Business

Climate change raising risks of financial disaster for home owners, insurers and bankers on August 30, 2023 at 10:09 pm Business News | The Hill

Published

1 year ago

August 30, 2023

The rising weather-related risks from climate change, from coastal hurricanes to western wildfires, are increasing pinching insurance companies, which are raising rates and pulling back from parts of the country in an effort to stay in business.

Just this summer, two major insurance companies left Florida, adding to the long list of companies that have left the state.

In July, Farmers Insurance announced it would no longer write policies in the state; in August, United Property and Casualty went bankrupt, leaving 22,000 of Floridians high and dry, and all Florida residents having to foot the bill to bail it out.

Banks could be next, said Dennis Kelleher of public interest nonprofit Better Markets.

“The banking crisis is only right behind the climate and insurance crisis,” Kelleher told The Hill. “Every time an insurance company sounds an alarm, the banks ought to be shaking in their boots, because they’re getting the bill.”

Unprecedented disasters

The unprecedented hurricane cutting across the Florida Panhandle is just the latest in a string of billion-plus dollar disasters to hit the United States this year.

As of early August — before the fires that leveled Lahaina, and before Hurricanes Hilary and Idalia — the U.S. had experienced 15 climate disasters with losses exceeding $1 billion, according to federal data.

Those disasters are becoming more frequent. In the 1980s, an average of almost three months separated such large-scale disasters — but for the last five years, they’ve been coming about every three weeks.

The backstop to these losses is the insurance industry, which has seen its costs increase exponentially in recent years. In 2021, the industry as a whole paid out nearly $4 billion more than it took in — and in 2022, following Hurricane Ian, those losses ballooned more than six times to nearly $27 billion, according to a review by a leading insurance trade group.

In the wake of these disasters, some insurance companies have left areas where the risk is highest, leasing an increasing numbers of Americans without insurance, according to the Wall Street Journal.

That’s in turn a risks for banks, since nearly two-thirds of U.S. home owners are paying a mortgage to a lender — generally a bank.

Banks, in turn, use these homes as collateral in a dizzying array of loans and associated financial derivatives — all of which are based, Kelleher argued, on the increasingly obsolete assumption that the properties themselves are backed by insurance.

In the past, this largely made sense. Banks didn’t worry about losing the real estate the loans were written against — they worried about maintaining the tightest possible spread between the equity homeowners were paying in, and the potential losses if they defaulted.

This assumption allowed banks to assume a loan-to-deposit ratio of 80 to 90 percent — in which a bank may only have $.10 or $.20 in deposits or real assets for every dollar it’s lending out.

That kind of ratio gives “very little cushion, but at the end of the day, it’s okay because you’ve got the physical assets,” Kelleher said.

But with the rise of climate change driven disasters, “the quality and reliability of the physical assets have dropped dramatically.”

Add the departure of insurance companies, he argued, and banks face the possibility of undergoing total losses for properties destroyed by disaster — losses that, in previous ages, insurance payments would have largely made up.

Kelleher argued that a wave of defaults is coming — one which will hit small community and regional banks first.

“We’re not talking about a decade, we’re talking over the next several years of there being significant bank and financial system consequences for what the insurance companies are experiencing right now,” he said.

A lack of data

It’s unclear how many uninsured properties exist in the United States, which itself is a danger.

“While you would think that state insurance regulators would have created such a database and series of reports through the National Association of Insurance Commissioners, this is unfortunately not the case,” Carly Fabian, a specialist in insurance and climate change at nonprofit Public Citizen told the Hill.

Regulators are struggling to catch up. The National Association of Insurance Commissioners in August announced it would build a comprehensive data-set to help identify where “insurance availability and affordability” is more challenging in the U.S.

That’s a move it had once opposed, Fabian noted, “which suggests they’re feeling pressure” to get more data on the problem.

Some progressive lawmakers want state insurers to focus on collecting data to figure out where the risks are worse.

“If you purchase a home in Pensacola today, current sea level rise projections through 2050 mean that your home will likely be under water before your mortgage is paid off,” Rep. Sean Casten (D-Ill.) told The Hill.

He added that as insurance firms catch on and stop writing policies in those areas, “a cascading effect” risks spreading through the financial system, as financial institutions offload loans, potentially threatening U.S. financial stability.

