250k), legal and accounting services, and other credits and perks that can be worth 6-7 figures. Make sure you know what you’re getting before you say yes to a program.
3. Do I want an industry-specific or industry-agnostic program?
This one is important and is directly related to #2. If your company sells CPG products, web hosting credits may not be valuable to your business, but a CPG-specific accelerator like SKU or The Brandery with direct connections to Sephora, Target, and Whole Foods may make more sense.
4. How much equity am I willing to give up?
Try not to make this a guessing game and make as many data-driven decisions on this as you can. Create a revenue and valuation model and see how much your company would benefit from the networking, fundraising opportunities, and perks offered, and see what the ROI would potentially be.
5. What are the funding and exit numbers?
This is an objective way to view the success of an accelerator: # of funding raised and exits. Of course, younger accelerators will have smaller numbers, but it’s worth looking to see if a company has raised $ after. Seed-DB is a great resource to view these numbers for hundreds of accelerators globally.
6. What do alumni think?
All accelerators are going to tout the transformative experience that is their program, and program mentors will likely have a similar narrative.
The best resource to learn the real experience of an accelerator: ask its alumni, and they’ll give you the truth. Make sure to survey both recent and more experienced alumni, as they’ll be able to speak to both the short term and long term benefits.
Personal experience: the night before I was set to hear from an accelerator on my application status, two alumni stressed to me that the time and equity investment wasn’t worth it. I consider this providence!
Finally, two items to note:
Choosing an accelerator is all about finding the right fit between you and the organization. Sadly, not all accelerators are created equal, and try to view a potential relationship with an accelerator as an investor relationship, or better yet, dating. There’s a reason the phrase “no money is better than bad money” is prevalent in the startup community.
Make sure to do your due diligence and ask the right questions to make sure a specific program is worth the investment of time, energy, and equity.
And sometimes? That may not mean an accelerator is a right fit right now or at any point, and that’s okay.
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Ladies and gentlemen, the U.S. National Anthem
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