issue: Financial Services

As Trump Pockets $1.2 Billion From Crypto, New Poll Finds Voters Want the Industry and Self-Dealing Officials Reined In

Posted on by Alex Terr

Support for tough anti-fraud rules is overwhelming and bipartisan, and it survives the industry’s best arguments. 89% of Democrats say they’d be less likely to back a candidate who lets Trump and his family profit from a crypto law.

WASHINGTON (July 8, 2026)— Days after a federal disclosure filing revealed that President Trump personally took in roughly $1.2 billion from crypto ventures last year, a new national survey from the Progressive Policy Institute (PPI) and Democratic polling firm GBAO shows voters want the industry, and the officials cashing in on it, reined in.

The filing, analyzed by the Associated Press, shows Trump collected more than $500 million from his World Liberty Financial token sales and over $600 million from “meme” coins stamped with his face, even as the ordinary investors who bought in were left holding the losses. World Liberty’s tokens have fallen roughly 80%, and the meme coin has collapsed from a peak above $74 to under $2. Trump built that windfall while his own administration dismantled the Biden-era crackdown on the very industry enriching him. Asked about it, the president shrugged: “We’re all profiting.”

Voters see the arrangement for what it is, and the poll shows they want it stopped.

The numbers are lopsided. Voters view crypto unfavorably by more than 3-to-1 (57% to 17%), and crypto companies fare no better (55% to 19%). The hostility runs across the spectrum and is sharpest among Democrats, 69% of whom view crypto unfavorably. Voters reserve their trust for Main Street institutions instead: community banks are seen favorably 62% to 10%. And with the cost of living dominating, crypto barely registers as a concern; fewer than 1% name promoting it as a top priority for Congress, against 45% who name inflation.

That skepticism translates into demand for guardrails, on a striking bipartisan basis:

  • 83% want crypto companies held to the same anti-money-laundering reporting rules banks already follow, including 80% of Republicans.
  • 81% want federal prosecutors and local law enforcement to be given more tools to investigate crypto crime.
  • 71% want federal officials and their families barred from promoting, issuing, or profiting from crypto, including 67% of Republicans.

Crucially, this support is durable. After a balanced back-and-forth weighing the strongest arguments on both sides, the backing held firm. Support for walling officials off from crypto profits actually rose from 71% to 75%, while the transaction-reporting requirement held at 80%.

Even after voters heard President Trump was defended as a successful businessman, a 66% majority, including 55% of Republicans, still wanted officials barred from profiting off crypto.

The electoral implications are hard to miss: against the backdrop of Trump’s $1.2 billion windfall, 89% of Democrats say they’d be less likely to support a candidate who backed a crypto law that lets Trump and his family profit, including 74% of Democrats currently undecided in the 2026 generic ballot, exactly the voters in play.

“Voters have watched the President turn the office into a crypto cash machine while regulating the very industry enriching him, and they want it to stop,” said economist Paul Weinstein Jr, PPI Senior Fellow and Board Member. “They want crypto playing by the same anti-fraud rules as everyone else, and they will hold candidates accountable for any law that lets the President’s family cash in at the public’s expense.” 

The full polling memo is available here.

Based on a national survey of 1,000 likely voters, including an 800-person representative sample with a Democratic oversample (532 Democrats and Democratic-leaning independents) weighted to the 2026 likely-voter electorate. Conducted May 22–28, 2026, by telephone with live interviewers and text-to-online.

Founded in 1989, PPI is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Find an expert and learn more about PPI by visiting progressivepolicy.org. Follow us at @ppi.

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Media Contact: Ian O’Keefe – iokeefe@ppionline.org

PPI Calls for the Federal Reserve to Stop Higher Banking Fees

Posted on by Alex Terr

WASHINGTON (June 5, 2026) — This week, the Progressive Policy Institute (PPI) filed an amicus brief in the case Linney’s Pizza, LLC v. Board of Governors of the Federal Reserve System at the U.S. Court of Appeals for the Sixth Circuit.