“Congress and federal regulators have an obligation to do more to address this,” Casten said.

Kelleher argued that financial regulators need to demand “stress tests,” in which key banking regulators — the Federal Reserve, the Office of Comptroller of the Currency, and the FDIC — require banks to audit their risk of failure in the face of different levels of serious climate upheaval.

Even where these tests are performed, it isn’t clear that banks are taking them seriously. In a stress test performed by the European Central Bank (ECB), a world in which global heating reaches 3 degrees Celsius by 2050 — three times its current level — banks assumed their total losses would be just $78 billion.

This number, the ECB itself noted, “significantly understates the actual climate-related risk.”

The role of fossil fuels

In the U.S., there’s an added issue: both regulators and banks are taking heavy fire from the GOP and the broader fossil fuel industry, which is fighting hard to maintain a free flow of credit to the fossil fuel industry.

When the Federal Reserve last year announced it was opening an initial pilot project that would require six banks to audit their climate risk, Republicans cried foul, arguing this was the beginning of a move to defund fossil fuels.

“The Fed’s new ‘pilot’ program is the first step toward pressuring banks into limiting loans to and investments in traditional energy companies and other disfavored carbon-emitting sectors,” Sen. Pat Toomey, ranking member of the Banking Committee, said in a statement.

“There is no risk from global warming that banks aren’t already fully capable of pricing into their decisions, and the Fed’s intrusion into this process only underscores that the real risk is government.”

Whether or not banks are capable, they are “light years” behind insurance, Kelleher said.

“Bankers are all tied up with, you know, accusations of wokeness, and the power and influence of the oil and gas industry. They should be more like the insurance industry, which is, who cares why a climate disaster is coming?”

“The only thing they should care about is, what the risks are, and what they should do about the risks.”

But while they’re attitude to reducing their direct exposure to climate change may be different, in one way, Fabian of Public Citizen noted, banking and insurance see eye to eye: both are happy to keep investing in the very fossil fuels whose combustion makes the problem worse.

“Even as they pull away from homeowners, insurers like State Farm remain major investors in fossil fuels and others like AIG are both major investors and major underwriters of fossil fuel projects and companies,” she said.

Equilibrium & Sustainability, Business, Energy & Environment, News, State Watch, California, Florida, Home insurance, Hurricane Ian, hurricane idalia The rising weather-related risks from climate change, from coastal hurricanes to western wildfires, are increasing pinching insurance companies, which are raising rates and pulling back from parts of the country in an effort to stay in business. Just this summer, two major insurance companies left Florida, adding to the long list of companies that have…

Business

The Cities Bracing for Trump’s Immigration Crackdown

Published

7 days ago

November 8, 2024

Bolanle Media Staff

In the wake of Donald Trump’s recent election victory and his promise of “the largest deportation operation in American history,” several major U.S. cities are bracing for potentially seismic shifts in their economic and social landscapes. As the nation grapples with the implications of this proposed policy, urban centers that have long been havens for immigrant communities find themselves at the epicenter of a looming storm.

Los Angeles, often dubbed the “City of Angels,” stands to lose more than its celestial nickname suggests. As a primary gateway for immigrants, the city’s vibrant tapestry of cultures and its economic engine could face significant disruption. From the bustling streets of Koreatown to the sun-drenched orchards of the Central Valley, the absence of undocumented workers could leave gaping holes in the city’s workforce and cultural identity.

Across the country, New York City, with its iconic skyline and melting pot reputation, faces its own reckoning. The Big Apple’s 5.9 million immigrants, many of whom are undocumented, form the backbone of industries ranging from construction to healthcare. The potential exodus could transform neighborhoods like Jackson Heights and Flushing, altering the very essence of what makes New York a global city.In the Sunshine State, Miami’s tropical allure belies the turbulent times ahead. Home to 2.5 million immigrants, the city’s economy relies heavily on sectors like tourism and hospitality – industries where undocumented workers often fill crucial roles. The potential deportation of these workers could send shockwaves through Miami’s economic ecosystem, from South Beach’s glitzy hotels to the agricultural heartlands of South Florida.

