Over the last three years, we have found that reforms to make fines and fees more equitable do not necessarily result in a loss of revenue. In some cases, proportioning fines or fees to lower income people’s ability to pay can lead to an increase in revenue. In other cases, steep fines and fees can be a “lose-lose,” since they bring in little revenue, and elimination of these burdens makes more sense. If you make it easier and cheaper to meet their fine obligations, people will often pay more regularly, sometimes resulting in increased revenue. Reforms that make it easier and more doable for people to pay can spur them to pay fines or tickets more readily. For example, previously people had to pay $62 to enroll in a payment plan to pay off parking or fare evasion citations. Under SFMTA’s new low-income payment plan, the enrollment fee is $5, people have a longer timeframe to pay off the ticket, and people can now make payments online, in addition to paying in person. If people successfully complete the payment plan, they can have all late fees waived, which can reduce the debt by more than half. After the SFMTA lowered fees for payment plan enrollment, they saw a 400% increase in people starting payment plans. In the first three months of offering these payment plans, SFMTA saw more than a 300% increase in revenue over the same three months of the previous year. Behavioral economics and consumer research confirm that the easier you make it for people to pay, the more likely it is that they’ll pay. Research and collections best practices recommend sending timely reminders, providing clear messaging with the actions a person is required to take, and allowing a variety of ways to pay, including online and in person. There is also evidence that “right-sizing” fines and fees, basing them on people’s ability to pay, and making the payment amounts realistic, can result in increased revenues. Beth Colgan, a professor at the University of California Los Angeles, examined several court systems that had piloted “day fines,” where the penalties were proportioned to people’s incomes and the offense. Several of these courts brought in more revenue when using this approach. “In short, graduation according to ability to pay can maintain and even improve revenue generation. The day-fines pilot projects suggest that for jurisdictions where ability to pay calculations result in a decrease in sanction amounts, revenue benefits may be obtained even without improved collections services,” wrote Colgan in the Iowa Law Review. We often found that fees are “high pain,” creating hardships for low-income people but “low gain,” resulting in very little revenue for the city our county. For example,when we examined local criminal justice administrative fees, we found that the average collection rate over a six-year period was 17%, even with tools such as wage garnishment and bank account levies. In 2016, the collection rate for the largest local fee, the monthly probation fee, was only nine percent. More than half of the fees we eliminated did not have any revenue projected in the city’s annual budget forecast. The amount of revenue they brought in was so minimal and unpredictable that departments did not track them. Our local experience mirrors research from across the country. A recent report by the Vera Institute found that the City of New Orleans lost money in its efforts to force city residents to pay court fees or face jail time: the cost of jailing people who could not or would not pay far exceeded the revenue received. In Florida, clerk performance standards rely on the assumption that just 9 percent of fees imposed in felony cases can be collected. In Alabama, collection rates of court fines and fees in the largest counties are about 25%. Both the White House Council of Economic Advisors and the Conference of State Court Administrators have found these Legal Financial Obligations are often an ineffective and inefficient means of raising revenue. Sometimes the collections rates are so low for certain fees, primarily those charged almost exclusively to very low-income people, localities may spend more to collect these fees than they generate in revenue. The University of California at Berkeley conducted research that showed that many counties spend more to collect fees in the juvenile justice system than the revenue that comes in. For many of the fees eliminated in the criminal justice fees legislation, the revenue collected each year was so low, it was not included in the county’s budget. In Alameda County, they found that to collect the county spent approximately $1.6 million to collect $285,000 in adult fines, fees and restitution, resulting in a net loss of $1.3 million. Records from LA County showed that in fiscal year 2017-18, the County spent $3.9 million to collect $3.4 million in probation fees, resulting in a loss of half a million dollars. A recent report by the Brennan Center for Justice reviewed fine and fee collections practices. The study examined 10 counties across Texas, Florida, and New Mexico, as well as statewide data for those three states. The counties vary in their geographic, economic, political, and ethnic profiles, as well as in their practices for collecting and enforcing fees and fines. The report finds that fees and fines are an inefficient source of government revenue. “The Texas and New Mexico counties studied here effectively spend more than 41 cents of every dollar of revenue they raise from fees and fines on in-court hearings and jail costs alone. That’s 121 times what the Internal Revenue Service spends to collect taxes and many times what the states themselves spend to collect taxes. One New Mexico County spends at least $1.17 to collect every dollar of revenue it raises through fees and fines, meaning that it loses money through this system.”
In a financial crisis, asset prices see a steep decline in value, businesses and consumers are unable to pay their debts, and financial institutions experience liquidity shortages. A financial crisis is often associated with a panic or a bank run during which investors sell off assets or withdraw money from savings accounts because they fear that the value of those assets will drop if they remain in a financial institution. Other situations that may be labeled a financial crisis include the bursting of a speculative financial bubble, a stock market crash, a sovereign default, or a currency crisis. A financial crisis may be limited to banks or spread throughout a single economy, the economy of a region, or economies worldwide.