Paul Weinstein Jr., Senior Fellow at PPI, stated that “Attempts to force the Fed to further reduce interchange fees, while well-meaning, would, based on recent economic studies, provide no financial relief to consumers and instead could lead to higher banking fees.”

Last fall, PPI released a study by former Undersecretary for Commerce Robert Shapiro that showed the Federal Reserve’s cap on debit card interchange fees failed to deliver promised savings for consumers, and instead reduced access to free checking, led to higher maintenance and overdraft fees, and pushed billions of dollars in spending toward higher fee credit cards.

Read the full brief here.

Founded in 1989, PPI is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Find an expert and learn more about PPI by visiting progressivepolicy.org. Follow us at @PPI.

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Media Contact: Ian O’Keefe – iokeefe@ppionline.org

Brief of Amicus Curiae Progressive Policy Institute in Support of Appellee

Posted on by Alex Terr

The Progressive Policy Institute (PPI), based in Washington, D.C., is a catalyst for policy innovation and political reform. Its mission is to create radically pragmatic ideas for moving the United States beyond ideological and partisan deadlock.

The Board of Governors for the Federal Reserve System and the Proposed Intervenors analyze the Durbin Amendment, using its text and other tools of statutory interpretation, to show that the Board complied with the congressional intent and the Administrative Procedures Act when crafting the interchange fee standard in Regulation II. Amicus endorses but does not replicate that analysis. Instead, consistent with PPI’s mission and expertise, this brief focuses on the broad economic and security harms that would result from adopting Appellant’s position.

Read the full Amicus Curiae

PPI Calls for Senate Banking Committee to Close Stablecoin Yield Loophole

Posted on by Alex Terr

WASHINGTON (May 13, 2026) — Today, Paul Weinstein Jr., Senior Fellow at the Progressive Policy Institute (PPI), issued the following statement ahead of the markup of the Digital Asset Market Clarity Act, also known as the CLARITY Act, by the Senate Banking Committee:

“Tomorrow, the Senate Banking Committee will begin marking up the CLARITY Act. The Committee has wanted to use the markup to clarify Section 4 of the GENIUS Act, which prohibits stablecoin issuers from paying yield like banks, but remains silent on stablecoin deposits on third-party platforms.

“But instead of closing the yield loophole, which will draw deposits away from regulated and insured banks and credit unions, the Committee is planning to consider a ‘compromise’ amendment that actually codifies the loophole into law.

“Senators Angela Alsobrooks (D-Md.) and Thom Tillis (R-N.C.) should be commended for their attempt to achieve a bipartisan compromise. But providing consumers with a less expensive payment processing tool does not require allowing stablecoins to offer customers yield-like rewards — and their proposed amendment should be strengthened to reflect that reality.”

Founded in 1989, PPI is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Find an expert and learn more about PPI by visiting progressivepolicy.org. Follow us at @PPI.

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Media Contact: Ian O’Keefe – iokeefe@ppionline.org

PPI Responds to CEA Report on Stablecoin Yield and Bank Lending

Posted on by Alex Terr

WASHINGTON (April 14, 2026) — Progressive Policy Institute (PPI) Senior Fellow Paul Weinstein, Jr., released the following statement in response to a recent report by the President’s Council of Economic Advisors (CEA) on stablecoin yield and its impact on bank lending:

“Despite the Trump Administration’s support for Crypto, a recent study by the President’s Council of Economic Advisors (CEA) undermines the argument that yield-bearing stablecoins won’t reduce community lending, particularly to small businesses, farms, and underserved areas.

“When Congress passed the Guiding and Establishing National Innovation for U.S. Stablecoins (GENIUS) Act last summer, the law prohibited the payment of interest by stablecoin issuers. The intent was to prevent the draining of deposits from traditional banks and create a regulatory structure for using stablecoin as a payment processing tool. However, the GENIUS Act, while prohibiting yield payments from stablecoin issuers, did not explicitly bar intermediaries from offering yield-like rewards to holders of the coins.

