OCC Assesses $4 Million Civil Money Penalty Against Trustmark National Bank For Violations of the Fair Housing Act

News Release 2021-109 | October 22, 2021

WASHINGTON—The Office of the Comptroller of the Currency (OCC) today announced a $4 million civil money penalty against Trustmark National Bank, Jackson, Miss., for violations of the Fair Housing Act.

The OCC found that Trustmark National Bank denied residents of majority minority and high minority neighborhoods in Memphis equal access to mortgage loans. This disparate treatment was evidenced through the bank’s pattern of mortgage application and origination activity, branching history, mortgage loan officer structure and operations, and marketing and advertising. Based on these findings, the OCC determined that the bank violated the Fair Housing Act, 42 U.S.C. §§ 3604(a), (b), and 3605(a); and its implementing regulation, 24 C.F.R. §§ 100.120 and 100.50.

The OCC’s action is based on an examination that focused on the bank’s lending activities from 2014 to 2016. The OCC’s civil money penalty is separate from, but coordinated with, the settlement between the bank and the Department of Justice and the Consumer Financial Protection Bureau, which is also being announced today.

The $4 million civil money penalty will be paid to the U.S. Treasury.

Acting Comptroller Michael J. Hsu announced the civil money penalty in conjunction with a new Department of Justice-led, multiagency initiative to combat redlining.

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Stephanie Collins
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United States Supports OECD Deal on Prohibiting Official Export Financing for Unabated Coal Power

WASHINGTON Today, the U.S. Department of the Treasury announced that the United States joined other OECD Participants to the Arrangement on Officially Supported Export Credits in agreeing on new disciplines that prohibit export credits for all new unabated coal power generation technology.  Only carbon capture, utilization, and sequestration technology, or “CCUS,” qualifies as abatement.  This arrangement also constrains export credit support for existing coal fired power plants to only pollution or carbon emission abatement equipment, which also must not extend the useful lifetime or capacity of the facility. 

“The Treasury Department commends the decision at the OECD to end international export credit support for unabated coal power,” said Treasury Climate Counselor John Morton regarding the decision.  “We have worked closely with partners to achieve this agreement because actions like these are vital to tackling climate change and reaching the goal of net-zero emissions by 2050. The Department will continue to work with countries throughout the world as they transition towards cleaner and greener sources of energy.”

Burning coal is one of the largest sources of carbon dioxide emissions globally and ending export credit financing of unabated coal is crucial for the decarbonizing of the power sector. The new prohibitions build on the 2015 coal power-financing restrictions and close off the remaining avenues for OECD export credit agencies to support unabated coal power, consistent with our international obligations.  With these new disciplines in place, OECD countries can redirect attention to supporting appropriate financing in areas like clean energy technology, climate mitigation, and other non-fossil fuel intensive sectors.  

This decision is a significant step to implement President Biden’s Executive Order on Tackling the Climate Crisis at Home and Abroad and complements Treasury’s recent issuance of fossil fuel energy guidance for multilateral development banks.  It also helps fulfill commitments from the June G7 Summit, in which Leaders stressed “that international investments in unabated coal must stop now and … committ[ed] now to an end to new direct government support for unabated international thermal coal power generation by the end of 2021,” including through export finance.  

More broadly, this decision is a diplomatic achievement for the international community in advancing climate solutions and aligning our actions with the goals of the Paris Agreement.  These new export credit disciplines should be fully implemented this month and were unanimously supported in principle by the Participants, which include Australia, Canada, the European Union, Japan, Korea, New Zealand, Norway, Switzerland, Turkey, the United Kingdom, and the United States.

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Joint Statement by Secretary of the Treasury Janet L. Yellen and Acting Director of the Office of Management and Budget Shalanda D. Young on Budget Results for Fiscal Year 2021

WASHINGTON —  U.S. Secretary of the Treasury Janet L. Yellen and White House Office of Management and Budget (OMB) Acting Director Shalanda D. Young today released the final budget results for fiscal year (FY) 2021. The deficit in FY 2021 was $360 billion less than in the prior fiscal year, reflecting an improved economy due in part to the American Rescue Plan Act of 2021 (ARP) and COVID-19 vaccination rollout. The 2021 deficit was $897 billion less than forecast in the President’s 2022 Budget and $342 billion less than estimated in the 2022 Mid-Session Review. [1] As a percentage of gross domestic product (GDP), the deficit was 2.6 percentage points lower than in the previous year. [2] The FY 2021 deficit was $2.8 trillion.

Under President Biden’s leadership, the U.S. economy is getting back on track and Americans are getting back to work. This is a result of the President taking swift action to mount a historic vaccination effort and secure the enactment of the ARP, which helped put a floor under the crisis, got shots into arms, and delivered checks into pockets. Since the President took office, the unemployment rate has fallen to 4.8 percent. The economy has added an average of 600,000 jobs each month and has already made up the GDP losses from the first half of 2020, surpassing the pre-pandemic GDP peak. During the first two quarters of 2021, the economy grew faster than the comparable period in any year over the past four decades. This faster, broader growth also produced a smaller budget deficit than originally projected. To carry this momentum forward, the President has put forward an agenda to invest in the middle class and ensure that all Americans can share in the benefits of a growing economy.   

“Today’s joint budget statement is further evidence that America’s economy is in the midst of a recovery. The nation’s economic progress is the direct result of the Biden-Harris Administration’s efforts to enact the American Rescue Plan and address the pandemic,” Treasury Secretary Janet L. Yellen said. “While the nation’s economic recovery is stronger than those of other wealthy nations, it is still fragile. In order to build upon the progress that has been made and to ensure the success of our businesses, productivity of our workers, and inclusiveness of our system, Congress should pass President Biden’s Build Back Better plan. Passing President Biden’s economic agenda will grow the economy, help workers and families, and strengthen our nation’s long-term fiscal outlook.”