A financial crisis may have multiple causes. Generally, a crisis can occur if institutions or assets are overvalued, and can be exacerbated by irrational or herd-like investor behavior. For example, a rapid string of selloffs can result in lower asset prices, prompting individuals to dump assets or make huge savings withdrawals when a bank failure is rumored. Contributing factors to a financial crisis include systemic failures, unanticipated or uncontrollable human behavior, incentives to take too much risk, regulatory absence or failures, or contagions that amount to a virus-like spread of problems from one institution or country to the next. If left unchecked, a crisis can cause an economy to go into a recession or depression. Even when measures are taken to avert a financial crisis, they can still happen, accelerate, or deepen. Financial crises are not uncommon; they have happened for as long as the world has had currency. Some well-known financial crises include:
As the most recent and most damaging financial crisis event, the Global Financial Crisis, deserves special attention, as its causes, effects, response, and lessons are most applicable to the current financial system. The crisis was the result of a sequence of events, each with its own trigger and culminating in the near-collapse of the banking system. It has been argued that the seeds of the crisis were sown as far back as the 1970s with the Community Development Act, which required banks to loosen their credit requirements for lower-income consumers, creating a market for subprime mortgages.
A financial crisis can take many forms, including a banking/credit panic or a stock market crash, but differs from a recession, which is often the result of such a crisis. The amount of subprime mortgage debt, which was guaranteed by Freddie Mac and Fannie Mae, continued to expand into the early 2000s when the Federal Reserve Board began to cut interest rates drastically to avoid a recession. The combination of loose credit requirements and cheap money spurred a housing boom, which drove speculation, pushing up housing prices and creating a real estate bubble. In the meantime, the investment banks, looking for easy profits in the wake of the dot-com bust and 2001 recession, created collateralized debt obligations (CDOs) from the mortgages purchased on the secondary market. Because subprime mortgages were bundled with prime mortgages, there was no way for investors to understand the risks associated with the product. When the market for CDOs began to heat up, the housing bubble that had been building for several years had finally burst. As housing prices fell, subprime borrowers began to default on loans that were worth more than their homes, accelerating the decline in prices. When investors realized the CDOs were worthless due to the toxic debt they represented, they attempted to unload the obligations. However, there was no market for the CDOs. The subsequent cascade of subprime lender failures created liquidity contagion that reached the upper tiers of the banking system. Two major investment banks, Lehman Brothers and Bear Stearns, collapsed under the weight of their exposure to subprime debt, and more than 450 banks failed over the next five years. Several of the major banks were on the brink of failure and were rescued by a taxpayer-funded bailout. The U.S. Government responded to the Financial Crisis by lowering interest rates to nearly zero, buying back mortgage and government debt, and bailing out some struggling financial institutions. With rates so low, bond yields became far less attractive to investors when compared to stocks. The government response ignited the stock market. By March 2013, the S&P bounced back from the crisis and continued on its 10-year bull run from 2009 to 2019 to climb to about 250%. The U.S. housing market recovered in most major cities, and the unemployment rate fell as businesses began to hire and make more investments. One big upshot of the crisis was the adoption of the Dodd-Frank Wall Street Reform and Consumer Protection Act, a massive piece of financial reform legislation passed by the Obama administration in 2010. Dodd-Frank brought wholesale changes to every aspect of the U.S. financial regulatory environment, which touched every regulatory body and every financial services business. Notably, Dodd-Frank had the following effects:
A financial crisis is when financial instruments and assets decrease significantly in value. As a result, businesses have trouble meeting their financial obligations, and financial institutions lack sufficient cash or convertible assets to fund projects and meet immediate needs. Investors lose confidence in the value of their assets and consumers' incomes and assets are compromised, making it difficult for them to pay their debts. A financial crisis can be caused by many factors, maybe too many to name. However, often a financial crisis is caused by overvalued assets, systemic and regulatory failures, and resulting consumer panic, such as a large number of customers withdrawing funds from a bank after learning of the institution's financial troubles. The financial crisis can be segmented into three stages, beginning with the launch of the crisis. Financial systems fail, generally caused by system and regulatory failures, institutional mismanagement of finances, and more. The next stage involves the breakdown of the financial system, with financial institutions, businesses, and consumers unable to meet obligations. Finally, assets decrease in value, and the overall level of debt increases. Although the crisis was attributed to many breakdowns, it was largely due to the bountiful issuance of sub-prime mortgages, which were frequently sold to investors on the secondary market. Bad debt increased as sub-prime mortgagors defaulted on their loans, leaving secondary market investors scrambling. Investment firms, insurance companies, and financial institutions slaughtered by their involvement with these mortgages required government bailouts as they neared insolvency. The bailouts adversely affected the market, sending stocks plummeting. Other markets responded in tow, creating global panic and an unstable market. Arguably, the worst financial crisis in the last 90 years was the 2008 Global Financial Crisis, which sent stock markets crashing, financial institutions into ruin, and consumers scrambling. |
Which of the following is not a financial obligation or opportunity of launching families?
Pos Terkait
Copyright © 2024 ketiadaan Inc.