“Most studies, including one by the Federal Reserve last year, have found that increased adoption of stablecoin would significantly impact the banking sector by draining deposits from banks and thereby reducing lending to communities. In a cynical attempt to cloud the results of these studies, the CEA has tried to make an inverse argument, claiming that a complete prohibition on stablecoin yield would only increase bank lending marginally. Even if correct, two things can be true: that a prohibition on yield would not significantly increase lending by banks, but allowing stablecoins to offer interest would significantly increase deposit outflows from banks

“By not directly addressing the impact of yield-bearing stablecoin on bank deposits and lending, the CEA has only further validated the argument that the yield loophole created by the GENIUS Act needs to be closed.”

Founded in 1989, PPI is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Find an expert and learn more about PPI by visiting progressivepolicy.org. Follow us at @PPI.

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Media Contact: Ian O’Keefe – iokeefe@ppionline.org

What’s Going on with Credit Scoring Rules?

Posted on by Alyssa Brown

Newly released documents from a Freedom of Information Act (FOIA) filing by the Housing Policy Council show that in 2022, Fannie Mae and Freddie Mac were resistant to adding VantageScore 4.0 and skeptical about shifting to a single credit report (because it is less predictive of creditworthiness than requiring two or three). 

PPI has long argued that competition in credit scoring is a good thing. But because VantageScore is owned by the three credit reporting agencies, there is potential for a conflict of interest, and these agencies could use their collective influence to the use of a less accurate credit score.

The FOIA requested documents highlight that Fannie and Freddie recommended that the Federal Housing Finance Agency (FHFA) only approve FICO 10T for use. They also asked that three other FICO scores, as well as VantageScore 4.0, be rejected. Furthermore, the documents indicate that Fannie Mae and Freddie Mac reported that a single-file report was less accurate than a tri- or bi- merge report. 

Despite these objections, President Biden’s director of the FFHA chose to ignore the GSE’s recommendation. The Trump administration temporarily halted the rule, but after a delay, FHFA Director Bill Pulte pushed forward with a plan that also contradicts the GSE’s advice — to allow VantageScore 4.0 as an approved model for Fannie Mae and Freddie Mac loans.

If true, the FHFA’s decision is reckless and potentially costly to consumers and should therefore be revisited by the agency. Furthermore, Congress should hold hearings on why the agency would ignore Fannie and Freddie’s warnings.

Lewis for RealClearMarkets: Don’t Turn Deposit Insurance Into Another Middle Class Tax

Posted on by Max Sherrill

The perennial challenge in the realm of banking regulation is to strike the proper balance between two worthy goals. Those of us on the left and center-left want to make financing more readily available to working-class applicants looking to earn their way up the socio-economic ladder. To that end, we want to give banks and other lending institutions greater security in knowing that they can responsibly take risks on those who might not otherwise qualify for a loan. At the same time, we don’t want to undermine those same potential working-class borrowers by steering lenders into the ditch known to insiders as a “moral hazard”—that is, by inducing lenders to make bad loans. Washington’s job is to help financial firms strike the right balance.

Read more in RealClearMarkets.

Stablecoins Will Lessen Community Lending

Posted on by Alyssa Brown

After the recent passage of the GENIUS Act, stablecoins — digital assets used for transactions and pegged to the value of the dollar — are expected to become a more common financial tool. The stablecoin market has grown from about $12 million in 2020 to just over $250 billion today.[1] After the Genius Act, JP Morgan projects that it could hit $500 to $750 billion in the next few years.[2]

The law includes many guardrails on stablecoins, with the non-ironic intention of protecting the stability of today’s financial structure. One important issue is whether deposits will flow out of existing banks into stablecoins. That could have significant consequences, including fewer community lending obligations and less credit and investment for small businesses, farmers, and homeowners across the country.

In August, the GENIUS Act became the first major U.S. law focused on the regulation of “payment stablecoins.” The bill is designed to enhance consumer protection, promote innovation, create confidence in the stablecoin marketplace, and protect the financial system.

Payment stablecoins have the following characteristics:

  • Means of Payment/Settlement: Its primary purpose is to function as a medium of exchange for settling transactions.
  • Stable Value: The issuer is obligated to convert, redeem, or repurchase the stablecoin for a fixed amount of monetary value (e.g., U.S. dollar).
  • Reserve Requirements: Issuers are typically required to maintain reserves backing outstanding payment stablecoins on at least a 1:1 basis. Stablecoins can also be pegged to other international currencies, such as the Euro, the Yen, or the Yuan.