 “These budget results are further proof that President Biden’s economic plan is working,” said OMB Acting Director Shalanda Young. “Instead of settling for an economy that serves the wealthiest Americans and biggest corporations, the President’s agenda builds on the progress we’ve made and grows our economy from the bottom up and the middle out—creating jobs, cutting taxes for the middle class, lowering costs for working families, and improving our country’s long-run fiscal and economic health.”

Summary of Fiscal Year 2021 Budget Results

Year-end data from the September 2021 Monthly Treasury Statement of Receipts and Outlays of the United States Government show that the deficit for FY 2021 was $2.8 trillion, $360 billion less than the prior year’s deficit. As a percentage of GDP, the deficit was 12.4 percent, a decrease from 15.0 percent in FY 2020.

The FY 2021 deficit was $897 billion less than the estimate of $3.7 trillion in the 2022 Budget published in May and $342 billion less than the estimate of $3.1 trillion in the Mid-Session Review (MSR), a supplemental update to the Budget published in August. Updates included in this year’s MSR were limited to tax receipts, outlay for tax credits, and programs where economic changes were expected to have the most significant effects across the budget window: Social Security, Medicare, Medicaid, Supplemental Nutrition Assistance Program, and unemployment compensation.

Table 1. Total Receipts, Outlays, and Deficit (in trillions of dollars)

 

Receipts

Outlays

Deficit

FY 2020 Actual

3.420

6.552

-3.132

    Percentage of GDP

16.3%

31.3%

15.0%

FY 2021 Estimates:

 

 

 

    2022 Budget

3.581

7.249

-3.669

    2022 Mid-Session Review

4.037

7.151

-3.114

FY 2021 Actual

4.046

6.818

-2.772

    Percentage of GDP

18.1%

30.5%

12.4%

Note: Detail may not add to totals due to rounding.

Governmental receipts totaled $4.0 trillion in FY 2021, exceeding Budget and MSR projections. As a share of GDP, receipts were 18.1 percent, 1.7 percentage points higher than in FY 2020. Relative to FY 2020, receipts increased by $626 billion, an increase of 18.3 percent. The increase in receipts for FY 2021 can be attributed to higher net individual and corporation income taxes from the improved economy.

Outlays were $6.8 trillion in FY 2021, less than projected in the Budget and MSR. Compared with FY 2020, outlays increased by $266 billion, or 4.1 percent. The increase reflects continued spending from laws enacted during the previous administration, such as the Coronavirus Aid, Relief, and Economic Security (CARES) Act and the Consolidated Appropriations Act, 2021, and programs created or enhanced by the ARP to provide relief to Americans and support the economy. Contributing to the dollar increase over FY 2020 were higher outlays for COVID relief programs such as Economic Impact Payments, State and Local Fiscal Recovery Funds, and the Emergency Rental Assistance Program. As a percentage of GDP, outlays decreased slightly from 31.3 percent in FY 2020 to 30.5 percent in FY 2021.

Total federal borrowing from the public increased by $1.3 trillion during FY 2021 to $22.3 trillion. The increase in borrowing included $2.8 trillion in borrowing to finance the deficit, partly offset by $1.5 trillion in other transactions that affect borrowing, particularly the decrease in the cash balance. As a percentage of GDP, borrowing from the public fell from 100.3 percent of GDP at the end of FY 2020 to 99.5 percent of GDP at the end of FY 2021.

To coincide with the release of the Federal Government’s year-end financial data, the Treasury’s Bureau of the Fiscal Service has updated Your Guide to America’s Finances (Your Guide) with this new data. Your Guide was launched in 2019 to make federal financial information transparent and accessible to all Americans. It presents a snapshot of the trillions of dollars collected and spent by the Federal Government each year and provides useful context for those numbers. Your Guide also clarifies common questions such as the difference between the deficit and the debt through user-friendly explanations, charts, and visualizations.

Below are explanations of the differences between FY 2021 estimates and the year-end actual amounts for receipts by source and outlays by agency. Because updates included in MSR were limited, the explanations compare actual year-end data to estimates from the 2022 Budget.KOGAcKU10LZYDW3DjsNNuIXJkcyi6pP4gcX5nyuakwAUsdoLMG1JPLwGsl+pGUy8WoaVZutRjLoxhahJNaNEoz579KcAoaC0P8NbZjt8gU0ILbQ81JtapwZp6MqISby8

Fiscal Year 2021 Receipts

Total receipts for FY 2021 were $4.0 trillion, $465.2 billion higher than the Budget estimate of $3.6 trillion. This net increase in receipts was the net effect of higher-than-estimated collections of individual income taxes, corporation income taxes, social insurance and retirement receipts, estate and gift taxes, deposits of earnings by the Federal Reserve, and excise taxes, partially offset by lower-than-estimated collections of customs duties and other miscellaneous receipts. The increase in 2021 receipts can be largely attributed to higher personal and business income. Table 2 displays actual receipts and estimates from the Budget by source.

  • Individual income taxes were $2.0 trillion, $339.5 billion higher than the Budget estimate. This difference was the net effect of higher withheld payments of individual income tax liability of $154.1 billion, higher nonwithheld payments of $170.4 billion, and lower-than-estimated refunds of $15.0 billion.
  • Corporation income taxes were $371.8 billion, $103.3 billion above the Budget estimate. This difference was the effect of higher-than-expected payments of corporation income tax liability of $86.7 billion and lower-than-estimated refunds of $16.6 billion.
  • Social insurance and retirement receipts were $1.3 trillion, $17.9 billion higher than the Budget estimate.
  • Excise taxes were $75.3 billion, $1.2 billion above the Budget estimate.  
  • Estate and gift taxes were $27.1 billion, $9.5 billion above the Budget estimate.
  • Customs duties were $80.0 billion, $4.8 billion below the Budget estimate.
  • Miscellaneous receipts were $133.3 billion, $1.4 billion below the Budget estimate.  This was the net effect of lower-than-expected collections of various fees, penalties, forfeitures, and fines of $4.2 billion; partially offset by higher-than-expected remittances by the Federal Reserve System of $2.8 billion, largely due to lower short-term interest rates and higher earnings as they have increased their asset holdings in response to COVID-19.

