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Fed bond buying may end before year is over: FOMC minutes

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WASHINGTON (1/4/13)--How long the Federal Reserve will continue its bond buying programs was discussed during the Dec. 11-12 meeting of its monetary policymaking body, the Federal Open Market Committee (FOMC).

The committee is divided on the actual timeline, but most of its members indicated that the program likely would be warranted until about the end of the year, said the FOMC minutes for the meeting. The minutes were released by the Fed Thursday afternoon.

"In considering the outlook for the labor market and the broader economy, a few members expressed the view that ongoing asset purchases would likely be warranted until about the end of 2013, while a few others emphasized the need for considerable policy accommodation but did not state a specific time frame or total for purchases," said the minutes.

Several others, said the document, "thought that it would probably be appropriate to slow or to stop purchases well before the end of 2013, citing concerns about financial stability or the size of the balance sheet. One member viewed any additional purchases as unwarranted."

The minutes also indicated that officials believed the program so far had been "effective and supportive of growth," but that "they also generally saw that the benefits of ongoing purchases were uncertain and that the potential costs could rise as the size of the [Fed's] balance sheet increased."

The asset buying program includes purchasing $40 billion a month in mortgage backed securities and $45 billion a month of longer-term Treasury securities to add to the Fed's asset portfolio, said the minutes. The FOMC also maintained its existing policy of reinvesting principal payments from its holdings of agency debt and agency MBS into agency MBS, and decided to resume in January rolling over maturing Treasury securities at auction.

For the full report, use the resource link.

Market News (01/04/2013)

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MADISON, Wis. (1/4/13)

  • As the year ended, mortgage applications decreased 21.6% for the week ending Dec. 28 from the week ending Dec. 14. The Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey indicated that the Refinance Index dropped 23.3%, compared with applications for the week ending Dec. 14, which is two weeks earlier instead of the usual one-week comparison because of the holidays. The Dec. 28 index was the third consecutive week refinances have dropped and the lowest level since April. The refinance share of the mortgage activity remained the same--at 82% of the applications for the two weeks.  The seasonally adjusted Purchase Index also decreased--1.48%--from that reported two weeks earlier. Use the link  for the full MBA report
  • Private-sector jobs in the U.S. increased in December by 215,000. That's greater than the 150,000 jobs expected by economists surveyed by Dow Jones Newswires, according to payroll processor Automatic Data Processing Inc. (ADP) and forecasting firm Moody's Analytics (The Wall Street Journal and Moody's Jan. 3). Job figures for November were revised higher to 148,000, from the 118,000 estimated during that month. It is the fastest pace of job growth since February, said ADP.  Small companies--with one to 49 workers--increased jobs by 25,000, while medium-sized companies (50-499 employees) hired 102,000 new employees. Larger companies created 87,000 jobs.  The jobs were up in the service sector, but factory jobs lost 11,000 …

News of the Competition (01/04/2013)

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MADISON, Wis. (1/4/13)

  • Wells Fargo and Ally Bank are using smart phone cameras to drive mobile banking growth. Wells Fargo recently expanded its mobile remote deposit app nationwide, following a successful pilot in which more than one million checks were deposited in two states over six months (American Banker Jan. 3). The bank seeks to offer a suite of "mobile unique" services in which smartphone cameras can be used to snap photos of information, said Brian Pearce, senior vice president and head of the retail mobile channel in the digital channels group at Wells Fargo. Ally late last year added remote deposit capture  to its mobile banking app. Ally views the mobile channel as an extension of the desktop platform, said Diane Morais, a deposit executive for Ally …
  • Experian has transformed quarterly consumer credit data into a Web-based searchable database called IntelliView. The new tool  provides data in seven categories: bank card, retail card, automotive, first mortgage, second mortgage, home equity line of credit and personal loans (American Banker Jan. 3).  The Web query analysis and reporting tool can be accessed through a Web browser. Previously, professionals making credit decisions had to pour through hundreds of pages of text and charts …
  • Hybrid credit and debit cards do not appear to be living up to their promise based on preliminary pilot tests, the American Banker (Jan. 3) reported Thursday. A lack of appeal among consumers and the introduction of more technologically sophisticated alternatives have caused banks to think twice about offering full market rollouts of hybrid cards. One exception is Fifth Third Bank, which has found success with its Duo card. Duo accounted for about 25% of new monthly credit card accounts, the bank said …