In addition to the above, payment stablecoins are prohibited from paying interest/yield solely for holding or using the coins or tokens. There are a number of rationales for this ban.

First, payment stablecoins are by law not securities, commodities, or traditional deposits, and as such face far lighter regulation. If they were allowed to accrue interest, they would more closely resemble the above, but without the financial regulation that protects consumers and the broader financial system. For example, deposit accounts at banks are insured up to $250,000 by the Federal Deposit Insurance Corporation (FDIC), while stablecoins are not. This means that if used by customers to store their savings, those customers would not be insured against loss should the stablecoin issuer go bankrupt or default.

Second, policymakers were concerned about oversaturation of supply.  There is already considerable competition in the depository marketplace — almost 9,000 banks and credit unions are currently in operation in the U.S. In recent years, that number has declined significantly due to consolidation and, in part, because of a decline in demand. The growing number of nonbank financial institutions has also diminished the demand for insured depository institutions.

Third, the authors of the law wanted to prevent financial instability and the outflow of deposits from insured depository institutions that are more highly regulated and an essential source of lending to communities, small businesses, and homeowners. Technology that allows consumers to bypass banks — otherwise known as disintermediation — could threaten lending to key business sectors that, in turn, could hurt economic growth and innovation.

Yet despite efforts to protect commercial banks and credit unions from the significantly less regulated stablecoin sector, it is not difficult for crypto companies and others to skirt around the prohibition.

For example, some companies, like Coinbase, are exploring ways to offer rewards to stablecoin holders, emphasizing that such rewards are not technically “interest” and are offered for reasons other than merely holding the stablecoin itself. The company already offers a 4.10% reward rate for customers who hold the popular stablecoin USD Coin, also known as USDC. The coin’s issuer, Circle, shares interest revenue from the assets that back USDC with Coinbase. Because of the potential to circumvent the new law, a significant amount of the $18.5 trillion in deposits at U.S. banks and credit unions could flow out of insured depository institutions and into payment stablecoins. A Treasury report from April 2025 estimates that roughly $6.6 trillion in deposit outflows could occur with higher usage of stablecoins (particularly if issuers could offer yields similar to bank accounts), representing a 36% decrease in the total amount of bank deposits.[3]

This level of outflows would be incredibly challenging for banks to weather. Traditional FDIC-insured depository institutions would be forced to compete for an increasingly scarcer amount of funds. This chasing of deposits would be potentially good for depositors in the short term, as banks would be forced to offer higher yields on savings and checking accounts. But over time, this would lead to considerable consolidation within the industry as banks either merge or declare bankruptcy — with smaller community banks likely bearing the brunt of the impact.

This, in turn, would undermine an important source of economic dynamism: community lending. Community banks use deposits to originate approximately 60% of all small business loans and 80% of agricultural loans nationally. The decline in the number of small banks, more scarce deposits, and reduced competition amongst credit providers will all lead to less credit for households, local businesses, and farmers. In many areas, less lending will lead to fewer jobs. For example, small businesses are important employers in rural areas, employing 62% of all workers.[4]

This impact will be especially acute in rural and low-income areas with few credit options, since an outflow in deposits will hinder lending for the Community Reinvestment Act (CRA). Under the CRA, banks are encouraged to meet the credit and community development needs of their entire communities, especially low- and moderate-income (LMI) neighborhoods. Banks are evaluated on their performance in providing loans, investments, and services to these communities, and these evaluations are used when they apply for mergers or other changes to their deposit facilities.

Especially since the Clinton administration’s 1995 reforms to the law, CRA has dramatically increased lending, investment, and basic banking services to underserved communities. The evidence shows that the changes made to CRA coincided with a rise from $1.6 billion in 1990 annual commitments to $103 billion in 1999.  Over that roughly same period, the number of CRA-eligible home purchase loans originated by CRA lenders and their affiliates rose from 462,000 to 1.3 million.