Fiscal Year 2021 Outlays

Total outlays were $6.8 trillion for FY 2021, $431 billion below the Budget estimate. Table 3 displays actual outlays by agency and major program as well as estimates from the Budget.  The largest changes in outlays from the Budget were in the following areas:

Department of Agriculture — Outlays for the Department of Agriculture were $235.2 billion in FY 2021, $53.5 billion less than the Budget estimate. 

Approximately $27 billion of this difference is attributable to outlays in the Supplemental Nutrition Assistance Program (SNAP) due to lower than anticipated participation, delays in Pandemic-EBT issuance, and benefits issued in FY 2021 that will be redeemed in FY 2022.

Outlays in the Child Nutrition Programs were $6.2 billion lower than expected due to fewer meals served and delayed reimbursement claims as a result of the continued impact of the COVID-19 pandemic on school operations. 

Within the Office of the Secretary, outlays in FY 2021 totaled $25.4 billion, higher than the President’s Budget projected outlays of $18.4 billion due to quicker than anticipated outlay rates for the supplemental funding received in the Consolidated Appropriations Act, 2021. While the President’s Budget projected that this supplemental funding would be spent out evenly over a five-year period, $7.6 billion of the $11.2 billion provided was outlayed in FY 2021. 

For the Risk Management Agency, the Budget projected outlays of $9.0 billion, while actual outlays totaled $6.7 billion, due to higher than anticipated producer premium collections deferred to FY 2021 from FY 2020.

For the Commodity Credit Corporation, the President’s Budget estimate was $16.5 billion higher compared to FY 2021 outlays, resulting from lower-than-expected outlays from FY 2020 balances.

Lastly, actual FY 2021 outlays for Assistance for Socially Disadvantaged Farmers and Ranchers were $1 million, instead of the $5.0 billion projected in the Budget, due to legal challenges that have prevented the assistance from being distributed. 

Department of Defense — Outlays for the Department of Defense were $717.6 billion, $5.2 billion higher than the Budget estimate. This difference was mostly due to higher-than-expected outlays for procurement related activities, which were $4.3 billion higher than the Budget estimate, and higher-than-expected outlays for research, development, test, and evaluation, which were $2.8 billion higher than the Budget estimate. One billion dollars higher-than-expected military construction costs and $0.8 billion higher-than-expected outlays for revolving and management funds also contributed to the total difference. These differences were partially offset by $2.2 billion lower-than-expected military personnel costs, $0.4 billion lower-than-expected outlays for operation and maintenance costs, and $0.3 billion lower-than-expected outlays for various military program accounts.

Department of Education — Outlays for the Department of Education were $260.4 billion, $28.4 billion higher than the Budget estimate. Outlays in the Federal Direct Student Loan program and the Family Federal Education Loan Program were $34.9 billion higher than the Budget estimate due primarily to upward modifications for extensions of the pause of student loan payments, interest, and collections first authorized by the CARES Act. In the Pell Grant program, outlays were $1.2 billion lower than the Budget estimates, due to lower-than-projected program participation during the most recent academic year. Outlays in the Special Education account were also $1.9 billion lower than the Budget estimate due to the unprecedented amount of other federal funds made available from the ARP and other supplemental appropriations that can support special education, which slowed expenditure of regular Individuals with Disabilities Education Act (IDEA) funds. Finally, outlays in the Rehabilitation Services account were $1.2 billion lower than the Budget estimate because States and grantees were unable to spend down as much of their funding as expected due to the ongoing pandemic, particularly due to the reduction of in-person service delivery.

Department of Health and Human Services — Outlays for the Department of Health and Human Services were $1.5 trillion, $80.7 billion lower than the Budget estimate.

Federal contributions to the Supplementary Medical Insurance (SMI) Fund were $44 billion higher than anticipated. Refunds from the Hospital Insurance (HI) Trust Fund were $20.6 billion lower than anticipated in the President’s Budget. Refunds from SMI were $10.6 billion lower than projected in the President’s Budget. There were more receipts than expected for the fiscal year, largely in part from the repayment of Medicare accelerated and advance payments to providers and suppliers, which totaled over $22 billion for HI and $15 billion for SMI in 2021.

The actual outlays for other health programs were $9.2 billion lower than the Budget projection due to the absence of an appropriation for Cost-Sharing Reductions.

Outlays for the Public Health and Social Services Emergency Fund were $19 billion lower than projected in the Budget. The difference is primarily driven by the changes in timing of procurements and provider payments from unobligated COVID-19 emergency supplemental resources since the President’s Budget as HHS continues to adapt its response. 

Lastly, outlays for the Child Care and Development Block Grant were $6.2 billion lower than projected due to slower-than-expected state spending of the COVID supplemental funds.

Department of Homeland Security — Outlays for the Department of Homeland Security were $91.1 billion, $31.6 billion lower than the Budget estimate. Approximately $25.3 billion of the difference is driven by the Federal Emergency Management Agency (FEMA), of which $24.4 billion is due to FEMA’s Disaster Relief Fund. This is due to slower and lower COVID-19 response spending than originally anticipated of ARP funding as States have slowed down reimbursement requests. The remainder is due to lower-than-projected outlays in other accounts. 

Department of Housing and Urban Development — Outlays for the Department of Housing and Urban Development (HUD) were $31.8 billion, $24.1 billion lower than the Budget estimate. The difference is primarily driven by the inadvertent exclusion from the Budget of the downward reestimate for the Federal Housing Administration (FHA) Mutual Mortgage Insurance (MMI) Fund, which should have been credited as $15.7 billion in offsetting receipts to the MMI Capital Reserve Account. In addition, outlays for HUD formula grant programs, including the Community Development Block Grant (CDBG), CDBG-Disaster Recovery and Homeless Assistance Grant programs, were lower than the Budget estimate largely due to ongoing economic impacts of COVID-19 and grantees prioritizing other federal sources of pandemic relief with earlier expenditure deadlines.

