Finance set to surpass tech as most-profitable U.S. industry

A Comparison of Plans to Reform Our Housing Finance System

Second-quarter earnings for the finance sector are expected to climb almost 20% from the same period in 2012, with all of the different industries within the sector including major banks, regional banks, insurers and brokerages set to report higher profit. Leading the way will be investment banks and brokerage houses, whose earnings are seen surging 40%. The industry has once again become such a driver of U.S. earnings growth that, without it, corporate profits would be seen declining 3.2% in the second quarter compared with a year ago. Even including financial services, profit growth of the S&P 500 companies is expected to come in at a tepid 0.4%.

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The plan was designed by the Organization for Economic Cooperation and Development and introduced at a meeting of the Group of 20 finance ministers in Moscow on Friday. The Paris-based OECD says that “national tax laws have not kept pace with the globalization of corporations and the digital economy, leaving gaps that can be exploited by multinational corporations to artificially reduce their taxes.” The new 15-point plan includes ways to close loopholes, for example that allow companies to stash profits from in offshore subsidiaries. Low tax payments by major multinationals have sparked public anger in Europe recently, especially as governments are struggling with high debts and low growth.

World finance chiefs threaten to close loopholes and force multinationals to pay more taxes

Demonstrators hold trays with bites decorated with small portraits of the government members during a protest in front of the delegation of the Spanish government in Catalonia, in Barcelona, Spain, Thursday July 18, 2013. Spain’s prime minister brushed off demands he should resign after text messages emerged showing he had a cozy relationship with a disgraced political party treasurer who amassed 47 million euros ($61 million) in secret Swiss bank accounts. The spectacle of alleged greed and corruption has enraged Spaniards hurting from austerity and sky high unemployment with no end in sight. (AP Photo/Emilio Morenatti)

Fannie and Freddie also hold some home loans in their own investment portfolios. Since mortgage lenders no longer have to hold these loans on their balance sheets, they have capital available to make more loans to creditworthy borrowers. The Mortgage Finance Working Groupa progressive group of housing finance experts, affordable housing advocates, and leading academics convened by the Center for American Progresshas put out a plan to responsibly wind down Fannie and Freddie and bring private capital back into the mortgage market. Likewise, the Center for American Progress, along with the National Council of La Raza, has also put forth a plan to ensure that the mortgage market of the future serves creditworthy borrowers across all geographies and housing types.

G20 finance chiefs launch plan to get multinationals to pay more taxes

World finance chiefs threaten to close loopholes and force multinationals to pay more taxes (Alexander Zemlianichenko/ Associated Press ) – World finance chiefs attend a meeting of the Group of 20 finance ministers in Moscow, Russia, Friday, July 19, 2013. Stashing profits offshore may soon get tougher for companies, thanks to an ambitious plan released Friday by the finance chiefs of leading world economies aimed at forcing multinationals to pay more taxes. CAPTION By Associated Press, PARIS Stashing profits offshore may soon get tougher for companies, thanks to an ambitious plan released Friday by the finance chiefs of leading world economies aimed at forcing multinationals to pay more taxes. Low tax payments by major global companies including Google, Amazon, Facebook and Starbucks have sparked public anger in Europe recently, as governments are struggling with high debts, low growth and austerity measures that are hitting ordinary taxpayers. Nick Miroff Analysts say the meritocracy of the Mexican drug cartels ranks might help it withstand leadership changes.

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