Today, CRA continues to benefit communities around the nation. For example, there have been nearly $5 trillion in CRA-qualifying mortgages and small business loans made from 2010 to 2024, according to an analysis by the National Community Reinvestment Coalition. In 2023 alone, CRA lending accounted for roughly $387 billion in small business and community development loans.[5] Furthermore, this is a substantial portion of all lending that depository institutions do in these areas, accounting for nearly 77% of outstanding small business loan dollars and 35% of outstanding farm loans.

Yet unlike deposits at banks, stablecoins have no community lending obligations. While it is not certain exactly how much damage a one-third decline in deposit levels would do to CRA’s vital source of credit, history does give us a reason for concern. At the end of 1980, money market mutual fund assets were only about $135 billion. Today, that number is closer to $5 trillion, making it second only to banks among financial intermediaries. The main advantage mutual funds had in the early years was the industry’s ability to offer higher interest rates than banks because of regulatory limits on insured depository institutions. This led to explosive growth throughout the decade and a substantial level of deposits shifting from banks and thrifts into money market mutual funds, weakening these institutions and undermining the goals of CRA. While successful reforms in the 1990s helped soften the impact, the underlying shift in deposits nevertheless cut the amount of funds available for investment in underserved communities.

CONCLUSION

To ensure financial stability, policymakers have a responsibility to ensure that the GENIUS Act’s prohibition on interest-bearing stablecoins is effective. The delineation between payment stablecoins and stablecoins that would offer interest was carefully thought out and was placed into the law for a reason — to protect large outflows of deposits from insured depository institutions that are the backbone of lending to small businesses and homeowners. The Federal Reserve and other regulators should proceed cautiously as they develop regulations to implement the GENIUS Act, heeding Congress’s mandate to balance the innovation and efficiency gains that stablecoins offer with protecting deposits and the critical lending they enable. Finally, Congress may want to revisit and enact legislation that closes any loopholes created by the GENIUS Act that would undermine insured depository institutions and the communities they serve.

 

[1] Rafael Nam, “Why There’s So Much Excitement Around a Cryptocurrency Called Stablecoin,” National Public Radio, July 15, 2025, https://www.npr.org/2025/07/15/nx-s1-5467380/crypto-stablecoin-genius-act-congress

[2] “What to Know About Stablecoins,” JP Morgan, September 4, 2025, https://www.jpmorgan.com/insights/global-research/currencies/stablecoins.

[3] Dylan Toker and Gina Heeb, “Why Banks Are on High Alert About Stablecoins,” Wall Street Journal, July 18, 2025, https://www.wsj.com/finance/currencies/why-banks-are-on-high-alert-about-stablecoins-2f308aa0?mod=Searchresults&pos=2&page=1.

[4] Michelle Kumar and Justice Antonioli, “Small Businesses Matter: Increasing Small Business Access to Capital in the Digital Age,” Bipartisan Policy Center, April 29, 2024, https://bipartisanpolicy.org/report/small-businesses-matter-capital-access/.

[5] “Findings from Analysis of Nationwide Summary Statistics for 2023 Community Reinvestment Act Data Fact Sheet,” Federal Deposit Insurance Corporation, 2023, https://www.fdic.gov/findings-analysis-nationwide-summary-statistics-2023-community-reinvestment-act-data-fact-sheet.

New PPI Report Warns Credit Card Rate Caps Could Limit Access for Working-Class Borrowers

Posted on by Alex Terr

WASHINGTON — Credit card interest rates have skyrocketed over the past few years, increasing borrowing and debt. Congress has attempted to mitigate credit card debt for Americans by introducing legislation to cap credit card interest rates at ten percent. However, this legislation would do more harm than good.

To inform the debate around new legislation proposing a 10% interest rate cap, the Progressive Policy Institute (PPI) today released “Cutting Credit: How Rate Caps Undermine Access for Working Americans.” Authored by Andrew Fung, Senior Economic & Technology Policy Analyst; Alex Kilander, Policy Analyst at PPI’s Center for Funding America’s Future; and Sophia Lu, PPI Public Policy Fellow, the report argues that while rising interest rates reflect inflation and increased lending risk, a blunt rate cap would strip issuers of a key tool for managing that risk — ultimately reducing access to credit for working-class borrowers.