Chicago, the “City of Big Shoulders,” may find those shoulders significantly weakened. With 1.7 million immigrants in its metropolitan area, the Windy City’s diverse neighborhoods and industries face an uncertain future. From the meatpacking plants to the tech startups, Chicago’s economic resilience could be tested like never before.

In the Lone Star State, Houston and Dallas stand as twin testaments to the complexities of immigration policy. These Texas titans, each home to large immigrant populations, could see their booming economies stumble. The construction sites that dot their ever-expanding skylines and the service industries that keep these cities humming could face unprecedented labor shortages.

Out West, the San Francisco Bay Area’s reputation as a bastion of innovation and progress could be challenged. The region’s tech industry, often reliant on immigrant talent, might find itself grappling with a new reality. From Silicon Valley’s coding campuses to the agricultural expanses of the Central Valley, California’s economic powerhouse could face a reckoning. Phoenix, rising from the Sonoran Desert, could see its growth trajectory altered. As Arizona’s urban center, it stands at the forefront of the immigration debate, potentially facing not just economic impacts but social and political upheaval as well.

These cities, along with others like San Diego and Las Vegas, are not just facing potential economic disruptions. They are staring down the barrel of profound social change. Family separations, community fragmentation, and the erosion of cultural enclaves built over generations are all possible consequences of mass deportations. Moreover, the fiscal implications are staggering. Undocumented immigrants contribute billions in taxes annually, often without receiving the full benefits of their contributions. Their sudden absence could leave gaping holes in city budgets, potentially affecting public services and infrastructure projects.

As these urban centers brace for impact, the debate rages on. Supporters of stricter immigration policies argue for the need to enforce laws and protect American jobs. Critics warn of economic devastation and the unraveling of America’s urban fabric. What’s clear is that America’s cities stand at a crossroads. The coming months and years will likely reshape urban landscapes in ways both visible and invisible. From the foods we eat to the services we rely on, from the neighborhoods we call home to the very character of our cities, the impacts of this proposed immigration crackdown could be far-reaching and long-lasting. As the nation watches and waits, these cities – vibrant, diverse, and economically vital – find themselves on the front lines of a policy that could redefine what it means to be an American city in the 21st century.

Bolanle Media is excited to announce our partnership with The Newbie Film Academy to offer comprehensive courses designed specifically for aspiring filmmakers. Whether you’re just starting out or looking to enhance your skills, our resources will provide you with the tools and knowledge needed to succeed in the competitive world of screenwriting. Join us today to unlock your creative potential and take your first steps toward crafting compelling stories that resonate with audiences. Let’s turn your ideas into impactful scripts together!

Business

How Trump’s Deportation Plans Could Reshape Major Cities

Published

7 days ago

November 8, 2024

Bolanle Media Staff

In the wake of Donald Trump’s recent election victory, his ambitious plans for mass deportations have thrust America’s urban centers into the spotlight. As the nation grapples with the potential implications of what Trump calls “the largest deportation operation in American history,” cities across the country are bracing for significant changes that could reshape their economic, social, and cultural landscapes.

The stakes are particularly high for metropolitan areas like New York, Los Angeles, Houston, Dallas, and Miami, which host the largest populations of unauthorized immigrants. These cities, along with other major urban hubs such as Chicago, Washington D.C., and San Francisco, stand at the forefront of a looming transformation that could reverberate throughout the nation.

Economic Tremors

Economists warn that the proposed deportations could send shockwaves through urban economies. Mark Zandi, chief economist at Moody’s, cautions that businesses would face “significant challenges” if a substantial number of immigrants were removed. Industries such as construction, hospitality, and healthcare—pillars of urban economies—could face severe labor shortages.

Joe Brusuelas, chief economist at RSM, emphasizes the potential ripple effects: “The native-born workforce cannot meet current labor demands.” This labor gap could lead to increased wages, potentially rekindling inflation—a concern that looms large over city planners and policymakers alike.

Community Fabric Under Strain

Beyond economic considerations, the social fabric of cities hangs in the balance. Elena, a Nicaraguan immigrant in Houston, voices a fear echoed in immigrant communities across the nation: “I’m scared… This is my home.” The threat of family separations, particularly in mixed-status households, casts a long shadow over urban neighborhoods.