Department of Justice — Outlays for the Department of Justice were $39.3 billion, $6.0 billion lower than the Budget estimate. The difference is predominately due to large changes in the Crime Victims Fund (CVF), the State and Local Law Enforcement Assistance (SLLEA) account, the Research, Evaluation, and Statistics (RES) account, and the Asset Forfeiture Program (AFP). Outlays for the CVF were $2.4 billion lower than estimated due to a slower-than-anticipated draw down of funds made available in prior fiscal years, similar to draw-down issues seen in the previous year. Outlays by the SLLEA were $1.1 billion lower and outlays by RES were $0.4 billion lower than anticipated in part due to delays created by technical issues with the migration to a new grants management system. For the AFP, outlays were $0.6 billion lower than estimates due to an unanticipated lag in victim payments, again similar to issues experienced in the previous year.

Department of Labor — Outlays for the Department of Labor were $404.8 billion, $147.8 billion lower than the Budget estimate. The difference was attributable primarily to lower-than-expected outlays in the Unemployment Trust Fund and Federal Additional Unemployment Compensation account. Outlays were lower in the Unemployment Insurance (UI) Program due to approximately half of states terminating the CARES Act pandemic UI programs early, economic conditions improving faster than expected, and ongoing claims backlogs. The Department expects states to continue to process retroactive benefits in the coming fiscal years.

Department of Transportation — Outlays for the Department of Transportation were $104.9 billion, $20.8 billion lower than the Budget estimate. Approximately half of this difference was due to slower-than-expected spending of Federal Transit Administration (FTA) COVID supplemental funding for a variety of reasons, including an inefficient supply chain that slowed progress on grantees’ capital projects. Additionally, supplemental COVID funding appropriated to FTA, as well as to the Federal Highways Administration (FHWA) and Federal Aviation Administration, likely redirected focus towards execution of those funds and slowed outlays in those operating administrations’ base grant programs, which may account for a portion of the difference between estimated and actual outlays.

Department of the Treasury — Net outlays for the Department of the Treasury were $1.6 trillion, $48 billion lower than the Budget estimate.

Non-IRS pandemic response programs enacted in the Consolidated Appropriations Act, 2021 and the ARP accounted for $66 billion in lower-than-projected outlays. This difference was primarily attributable to the ARP State and Local program, which outlayed $31 billion less than forecasted because of statutory requirements delaying second tranche outlays by at least 12 months. Outlays for the Homeowner Assistance Fund (HAF) were $9.0 billion lower than the Budget projected, as grantees did not begin to submit detailed plans, which allow grantees to receive the remainder of their HAF allocations, for Treasury approval until late in the fiscal year (August). The remaining $26.1 billion of the difference was due to slower-than-anticipated outlays for the Capital Projects Fund, the State Small Business Credit Initiative, and the Emergency Capital Investment Fund.

Outlays for individual and corporate refundable credits created in the CARES Act, the Consolidated Appropriations Act, 2021, and the ARP were $94.7 billion lower than the Budget estimate due to lower-than-expected take-up of the employee retention credit, paid sick and family leave credits, and the COBRA premium assistance credit. This was partly offset by $23.9 billion in higher-than-anticipated outlays for Economic Impact Payments and the recovery rebate credit, due to higher take-up.

Outlays for Refundable Premium Tax Credits were $5.4 billion higher than anticipated due to increased enrollment attributable to the special enrollment period created to combat the COVID-19 pandemic. 

Interest on the public debt, which is paid to the public and to trust funds and other Government accounts, was $77.7 billion higher than the Budget estimate. The difference was due primarily to higher-than-projected borrowing costs on inflation-protected securities held both by the public and by Government accounts.

Net outlays for intragovernmental interest transactions with non-budgetary credit financing accounts were $9.8 billion higher than projected, including $11.3 billion in lower-than-projected receipts of interest from credit financing accounts, partly offset by $1.5 billion lower-than-anticipated interest paid to credit financing accounts. (Interest received from credit financing accounts is reported in Treasury’s aggregate offsetting receipts.)

Other Defense Civil Programs — Outlays for the Other Defense Civil Programs were $58.1 billion, $10.2 billion lower than the Budget estimate. The difference was primarily due to higher interest earnings on inflation-protected securities held by the Department of Defense Medicare-Eligible Retiree Health Care Fund, which were $9.4 billion higher than expected, reducing net outlays. Additional lower-than-expected outlays from other accounts in Other Defense Civil Programs account for the remaining difference.

International Assistance Programs — Outlays for International Assistance Programs were $20.0 billion, $5.5 billion lower than the Budget estimate. This difference is due in part to an unexpected $2 billion in receipts to the Economic Support Fund for the purchase of COVID vaccines by the COVID-19 Vaccines Global Access (COVAX), the cost of which was obligated but not expended prior to the end of the fiscal year. Additionally, Foreign Military Financing grant outlays were $1.4 billion lower than projected, in part to account for the time required to meet congressional pre-obligation requirements. In addition, Foreign Military Sales net outlays were $1.7 billion lower than expected due to higher-than-anticipated receipts received from foreign governments for weapons purchases.

Small Business Administration — The Small Business Administration’s (SBA’s) outlays were $322.7 billion, $49.6 billion lower than the Budget estimate. The difference in outlays is primarily driven by several large COVID relief programs. The largest change was for Economic Injury Disaster Loan Advances for COVID Economic Injury Disaster Loan applicants, which were $29.7 billion lower than projected. In addition, outlays for the Disaster Loan Program, which includes COVID Economic Injury Disaster Loans, were $9.7 billion lower than projected, and outlays for the Shuttered Venues Operator Grants were $6.6 billion lower than projected. SBA did not receive the level of eligible applications initially estimated for these programs. In addition, the Paycheck Protection Program received a significant number of cancellations, resulting in outlays that were $2.4 billion less than projections. SBA’s salaries and expenses outlays also were $0.8 billion less than projected.