“A 10% interest rate cap may sound like relief, but it could end up closing the door on credit for millions of Americans,” said Fung. “When lenders can’t price for risk, they stop serving lower-income borrowers.”

The authors suggest three ways that would strengthen consumer protections without cutting off access to credit:

  • Enhancing Transparency in Credit Terms and Disclosures: When consumers can clearly find and understand how much they will pay over the life of a loan or credit card balance, they can better evaluate their credit and spending decisions.
  • Expanding Financial Education in Schools and Communities: Most young Americans struggle with managing their finances, and the implementation of financial education will help them make better monetary decisions. 
  • Investing in Community Development Financial Institutions (CDFIs) to Provide Responsible Credit Access for Working Americans: CDFIs play an essential role in the financial ecosystem by giving those who cannot afford rising interest rates at banks a safer alternative to predatory loans.

“Rather than imposing blanket rate caps, targeted reforms expand access to responsible credit and empower consumers through transparency and education, said Kilander.”

Read and download the report here.

 

Founded in 1989, PPI is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org. Find an expert at PPI and follow us on X.

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Media Contact: Ian O’Keefe – iokeefe@ppionline.org

Cutting Credit: How Rate Caps Undermine Access for Working Americans

Posted on by Alex Terr

INTRODUCTION

As the inflation rate surged throughout 2021 and 2022 and put pressure on consumers’ wallets, another important trend was underway: credit card interest rates were rising. With the Federal Reserve raising the federal funds rate substantially to combat inflation, credit card interest rates climbed sharply in 2022 and 2023 as a result of the increased costs of lending, rising from an average of 14.51% in Q4 2021 to 21.19% just two years later. However, even as inflation subsided and prices stabilized, credit card interest rates remained elevated.

Why is this the case? Ultimately, credit card interest rates reflect the state of the broader consumer credit market. In recent years, that market has started showing signs of stress, particularly among less creditworthy borrowers, who have higher credit card debt and more frequent delinquencies. Higher market-wide risk — alongside a still high federal funds rate — has caused banks that issue credit cards to raise interest rates and keep them high.

Consumer discontent with these high rates has spurred a bipartisan effort to address the issue. In February 2025, Senator Bernie Sanders (I-Vt.) and Josh Hawley (R-Mo.) introduced legislation that would cap credit card interest rates at 10% for five years, claiming that the bill would provide “working families with desperately needed financial relief.” A 10% cap was also floated by Donald Trump on the campaign trail, to provide relief “while working Americans catch up.”

However, limiting credit card interest rates to an arbitrary 10% effectively deprives credit card issuers of their most powerful tool to manage risk. As a result, a rate cap would dramatically reduce access to credit for the very people it aims to protect, just as the economy teeters on the precipice of a recession. By significantly limiting their ability to qualify for and use credit, it would even cause many consumers to turn to predatory alternatives such as payday lenders.

The following sections of this paper dive into the consumer credit market and evaluate the different options policymakers can use to make it function better for working Americans. First, it reviews the current state of the market, highlighting the important role that consumer credit plays in the economy, how credit card issuers decide upon interest rates, and breaking down why interest rates have risen in recent years. Second, it explains the economics of rate caps, and how workingclass Americans would bear the brunt of a cap’s consequences. Lastly, the paper explores some better policy alternatives to protect consumers, including greater transparency, better financial capability for households, and alternatives to traditional credit.

Read the full report.

New PPI Report Examines Impact of ‘Buy Now, Pay Later’ on Consumer Credit

Posted on by Max Sherrill

WASHINGTON — Amid growing concerns about economic instability and the risk of a wider economic downturn, the Progressive Policy Institute (PPI) has released a new report examining the rapidly expanding “‘Buy Now, Pay Later”’ (BNPL) trend. The report, titled “Buy Now, Pay Later: The New Face of Consumer Credit,” explores the benefits and risks of this emerging form of consumer credit and advocates for targeted regulations to protect consumers while encouraging ongoing innovation in the credit market.

