Finance
Finance ministers put banking union plans on ice
Eurozone finance ministers mothballed plans on Thursday to finish the banking union — a decade-long undertaking born out of the monetary and the sovereign debt crises — settling for narrower enhancements to the bloc’s guidelines for dealing with financial institution failures.
Eurogroup chief and Irish Finance Minister Paschal Donohoe had hoped to succeed in consensus on a workplan sketching out a means ahead on 4 parallel “workstreams,” together with a typical deposit insurance coverage scheme, dubbed EDIS, to cowl savers’ losses in case of financial institution failures. It additionally contained measures lowering banks’ publicity to sovereign debt; making a single marketplace for banking; and agreeing on frequent guidelines on methods to take care of failing banks.
However the Irishman’s plan did not fly with capitals, with the primary sticking level being Berlin’s opposition to EDIS. “For Germany, a full European deposit assure just isn’t up for debate,” stated Finance Minister Christian Lindner as he entered the assembly.
Nonetheless, Donohoe is decided to salvage one thing from all the hassle that went into the work plan. He offered a press release on Thursday night, agreed by eurozone international locations, that calls on the EUROPEAN Fee to current proposals to strengthen guidelines for financial institution disaster administration and nationwide deposit assure schemes.
These initiatives ought to soar by the legislative hoops earlier than the following European elections in 2024. However the different “workstreams” had been shelved indefinitely.
“I made the case for broader, for giant collective steps, however what the Eurogroup has carried out at the moment is comply with a step that may be a transparent and powerful enchancment on the place we’re at the moment,” Donohoe informed reporters after the assembly. “We’ll agree on an motion plan at one other level, and I hope one other level quickly.”
A protracted, unusual journey
The Irishman had hoped to ship a roadmap of kinds that may chart a legislative path for eurozone international locations to comply with, with the purpose of securing EDIS. The frequent fund would in precept buttress and finally merge nationwide deposit ensures, of as much as €100,000 per deposit, right into a single fund — successfully offering an added layer of safety to folks’s financial savings in a extreme financial institution disaster.
Nevertheless it proved a non-starter for Berlin. “The main target will all the time be on nationwide deposit safety,” Lindner stated.
Donohoe is hardly the primary who could not crack the EDIS enigma. The Fee first proposed the invoice in 2015, solely to see it collect mud in Parliament and Council ever since. A serious cause for the stalemate is the reminiscences of the monetary and sovereign debt crises a decade in the past. Northern international locations have lengthy feared {that a} shared deposit insurance coverage fund would put their lenders on the hook for Southern depositors when the following banking disaster hits.
“Danger discount” thus turned the North’s de facto coverage stance within the EDIS debate. That camp maintained that EDIS would solely come about as soon as banks had cleaned up their stability sheets and the bloc had closed the main loopholes for bailing out lenders with taxpayer cash.
Alternatively, there have been additionally objections from Italy, which rejected plans to introduce focus expenses on banks holding excessive quantities of nationwide sovereign debt.
France then spearheaded a bid to loosen capital and liquidity ringfences that banks have throughout the bloc to make sure their subsidiaries can cushion a disaster — a lot to the frustration of smaller international locations, akin to Luxembourg and Belgium. Permitting banks to maneuver capital throughout borders would pave the best way for eurozone financial institution mergers to materialize — as desired by high banking officers.
Donohoe’s work plan was supposed to deal with these points in lockstep by laws, over a number of years.
However now, the truth that he could not advance the initiative signifies that EDIS as proposed is in query, notably given the divisions between Italy and Germany over what ought to occur and when.
The talk is essentially unchanged from final 12 months, when talks additionally fell aside in mid-June, regardless of Donohoe’s efforts to wine and dine his solution to victory. Rome continues to push again in opposition to Berlin’s calls for of introducing stricter measures to cut back banks’ publicity to sovereign debt. Berlin, in the meantime, is against introducing an EDIS that’s too bold — leaving negotiations in impasse.
For all of Donohoe’s efforts, savers are nonetheless weak when the following banking disaster hits. Ought to a nationwide insurance coverage scheme develop into depleted in a disaster, there shall be nothing to again it up.
Subsequent steps
A stalled EDIS additionally leaves the banking union incomplete. Brussels launched the three-pillar union within the aftermath of the monetary meltdown of 2008.
Two pillars are in place. One is that banks are topic to strict guidelines that outline how massive their capital buffers needs to be. The opposite ensures that they put cash right into a disaster fund to deal with the price of winding down operations. EDIS was presupposed to be the third pillar to finish the technique.