Social Security Administration — Outlays for the Social Security Administration were $1,192.5 billion, $6.8 billion lower than the Budget estimate, which is relatively minor compared to total program outlays. The difference is primarily attributable to lower-than-expected outlays for the Old-Age and Survivors Insurance Trust Fund, Disability Insurance Trust Fund and Supplemental Security Income programs. Actual benefit payments were down slightly from the estimates in the Budget, mainly due to a lower number of beneficiaries and recipients than previously projected.

Federal Communications Commission — Outlays for the Federal Communications Commission were $11.1 billion, $5.4 billion lower than the Budget estimate of $16.5 billion. The difference in outlays is associated with multiple programs including two new COVID-19 emergency programs created by the Consolidated Appropriations Act, 2021 and the ARP. Projected outlays for the new Emergency Broadband Benefit program, which provides a discount on broadband connectivity and devices for eligible households, were based on an initial demand forecast that assumed higher enrollments and more claims than actually occurred. The Emergency Connectivity Fund, which provides reimbursements for educational broadband connections and devices for eligible schools and libraries for off-campus use by students, school staff, and library patrons, began making obligations later than estimated. Additionally, Universal Service Fund outlays were lower than estimated due to a delay in conducting the reverse auction for the Rural Digital Opportunity Fund that resulted in later obligations and outlays, and due to invoice extensions and waivers granted during COVID-19 for the Schools and Libraries and Rural Health Care programs. Also, the TV Broadcaster Relocation Fund had lower outlays than anticipated because reimbursement requests from Broadcast Stations, which can be requested until July 2023, were lower than estimated.

Postal Service — Net outlays for the United States Postal Service were -$2.7 billion, $7.2 billion lower than the Budget estimate. The difference is almost entirely attributed to the Postal Service not including debt and borrowing in their final outlays reporting to Treasury, primarily the $10 billion in CARES Act borrowing (which is not required to be repaid) or $3 billion in Federal Financing Bank repayment.

Undistributed Offsetting Receipts — Undistributed Offsetting Receipts were -$273.4 billion, $54.4 billion lower net collections than the Budget estimate.

Spectrum auction and relocation receipts were $81.2 billion lower than the Budget estimate because the transfer of $81 billion in receipts from the C-band auction of 280 Megahertz of spectrum did not occur by September 30 as planned. This transfer will now occur in FY 2022. 

Interest received by trust funds resulted in $25.4 billion higher net collections than the Budget estimate. The difference was due largely to Military Retirement Fund interest earnings on inflation-protected securities, due to higher-than projected inflation. Total Military Retirement Fund interest earnings were $24.2 billion higher than the Budget estimate. This intragovernmental interest is paid out of the Department of the Treasury account for interest on the public debt and has no net impact on total Federal Government outlays.

[1] Figures may not add up to totals due to rounding.

[2] The estimates of GDP used in the calculations of the deficit and borrowing relative to GDP reflect the revisions to historical data released by the Bureau of Economic Analysis (BEA) in July 2021. GDP for FY 2021 is based on the economic forecast for the 2022 Mid-Session Review, adjusted for the BEA revisions.

Statement by the Acting Comptroller of the Currency on FSOC Climate Change Report

News Release 2021-108 | October 21, 2021

WASHINGTON—Acting Comptroller of the Currency Michael J. Hsu made the following statement today at the meeting of the Financial Stability Oversight Council (FSOC) with respect to the FSOC Climate Change Report:

Thank you, Madam Chair, and thank you to the FSOC and interagency staff for today’s excellent and timely presentation and the work underlying it to address climate change. I fully support the FSOC’s Climate Change Report and its recommendations, issued in response to President Biden’s Executive Order 14030.

The Report provides valuable information on the risks climate change pose to OCC regulated institutions as well as to the entire financial system. The Report’s recommendations provide a clear framework and lay out concrete steps for the OCC, FSOC, and other FSOC members to take to better measure, monitor, and address climate-related financial risks.

At the OCC, we are especially focused on the safety and soundness risks to banks from climate change. This starts with sound risk management. We are learning a lot by collaborating with peers and participating in international forums like the Basel Committee and the Network for Greening the Financial System. Building on that and the FSOC Report’s recommendations, we are developing high level climate risk management supervisory expectations for large banks and hope to issue framework guidance in the near future.

Finally, I greatly appreciate the Report’s focus on the disproportionate potential impact of climate change on disadvantaged and financially vulnerable communities. In many cases, these are the same communities that have been adversely impacted by the pandemic. Bearing this and inequality challenges in mind is important as we tackle climate change risks.

The OCC is strongly committed to acting on the risks that climate change present to the financial system and will approach this issue with the urgency it warrants. The FSOC Climate Change Report provides an excellent road map for us and the other FSOC members. Thank you for your leadership on this issue.

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Secretary of the Treasury Janet L. Yellen to Travel to Italy, the Republic of Ireland, and Scotland

WASHINGTON –  The U.S. Department of the Treasury today announced that Secretary Janet L. Yellen will attend the G20 Joint Finance and Health Ministers’ Meeting on October 29 in Rome, Italy; G20 Heads of State and Government Summit on October 30 and 31 in Rome, Italy; attend meetings to further global tax policy priorities in Dublin, Ireland on October 31 and November 1; and represent the U.S. at the UN Climate Change Conference UK (COP26) on November 2 and 3.

While overseas, Secretary Yellen will continue to reinforce the U.S. commitment to multilateralism and advance U.S. policy priorities on global tax policy, climate change, an inclusive economic recovery, and global health.  She will also hold meetings with counterparts, allies, and business leaders.

 In addition to representing the U.S. during the G20 meetings and at COP26, Secretary Yellen will also travel to Dublin, Ireland to meet with government officials, and private sector representatives. While in Dublin, Secretary Yellen will focus on the historic OECD/G-20 Inclusive Framework agreement wherein virtually the entire global economy – 136 countries representing 94% of the world’s GDP – have agreed to a new set of international tax rules, including a global minimum tax. 