Immigrant advocacy groups like FIEL are mobilizing, advising clients to prepare for “anything that can happen.” This atmosphere of uncertainty could lead to decreased community engagement and cooperation with local authorities, potentially impacting public safety and community cohesion.

Cities at a Crossroads

As the debate intensifies, cities find themselves at a crossroads. Some, like New York and Los Angeles, have historically positioned themselves as “sanctuary cities,” often at odds with federal immigration enforcement. The impending clash between federal policy and local governance promises to be a defining feature of this new political landscape.

Meanwhile, the logistical challenges of implementing such a massive deportation operation remain daunting. Questions abound regarding detention facilities, transportation networks, and the sheer manpower required to carry out Trump’s vision.

Looking Ahead

As America’s urban centers brace for potential change, the full impact of Trump’s deportation plans remains to be seen. Legal challenges are all but certain, and the resilience of America’s cities will be put to the test.

What is clear is that the coming months and years will be pivotal for urban America. As Jason Miller, a senior Trump adviser, puts it, the plan is to “immediately reinstate” immigration policies from Trump’s first term. For America’s cities, this could mean a period of unprecedented change, challenge, and, potentially, transformation.

As the nation watches and waits, the story of America’s cities in the face of this ambitious deportation plan is just beginning to unfold. The outcome will undoubtedly shape the future of urban life in America for years to come.

Bolanle Media is excited to announce our partnership with The Newbie Film Academy to offer comprehensive courses designed specifically for aspiring screenwriters. Whether you’re just starting out or looking to enhance your skills, our resources will provide you with the tools and knowledge needed to succeed in the competitive world of screenwriting. Join us today to unlock your creative potential and take your first steps toward crafting compelling stories that resonate with audiences. Let’s turn your ideas into impactful scripts together!

Business

Donald Trump Wins 2024 USA Election

Published

1 week ago

November 6, 2024

Bolanle Media Staff

Based on the election results, Donald Trump has indeed won the 2024 U.S. presidential election, defeating Vice President Kamala Harris. Here’s an analysis of the key statistics and implications:

Electoral College Victory

Donald Trump has secured the presidency by winning crucial battleground states and flipping some key states that were previously held by Democrats. The final Electoral College tally is still being determined, but Trump has surpassed the 270 electoral votes needed to win.

Battleground State Performance

Trump’s victory was largely secured by winning several critical swing states:

Wisconsin: Trump’s win here was pivotal in securing his path to victory.
Pennsylvania: This state flipped back to Republican control.
Georgia: Another key state that Trump managed to win back.
Michigan: Trump successfully flipped this traditionally Democratic stronghold.

Popular Vote and Voter Priorities

While the final popular vote tally is still being calculated, exit polls provide insight into voter priorities:

Economy and democracy were top concerns for voters.
Abortion and immigration also played significant roles in voter decision-making.

Congressional Control

The election results extend beyond the presidency:

Republicans are set to take back the Senate majority, securing at least 51 seats.
Control of the House of Representatives remains undetermined.

Media Implications

The outcome of this election could be seen as a challenge to mainstream media narratives for several reasons:

Polling Discrepancies: Many pre-election polls suggested a tight race or even a slight Harris advantage in key states. Trump’s victory, particularly in battleground states, may indicate that polls underestimated his support.
Narrative Shifts: Throughout the campaign, much of the mainstream media focused on Trump’s legal challenges and controversies. His victory suggests that these issues may not have resonated with voters as much as economic and policy concerns.
Voter Priorities: The emphasis on issues like the economy and immigration in voter decision-making may indicate a disconnect between media focus and voter concerns.
Electoral Predictions: Many mainstream outlets were cautious about predicting a Trump victory, even as results began to favor him. This hesitancy could be seen as a reflection of broader media skepticism about Trump’s chances.
Underestimation of Trump’s Base: The results suggest that Trump’s core support remained strong and potentially grew, despite negative coverage in much of the mainstream media.

It’s important to note that while the election outcome may challenge some media narratives, it doesn’t necessarily invalidate all mainstream reporting. The complex factors influencing voter behavior and the challenges of accurate political forecasting remain subjects of ongoing analysis and debate.

As the dust settles on this historic election, both the media and political analysts will likely engage in extensive reflection on the factors that led to Trump’s victory and the implications for future political coverage and analysis.