It’s unclear what lies forward for EDIS. Likelihood is that talks will proceed till one other disaster emerges and forces the likes of Germany and Italy to rethink their positions. Donohoe’s predecessor, Mário Centeno, usually reminded journalists that the U.S. Congress mentioned about 150 proposals over greater than 50 years earlier than it launched a typical deposit insurance coverage system — on the peak of the Nice Despair in 1933.
“We’ll come again to it,” Donohoe stated.
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The start of a new year can bring a surge of motivation around setting new goals, including financial resolutions.
One way to help those goals become reality, financial experts say, is to make them as specific as possible. Then, track your progress, while allowing flexibility for unexpected challenges.
“It’s easier to track progress when we know where we are going,” says Sylvie Scowcroft, a certified financial planner and founder of The Financial Grove in Cambridge, Massachusetts.
That’s why she encourages her clients to set clearly defined goals, often related to paying off a specific debt, saving a certain amount per month or improving their credit score.
Here are more tips from financial experts about crafting 2025 financial goals:
Pick your top priorities
Trying to accomplish too much can feel overwhelming. Instead, pick your priorities, says Cathleen Tobin, CFP and owner of Moonbridge Financial Design in Rhinebeck, New York.
She suggests focusing on those big, often emotionally-driven goals to find motivation.
“It’s more compelling than just a number,” she says. For example, do you want to make sure you’re on track for retirement or save money for a house? “Start there.”
Be as specific as possible
Scowcroft says she sees clients get tripped up by selecting overly broad goals, such as “get better with money.” Instead, she encourages people to select specific action items, such as “sign up for a budgeting tool and set aside time each month to learn where my money is going.”
That level of specificity provides direction so you know what steps to take next, she adds. For example, if your top priority is to become debt-free, then your specific goal might be to pay off an extra $200 of your debt balance each month.
Tobin says labeling savings accounts so they correspond with goals can also help. An emergency fund could be named something like “Peace of mind in 2025,” so you remember why you’re saving every time you make a transfer.
“It’s more motivating than just ‘emergency fund,’” Tobin says.
Get more financial clarity with NerdWallet
Monitor your credit, track your spending and see all of your finances together in a single place.
Track your progress
Measuring your progress as the year unfolds is also a critical component of successful goal setting, Tobin says.
She compares it to weight loss. If you want to lose 20 pounds by June, then you need to lose about a pound a week for the first six months of the year. Similarly, she says it helps to break savings goals into microsteps that specify what you need to do each week.
Schedule a weekly or monthly check-in with yourself to make sure you are meeting those smaller goals along the way. You might want to review your debt payoff progress or check your credit score, for example.
“Being able to break it down into steps that can be done each week or twice a month really helps,” Tobin says.
Automate where you can
If your goal is to save more money, then setting up an automatic transfer each month can help turn that goal into reality, as long as you know you have the money in your checking account to spare.
“It reduces the mental load,” says Mike Hunsberger, CFP and owner of Next Mission Financial Planning in St. Charles, Missouri, where he primarily supports veterans and current members of the military.
He recommends starting small to ease into the change.
“I wouldn’t jump to double what you’re currently saving,” he says. For example, when it comes to saving in a retirement account, if you’re starting with a 3% contribution, you might want to bump it up to 4%, then slowly increase it from there.
“My number one piece of advice is to start small, but make sure you scale over time,” Hunsberger adds. “Because it’s gradual, you probably won’t notice it impacting your lifestyle.”
Adjust as needed
“Stay flexible,” Scowcroft says. “Part of it is just being kind to yourself and not being too rigid.”
When unexpected challenges come up, such as a big unplanned expense, you might have to pause making progress on your goal and reset.
You might even need to change your goal. Scowcroft says that doesn’t mean you “failed,” just that life changed your plans. Dwelling on any negativity won’t help your forward progress.
Team up with a friend
Sharing your goals with a friend can also make it easier to reach them, Scowcroft says.
“It really helps to have an accountability buddy,” she says.
She suggests putting a regular “money date” with your friend on the calendar so you can ask each other how you’re doing, brainstorm any challenges or even budget together side-by-side.
“It’s a fun excuse to meet up with a friend.”
Get more financial clarity with NerdWallet
Monitor your credit, track your spending and see all of your finances together in a single place.
If you asked me what the process for setting up a Roth IRA looked like, I doubt I could offer you a thorough response. The same goes for mortgages and loans and interest. When I had to fill out my first W-9 form, I was admittedly more than a bit confused.
In short, financial literacy isn’t my forte. And that’s because, like many Massachusetts public school students, I’ve never had to take any sort of personal finance class.