The Secretary is looking forward to continuing working in close cooperation with our allies and multilateral partners to address global challenges.

Additional details and information about possible media opportunities will be announced prior to the trip. 

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FATF Works to Strengthen Financial Transparency, Combat Misuse of Virtual Assets

FATF Approves Public Consultation of Revisions to Beneficial Ownership Standards and Updated Guidance on Virtual Assets

WASHINGTON — The Financial Action Task Force (FATF) concluded its October plenary today, the sixth session since the start of the ongoing COVID-19 pandemic. With hybrid participation both virtually and in-person in Paris, FATF advanced its core work on virtual assets, beneficial ownership transparency, and illicit finance risks.

“The United States welcomes the significant work by the FATF to enhance beneficial ownership transparency and provide clear standards and guidance for the virtual asset industry,” said Secretary of the Treasury Janet L. Yellen. “The FATF’s work will continue to strengthen global action against illicit finance.”

Virtual Assets Guidance
The FATF approved for publication an updated version of its Guidance on a Risk-Based Approach to Virtual Assets and Virtual Asset Service Providers. The guidance is intended to help jurisdictions and the private sector to implement the FATF’s standards on the virtual assets sector, which were revised in 2018. The FATF’s Virtual Assets Contact Group, the body that undertook this revision and which is co-chaired by the United States and Japan, will now focus its efforts to promote implementation of the standards.

Proposed Changes to Beneficial Ownership Standards
The FATF agreed to publish for public consultation proposed revisions to Recommendation 24, which sets the FATF standard regarding beneficial ownership transparency for legal persons. These proposed revisions are intended to improve the quality of beneficial ownership information available to law enforcement and other authorities in a timely manner, facilitate international cooperation, and improve transparency around public procurement to combat corruption. The U.S. strongly supports these enhancements to Recommendation 24 to increase beneficial ownership transparency.

Upcoming Illicit Finance Risk Report
The FATF approved the commencement of a study on Illicit Proceeds Generated from the Fentanyl and Related Synthetic Opioids Supply Chain. These dangerous substances are contributing to thousands of overdose deaths a year in North America, and their popularity with traffickers points to its growth in drug markets around the world. The primary objective of the study is to raise global awareness for operational authorities of how the proceeds of this illicit trafficking are laundered by drug trafficking organizations.

Combating Terrorist Financing
Strengthening the global response to terrorist financing remains a priority for the FATF. This includes financial networks and support to groups such as ISIS, Al-Qaida (AQ), and Hizballah, as well as racially or ethnically motivated violent extremists, and other terrorist threats. The FATF adopted an update to its 2016 confidential report on terrorist financing risk indicators. This update, co-led by the United States and Germany, includes specific indicators involved in racially-or ethnically motivated terrorist financing. Additionally, the FATF is issuing a public update on ISIS and AQ financing (the first since June 2019). This update builds off of regular internal ISIS and AQ financing assessments that are shared with members of the FATF Global Network.

Afghanistan
The FATF also issued a statement on the situation in Afghanistan. It reaffirmed United Nations Security Council Resolutions that Afghanistan should not be used to plan or finance terrorist acts, emphasized the importance of supporting the work of non-governmental organizations in the country and maintaining the flow of humanitarian assistance to the Afghan people, and for governments to facilitate information sharing with their financial institutions on any emerging illicit finance risks related to Afghanistan. The FATF noted that it will continue to monitor the situation in Afghanistan.

Outcomes of the FATF Plenary, 21 October 2021

The Financial Action Task Force (FATF) is an international policy-making and standard-setting body, headquartered in Paris, dedicated to combating money laundering and the financing of terrorism and proliferation finance. The Treasury Department leads the U.S. delegation to the FATF.

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Financial Stability Oversight Council Identifies Climate Change as an Emerging and Increasing Threat to Financial Stability

In First Step, FSOC Releases Report and Recommendations on Climate-related Financial Risk

WASHINGTON — The Financial Stability Oversight Council (FSOC) has released a new report in response to President Biden’s Executive Order 14030, Climate-related Financial Risk. For the first time, FSOC has identified climate change as an emerging and increasing threat to U.S. financial stability. The report and accompanying recommendations demonstrate FSOC’s commitment to building on and accelerating existing efforts on climate change through concrete recommendations for member agencies to:

  • Assess climate-related financial risks to financial stability, including through scenario analysis, and evaluate the need for new or revised regulations or supervisory guidance to account for climate-related financial risks;
  • Enhance climate-related disclosures to give investors and market participants the information they need to make informed decisions, which will also help regulators and financial institutions assess and manage climate-related risks;
  • Enhance actionable climate-related data to allow better risk measurement by regulators and in the private sector; and
  • Build capacity and expertise to ensure that climate-related financial risks are identified and managed.

“Climate change is an emerging and increasing threat to America’s financial system that requires action,” Secretary of the Treasury Janet L. Yellen said. “FSOC’s report and recommendations represent an important first step towards making our financial system more resilient to the threat of climate change.  These measures will support the Administration’s urgent, whole-of-government effort on climate change and help the financial system support an orderly, economy-wide transition toward the goal of net-zero emissions.”

While the report recommends that FSOC members take new actions on climate change data, disclosure, and scenario analysis, it also discusses how individual members are already taking important steps forward. For example:

  • The Securities and Exchange Commission (SEC) has begun to evaluate its disclosure rules and requested public comment on ways to improve climate disclosure.
  • The Federal Reserve Board (FRB) has established two committees to develop a better understanding of climate-related risks and incorporate them into its supervision of financial firms and into its financial stability framework. 
  • The Commodities Futures Trading Commission (CFTC) has engaged on climate-related financial risk issues through its Market Risk Advisory Committee (MRAC). In September 2020, the MRAC’s climate subcommittee issued a report entitled Managing Climate Risk in the U.S. Financial System, with recommendations to address the growing impact of climate-related financial risk.
  • Both the Federal Housing Financing Agency (FHFA) and the Treasury Department’s Federal Insurance Office have requested information on climate-related financial risks from the public to inform their activities

Established under the Dodd-Frank Wall Street Reform and Consumer Protection Act, FSOC is charged with identifying risks to U.S. financial stability, promoting market discipline, and responding to emerging threats to the stability of the U.S. financial system. FSOC consists of 10 voting members and 5 nonvoting members and brings together the expertise of federal financial regulators, state regulators, and an independent insurance expert appointed by the President.

