Fed Sets Limits on Biggest Banks’ Loans to Each Other
WASHINGTON (AP) – The Federal Reserve has set limits aimed at addressing one of the leading causes of the 2008 financial crisis — the buildup of loans extended by one bank to another among the biggest Wall Street institutions. The Fed unveiled a new rule Thursday that caps a big bank’s credit exposure to another bank. The rule is close to a proposal the central bank floated two years ago, but it makes revisions for the credit limits to be tailored to the size of the bank.
Startup Launches Insurance For Uber, Lyft Passengers
(AP) – Worried about an accident when you ride with Uber or Lyft? Now you can get an insurance policy from your phone for the ride too.
Startup Sure Inc. announced Thursday that it has partnered with underwriter Chubb to launch a new service called RideSafe that allows passengers to buy accidental medical, death and dismemberment insurance coverage for the ride.
Ride-hailing companies typically provide liability insurance coverage for U.S. drivers that would cover passengers in an accident.
Uber and Lyft, for example, both provide $1 million of liability insurance, which would cover bodily injury and property damage for the driver, passenger and anyone else involved in a potential accident.
But Sure CEO Wayne Slavin said the ride-hailing company policies have strict guidelines as to when they take effect and in what situation they are applied. That may leave passengers footing the bill for some expenses. He says RideSafe is a means to cover some of those gaps, such as medical copayments or for times a company policy is not in effect.
As Fed Raises Rates, Popular Bond Index Funds Get Pinched
NEW YORK (AP) – Index funds are surging in popularity due to their low costs and relatively good performance. But many bond index funds also carry an additional risk that investors should keep in mind as more dollars flow into the field: Many of the biggest are likely to be hurt more than other bond funds when interest rates rise. It’s a reminder that nothing’s risk-free in investing.
U.S. Long-Term Mortgage Rates Jump; 30-Year at 4.62 Percent
WASHINGTON (AP) – Long-term U.S. mortgage rates jumped this week after two straight weeks of declines, reaching their second-highest level this year.
Against a backdrop of rising interest rates in the economy, long-term loan rates have been running at their highest levels in seven years. And the Federal Reserve on Wednesday raised its benchmark interest rate for the second time this year and signaled that it may step up its pace of rate increases.
Mortgage buyer Freddie Mac said Thursday the average rate on 30-year, fixed-rate mortgages was 4.62 percent, up from 4.54 percent last week. By contrast, the 30-year rate averaged 3.91 percent a year ago.
The average rate on 15-year, fixed-rate loans increased to 4.07 percent from 4.01 percent last week.
The average 30-year mortgage rate reached a high this year of 4.66 percent on May 24; the 15-year rate hit 4.15 percent that day.
Russia Proposes Raising Retirement Age, VAT
MOSCOW (AP) – Russia’s government is calling for the country’s retirement age to be raised gradually and for a hike in the value-added tax.
The moves approved by the Cabinet on Thursday now will be sent to the parliament.
Prime Minister Dmitry Medvedev said the age at which retirees can receive state pensions would be gradually raised over the next 15 years to 65 for men — up from the current 60 — and from 55 to 63 for women.
Alexei Kudrin, head of parliament’s Russian Accounts Chamber, said the proposal to raise VAT to 20 percent from 18 percent “is connected with the fact that budget revenues are not rising, first of all due to the oil price drop.”
The moves follow President Vladimir Putin’s promise last month to improve Russia’s economy.