Indeed, throughout the debates over eliminating MCAS as a graduation requirement for high schoolers, we heard quite a bit about the state’s educational gold standard. So is it not the least bit shameful, or at least embarrassing, that our state does not require high school students to take a financial literacy class when a majority of states do?
Absolutely. And it needs to change.
Twenty-six states, including Rhode Island, New Hampshire, and Connecticut, have passed legislation making a personal finance course mandatory for high school students. Meanwhile, Massachusetts received an “F” from the Champlain College Center for Financial Literacy, which released a report card in 2023 evaluating how each “state delivers personal finance education in its public high schools.” In addition, a 2023 report card(link?) from the American Public Education Foundation gave the state a “C” for its financial literacy requirements — a score worse than or equal to all but six states.
Meanwhile, across the state, credit card and student loan debt have spiked to eye-popping levels. As of the second quarter of this year, the average Massachusetts resident had a credit card balance of $8,556 and $33,710.38 in student loan debt. The latter is particularly troubling for young people like myself. For the next four years, countless high school seniors throughout the Commonwealth will be attending college, paying tens of thousands of dollars on top of day-to-day expenses.
The need for personal finance courses in Massachusetts is tremendous — a need that, as per a 2021 report from the state’s Office of Economic Empowerment, is recognized almost universally among teachers and, importantly, students.
Yet, as a result of being taught next to nothing about personal finances, many of us are left ill-prepared for these new circumstances. Our understanding of credit cards is limited to, as State Treasurer Deb Goldberg so eloquently articulated to GBH, “The parent puts a plastic card into the wallet and boom: out comes money.” And so the cycle of taking out loans, accumulating massive debt, and working for years before being able to pay it off persists.
Why perpetuate the cycle when it is so clear that these classes work? According to a 2021 Ramsey Solutions survey, among the teenagers who have completed a personal finance class, nearly 80 percent said that they’ve created a monthly budget for themselves, 94 percent felt confident about saving money, and 87 percent understood how to pay income taxes. And, as noted in the OEE’s report, personal finance courses are tools that “increase social mobility for low-income or immigrant students.” Requiring such classes really couldn’t make much more sense.
At my own high school, Brookline High School, financial literacy is offered in the form of a popular elective, “The World of Money: Practical Studies in Finance and Investment,” which “integrates the basic principles of economics, money management, investing, and technology,” according to the course catalog. Every spring, as course selection rolls around, hundreds of students eye this semester-long course, but with only so many spots, most cannot take it — and, consequently, miss out on an opportunity to learn about financial literacy.
Recognizing the imminent need to educate ourselves on matters of taxes, loans, investments, and more, several members of Brookline High School’s Student Council, including myself, have proposed amendments to our student handbook that would incorporate a financial literacy component in our graduation requirements and incorporate personal finance lessons into our weekly advisory classes. Our work would ensure that such important life skills are accessible to all students, not merely for those lucky enough to find a place in the class.
But while such efforts are certainly a step in the right direction on this issue, they are not enough. Financial literacy should not be a privilege for schools with a proactive student body; it is a fundamental aspect of our lives, and our state’s education system must begin reflecting that. The state must require personal finance courses for graduation — it’s the smartest investment we can make.
Ravin Bhatia is a senior at Brookline High School.
DALLAS, Dec. 24, 2024 /PRNewswire/ — NexPoint Real Estate Finance, Inc. (NYSE: NREF) (the “Company”) today announced a dividend for its 8.50% Series A Cumulative Redeemable Preferred Stock (NYSE: NREF PRA) of $0.53125 per share. The dividend will be payable on January 27, 2025, to stockholders of record at the close of business on January 15, 2025.
About NexPoint Real Estate Finance, Inc.
NexPoint Real Estate Finance, Inc., is a publicly traded REIT, with its common stock and Series A Preferred Stock listed on the New York Stock Exchange under the symbol “NREF” and “NREF PRA,” respectively, primarily focused on originating, structuring and investing in first-lien mortgage loans, mezzanine loans, preferred equity, convertible notes, multifamily properties and common equity investments, as well as multifamily and single-family rental commercial mortgage-backed securities securitizations, promissory notes and mortgage-backed securities. More information about the Company is available at nref.nexpoint.com.
CONTACTS
Investor Relations
Kristen Griffith
IR@nexpoint.com
Media Relations
Prosek Partners for NexPoint
pro-nexpoint@prosek.com
View original content to download multimedia:https://www.prnewswire.com/news-releases/nexpoint-real-estate-finance-inc-announces-series-a-preferred-stock-dividend-302339003.html
SOURCE NexPoint Real Estate Finance, Inc.
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