The full report and recommendations can be found here.  A factsheet on FSOC’s actions can be found here. A copy of Secretary Yellen’s remarks during the open session can be found here and a readout of FSOC’s meeting can be found here.

 

READOUT: Financial Stability Oversight Council Meeting on October 21, 2021

WASHINGTON – Today, U.S. Secretary of the Treasury Janet L. Yellen convened a meeting of the Financial Stability Oversight Council (Council) in executive and open sessions by videoconference.

 
During the executive session, the Council received an update on the development of the Council’s 2021 annual report.  

The Council also received an update from Treasury staff on the report on stablecoins being developed by the President’s Working Group on Financial Markets.  Council members discussed potential risks, benefits, and regulatory considerations related to stablecoins. 

In the open session, the Council heard a presentation on the Council report prepared in response to the Executive Order on Climate-Related Financial Risk. The Council voted to approve the issuance of the report.  

The Council also voted to approve the minutes of its previous meeting on September 9, 2021.

In attendance at the Council meeting by videoconference were the following members:

  • Janet L. Yellen, Secretary of the Treasury (Chairperson of the Council)
  • Jerome H. Powell, Chair, Board of Governors of the Federal Reserve System
  • Michael J. Hsu, Acting Comptroller of the Currency
  • Rohit Chopra, Director, Consumer Financial Protection Bureau
  • Gary Gensler, Chair, Securities and Exchange Commission 
  • Jelena McWilliams, Chairman, Federal Deposit Insurance Corporation
  • Rostin Behnam, Acting Chairman, Commodity Futures Trading Commission
  • Sandra L. Thompson, Acting Director, Federal Housing Finance Agency
  • Todd M. Harper, Chairman, National Credit Union Administration
  • Thomas Workman, Independent Member with Insurance Expertise
  • Dino Falaschetti, Director, Office of Financial Research (non-voting member)
  • Steven Seitz, Director, Federal Insurance Office (non-voting member)
  • Eric Cioppa, Superintendent, Maine Bureau of Insurance (non-voting member) 
  • Charles G. Cooper, Commissioner, Texas Department of Banking (non-voting member)

Additional information regarding the Council, its work, and the recently approved climate report and meeting minutes is available at http://www.fsoc.gov.  

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Joint Statement from the United States, Austria, France, Italy, Spain, and the United Kingdom, Regarding a Compromise on a Transitional Approach to Existing Unilateral Measures During the Interim Period Before Pillar 1 is in Effect

Joint Statement from the United States, Austria, France, Italy, Spain, and the United Kingdom, Regarding a Compromise on a Transitional Approach to Existing Unilateral Measures During the Interim Period Before Pillar 1 is in Effect

  1. Background
    1. On October 8, 2021, the United States, Austria, France, Italy, Spain, and the United Kingdom, joined 130 other members of the OECD/G20 Inclusive Framework in reaching political agreement on the Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy.
    2. From the outset, a key impetus of the OECD/G20 Inclusive Framework’s negotiations was to stop the proliferation of “Digital Services Taxes and other relevant similar measures” (collectively “Unilateral Measures”) by replacing them with a consensus-based reallocation of taxing rights among Inclusive Framework (“IF”) members.  See Statement on a Two-Pillar Solution to Address the Tax Challenges Arising from the Digitalization of the Economy (October 8, 2021).
    3. In line with this objective, Austria, France, Italy, Spain and the United Kingdom have agreed that as part of Pillar 1, they will withdraw all Unilateral Measures on all companies and refrain from imposing new Unilateral Measures. In general, Austria, France, Italy, Spain and the United Kingdom had preferred for withdrawal of Unilateral Measures to be contingent on implementation of Pillar 1, while the United States had preferred withdrawal of Unilateral Measures immediately as of October 8, 2021, the date political agreement with respect to Pillar 1 was reached.
    4. This joint statement describes a political compromise reached among the United States, Austria, France, Italy, Spain, and the United Kingdom, on a transitional approach to existing Unilateral Measures while implementing Pillar 1 (hereinafter, the “Unilateral Measures Compromise”).  Under the Unilateral Measures Compromise, Austria, France, Italy, Spain, and the United Kingdom, countries which have all enacted Unilateral Measures before October 8, 2021, are not required to withdraw their Unilateral Measures until Pillar 1 takes effect.  However, to the extent that taxes that accrue to Austria, France, Italy, Spain, and the United Kingdom with respect to existing Unilateral Measures during a defined period after political agreement is reached, and before Pillar 1 takes effect, exceed an amount equivalent to the tax due under Pillar 1 in the first full year of Pillar 1 implementation (prorated to achieve proportionality with the length of the Interim Period), such excess will be creditable against the portion of the corporate income tax liability associated with Amount A as computed under Pillar 1 in these countries, respectively.  As part of the Unilateral Measures Compromise, the United States agrees to terminate proposed trade actions and commit not to impose further trade actions against Austria, France, Italy, Spain, and the United Kingdom with respect to their existing Digital Services Taxes until the end of the Interim Period. The United States, Austria, France, Italy, Spain, and the United Kingdom, will remain in close contact to ensure that there is a common understanding of the respective commitments under this agreement and endeavor to resolve any further differences of views on this matter through constructive dialogue.
  2. Definitions
    The following definitions apply for purposes of this joint statement:
    1. The “Credit Amount” is the amount by which taxes, which were accrued during the Interim Period (and regardless of whether they were actually paid during the Interim Period) with respect to Unilateral Measures enacted before October 8, 2021, exceed the Interim Pillar 1 Amount. 
    2. The “Interim Period” is the period beginning on January 1, 2022, and ending on the earlier of the date the Pillar 1 multilateral convention comes into force or December 31, 2023.
    3. The “Interim Pillar 1 Amount” is the product of (a) the amount of tax that is owed by the taxpayer as a result of Pillar 1 Amount A during the first taxable year that Pillar 1 is in effect in the Relevant Country in respect of the taxpayer; and (b) a fraction the numerator of which is the number of days during the Interim Period and the denominator of which is 365. 
    4. “MNE group” has the meaning provided in the Glossary of the OECD Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.
    5. “Relevant Country” is the jurisdiction that has imposed the Unilateral Measure with respect to which the Interim Credit is to be provided.
  3. Framework for Unilateral Measures Compromise
    1. In the case of Austria, France, Italy, Spain, and the United Kingdom:
      1. a) Each country agrees to provide a credit (“Interim Credit”) equal to the Credit Amount.  The Interim Credit shall be applied in the first taxable year that a taxpayer that is part of an MNE group is subject to Amount A tax liability after the Interim Period, and only against corporate income tax liability arising from the new taxing right under Pillar 1.  In the case of a taxpayer that is not a member of a MNE group that is subject to Amount A tax liability with respect to Pillar 1 in the first taxable year in which Pillar 1 is in effect in the Relevant Country, the Interim Credit shall be determined on the basis of the first year in which Pillar 1 applies to such taxpayer and shall become available at such time, except that Interim Credits shall not be available for a MNE group that first becomes subject to Pillar 1 more than four years after Pillar 1 comes into effect in the Relevant Country.  If the Interim Credit exceeds the liability arising from the new taxing right under Pillar 1 in a taxable year, the excess Interim Credit amount shall be carried forward, credited against tax liability arising from the new taxing right under Pillar 1, and commensurately reduced in each subsequent taxable year until the entire Credit Amount has been fully utilized.
    2. In the case of the United States:

      In recognition of the Unilateral Measures Compromise, the United States will terminate trade actions proposed under Section 301 and commit not to impose further trade actions with respect to the existing Digital Services Taxes imposed by Austria, France, Italy, Spain, or the United Kingdom during the Interim Period, provided that the country follows through on the agreement described in subsection C.1 of this joint statement. 

    3. The parties will meet regularly to discuss progress implementing Pillar 1 and any implications that may have for the appropriate application of the agreement.

Attachment:  Annex

ANNEX

This annex to the joint statement from the United States, Austria, France, Italy, Spain, the United Kingdom, and regarding the Unilateral Measures Compromise provides an example of the framework described in subsection C.1 of the joint statement. 

  1. Assumed facts: During the Interim Period, XYZ, a corporate taxpayer, pays €100x in taxes to Country A, one of the countries identified in subsection C.1, with respect to its digital services tax, a Unilateral Measure.  For Country A, the Interim Period ends on December 31, 2023.  On January 1, 2024, Country A implements Pillar 1 (effective for calendar year beginning 2024 and all subsequent years) and repeals its digital services tax.  XYZ is a member of a MNE group that is subject to Pillar 1 tax liability in TY 2024.  XYZ’s corporate income tax liability with respect to Pillar 1 is €20x in calendar TY 2024 and €25x in calendar TY 2025.  XYZ’s Interim Pillar 1 Amount is €40x (i.e., the product of the €20x Amount A tax liability for TY 2024 and 730/365).  XYZ’s total corporate income tax liability (including but not limited to Pillar 1 liability) with respect to TY 2024 and 2025, before application of the Interim Credit, is €110x and €70x, respectively.
     
  2. Result: XYZ’s Credit Amount with respect to Country A is €60x (i.e., €100x digital services tax liability less €40x Interim Pillar 1 Amount).  XYZ’s TY 2024 corporate income tax liability in Country A with respect to Pillar 1 Amount A of €20x is reduced to €0x by the Credit Amount.  The €40x remainder of the Credit Amount (i.e., €60x Credit Amount less €20x Amount A tax liability for TY 2024) is carried forward and reduces XYZ’s TY 2025 Country A corporate income tax liability to €0x with respect to Pillar 1 Amount A.  Accordingly, an Interim Credit of €15x (i.e., €40x Credit Amount carry forward less €25x Amount A tax liability for TY 2025) is carried forward to TY 2026.  XYZ’s total corporate income tax liability for 2024 and 2025 after application of the Interim Credit is €90x (i.e., €110x total corporate income tax liability less €20x Interim Credit) and €45x (i.e., €70x total corporate income tax liability less €25x Interim Credit carryforward), respectively. 

 

  1.  

The United States, Austria, France, Italy, Spain, and the United Kingdom Announce Agreement on the Transition from Existing Digital Services Taxes to New Multilateral Solution Agreed by the OECD-G20 Inclusive Framework

WASHINGTON – On October 8, an historic agreement was reached between 136 countries of the OECD-G20 Inclusive Framework – representing 94% of the world’s GDP – on a two Pillar package of reforms to the international tax framework to be implemented in 2023.

These reforms will provide for a tax framework that is fairer, more stable, and better equipped to meet the needs of a 21st century global economy.

In support of that agreement, the United States, Austria, France, Italy, Spain, and the United Kingdom have today announced the terms of an agreement on the transition from existing Digital Services Taxes to the new multilateral solution and have committed to continuing discussions on this matter through constructive dialogue.

This compromise represents a pragmatic solution that helps ensure that the named countries can focus their collective efforts on the successful implementation of the OECD/G20 Inclusive Framework’s historic agreement on a new multilateral tax regime and allows for the termination of trade measures adopted in response to Digital Services Taxes.

Overall, this political agreement carefully balances the perspectives of several countries and is yet further demonstration of our commitment to working together to reach consensus, and to deliver far-reaching multilateral reforms that help support our national economies and public finances.

To read the joint agreement, visit https://home.treasury.gov/news/press-releases/jy0419.

 

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