Authored by Andrew Fung, an Economic Policy Analyst at PPI, the report highlights the growing popularity of BNPL services among young and low-income consumers, who are attracted to the flexibility these services provide in accessing goods and services that may otherwise be unaffordable. While BNPL loans can improve financial inclusion, they also carry significant risks, especially for consumers with limited financial literacy or those prone to overextending themselves financially.

“In today’s uncertain economic climate, it’s crucial to understand the patterns of consumer spending,” said Fung. “BNPL loans present a new way for consumers to access credit, but the rapid growth of this market requires careful attention to potential financial risks.”

The report outlines the current state of consumer credit, noting that while overall debt levels remain stable, there are emerging areas of concern that should be closely monitored. BNPL loans, with their smaller, fixed payment structures, are generally less risky than traditional credit cards. However, the report recommends sensible regulations, such as interest rate caps, clear loan term disclosures, and standardized dispute resolution processes, to protect consumers and support the sustainable growth of this credit option.

“As policymakers continue to navigate economic challenges, it’s important to examine the current state of consumer credit closely,” added Fung. “Our report provides a practical approach for ensuring BNPL can benefit consumers while mitigating potential risks to both individuals and the broader economy.”

The report also examines the demographic profile of BNPL users, revealing that these services are especially popular among Black, Hispanic, and female consumers, as well as those with household incomes between $20,000 and $50,000 per year. Although BNPL has grown rapidly, it still represents a relatively small portion of the overall American economy. However, its differences from traditional credit methods and the unique risks it presents are drawing increasing attention from policymakers.

Read and download the report here.

The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org. Find an expert at PPI and follow us on Twitter.

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Media Contact: Ian O’Keefe – iokeefe@ppionline.org

Buy Now, Pay Later: The New Face of Consumer Credit

Posted on by Max Sherrill

Introduction

Consumer credit plays two essential roles in our everyday lives. Instruments like credit cards make it possible for Americans to purchase everything from their daily latte to groceries and furniture with less friction, even if we have enough money in the bank. Beyond these smaller purchases, consumer credit also allows us to borrow to pay for bigger ticket items that may be too expensive to buy with their current resources. The second scenario can lead to a potentially dangerous expansion of household debt, which can trap some households in a debt spiral that’s hard to escape or have larger systemic effects.

This paper will consider the economic and policy ramifications of the current rapid expansion of one form of consumer credit, known as buy now, pay later (BNPL). Buy now, pay later loans serve as an alternative to traditional payment methods like credit cards when shopping online, allowing consumers to break up the cost of their purchase into several installments to be paid over the course of a few weeks or months, often with very low or zero interest. Understanding how this new form of consumer credit fits into the larger American economy is important, and this paper will explain why BNPL falls under the first category of consumer credit but does merit scrutiny and potential regulation as it continues to develop.

Read the full report.

Ritz for Forbes: No, Bitcoin Won’t Solve Our National Debt

Posted on by Max Sherrill

By Ben Ritz

At a Bitcoin conference last weekend, Senator Cynthia Lummis (R-Wyo.) announced forthcoming legislation that would direct the Treasury to buy 1 million Bitcoin, or roughly 5% of the global stock, over five years (which would cost between $60 billion and $70 billion at today’s prices). Lummis claimed that the federal government would be “debt-free because of Bitcoin” if her proposal is enacted, because these Bitcoin could be sold by the federal government at a profit after 20 years. Unfortunately, there are both mathematical and conceptual problems that prevent such an approach from solving the federal government’s budget problems.

Let’s start with the math: The U.S. national debt today stands at nearly $28 trillion (or $35 trillion, if one includes “intragovernmental debt” the general fund owes to other internal government accounting entities such as the Social Security and Medicare trust funds). This year alone, the federal government spent roughly $2 trillion more than it raised in revenue, which had to be covered by borrowing that gets added to our national debt.

Keep reading in Forbes.

Paying for Progress: A Blueprint to Cut Costs, Boost Growth, and Expand American Opportunity

Posted on by The Progressive Policy Institute

The next administration must confront the consequences that the American people are finally facing from more than two decades of fiscal mismanagement in Washington. Annual deficits in excess of $2 trillion during a time when the unemployment rate hovers near a historically low 4% have put upward pressure on prices and strained family budgets. Annual interest payments on the national debt, now the highest they’ve ever been in history, are crowding out public investments into our collective future, which have fallen near historic lows. Working families face a future with lower incomes and diminished opportunities if we continue on our current path.

The Progressive Policy Institute (PPI) believes that the best way to promote opportunity for all Americans and tackle the nation’s many problems is to reorient our public budgets away from subsidizing short-term consumption and towards investments that lay the foundation for long-term economic abundance. Rather than eviscerating government in the name of fiscal probity, as many on the right seek to do, our “Paying for Progress” Blueprint offers a visionary framework for a fairer and more prosperous society.

Our blueprint would raise enough revenue to fund our government through a tax code that is simpler, more progressive, and more pro-growth than current policy. We offer innovative ideas to modernize our nation’s health-care and retirement programs so they better reflect the needs of our aging population. We would invest in the engines of American innovation and expand access to affordable housing, education, and child care to cut the cost of living for working families. And we propose changes to rationalize federal programs and institutions so that our government spends smarter rather than merely spending more.

Many of these transformative policies are politically popular — the kind of bold, aspirational ideas a presidential candidate could build a campaign around — while others are more controversial because they would require some sacrifice from politically influential constituencies. But the reality is that both kinds of policies must be on the table, because public programs can only work if the vast majority of Americans that benefit from them are willing to contribute to them. Unlike many on the left, we recognize that progressive policies must be fiscally sound and grounded in economic pragmatism to make government work for working Americans now and in the future.

If fully enacted during the first year of the next president’s administration, the recommendations in this report would put the federal budget on a path to balance within 20 years. But we do not see actually balancing the budget as a necessary end. Rather, PPI seeks to put the budget on a healthy trajectory so that future policymakers have the fiscal freedom to address emergencies and other unforeseen needs. Moreover, because PPI’s blueprint meets such an ambitious fiscal target, we ensure that adopting even half of our recommended savings would be enough to stabilize the debt as a percent of GDP. Thus, our proposals to cut costs, boost growth, and expand American opportunity will remain a strong menu of options for policymakers to draw upon for years to come, even if they are unlikely to be enacted in their entirety any time soon.

The roughly six dozen federal policy recommendations in this report are organized into 12 overarching priorities:

I. Replace Taxes on Work with Taxes on Consumption and Unearned Income
II. Make the Individual Income Tax Code Simpler and More Progressive
III. Reform the Business Tax Code to Promote Growth and International Competitiveness
IV. Secure America’s Global Leadership
V. Strengthen Social Security’s Intergenerational Compact
VI. Modernize Medicare
VII. Cut Health-Care Costs and Improve Outcomes
VIII. Support Working Families and Economic Opportunity
IX. Make Housing Affordable for All
X. Rationalize Safety-Net Programs
XI. Improve Public Administration
XII. Manage Public Debt Responsibly

Read the full Blueprint. 

Read the Summary of Recommendations.

Read the PPI press release.

See how PPI’s Blueprint compares to six alternatives. 

Media Mentions:

Weinstein for Forbes: What History Tells Us About The Fed’s Timing Of Interest Rate Cuts

Posted on by Max Sherrill

By Paul Weinstein Jr.

At the end of 2023, many economists and bankers predicted the Federal Reserve would cut interest rates several times over the course of 2024, leading to lower mortgage and credit card rates, and greater economic activity overall.

The Fed itself, according to its dot plot (a chart that records each Fed official’s projection for the central bank’s key short-term interest rate), projected three 0.25% cuts by the end of 2024. Yet, at the conclusion of the first quarter, the federal funds rate still remains locked in between 5.25% and 5.5%. While the stock market rally indicates that investors believe three or more rate cuts are still on the table for this year, history suggests that may not be the case.

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