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Market Archive

Market

NEW: FOMC policy stays the same as expected

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WASHINGTON (FILED at 2:50 p.m. ET 1/31/13)--Federal Reserve monetary policymakers today voted 11 to 1 to keep their policy of purchasing bonds and Treasuries as established in December and to continue tying the federal target fund interest rate to near zero.

The Federal Open Market Committee (FOMC) met Tuesday and today in its first meeting of the year with its new roster of Federal Reserve Bank presidents who vote on the policy decisions.  New voting members are Esther George of the Kansas City Fed; Charles Evans, Chicago; Eric Rosengren, Boston; and James Bullard, St. Louis. George was the lone dissenter.

At its meeting in December, the FOMC had said it would continue buying $85 billion in bonds each month--$40 billion in mortgage-backed securities and $45 billion in long-term Treasury bonds. It also indicated it would keep the quantitative easing policy in place until gains in employment are substantial. It also said it would keep short-term rates at near-zero levels until it saw the unemployment rate fall to 6.5% or lower, if inflation forecasts remain near the fed's 2% target.

In maintaining this policy, the committee noted in a statement released after the meeting that "growth in economic activity paused in recent months, in large part because of weather-related disruptions and other transitory factors. Employment has continued to expand at a moderate pace but the unemployment rate remains elevated. Household spending and business fixed investment advanced, and the housing sector has shown further improvement. Inflation has been running somewhat below the committee's longer-run objective, apart from temporary variations that largely reflect fluctuations in energy prices. Longer-term inflation expectations have remained stable."

It "is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction," said the FOMC. "Taken together, these actions should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative."

The committee said it expects that "with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the committee judges consistent with its dual mandate" of fostering maximum employment and price stability.

"Although strains in global financial markets have eased somewhat, the committee continues to see downside risks to the economic outlook. The committee also anticipates that inflation over the medium term likely will run at or below its 2% objective."

If the outlook for the labor market does not improve "substantially," the committee will continue its purchases of Treasury and agency mortgage-backed securities, and employ other policy tools as appropriate, until improvement is achieved in a context of price stability. In determining the size, pace, and composition of its asset purchases, it will "take appropriate account of the likely efficacy and costs of such purchases."

The FOMC also said  its "highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens." It decided to keep the target range for the federal funds rate at 0% to 0.25% and anticipates that "this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6.5%, inflation between one and two years ahead is projected to be no more than a half percentage point above the Committee's 2% longer-run goal, and longer-term inflation expectations continue to be well anchored."

In determining how long to maintain the policy, the committee said it will also consider additional measures of labor market conditions, indicators of inflation pressures and inflation expectations, and readings on financial developments. "When the committee decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2%," the FOMC said.

Voting for the FOMC monetary policy action were: Chairman Ben S. Bernanke; Vice Chairman William C. Dudley; Bullard; Elizabeth A. Duke; Evans; Jerome H. Powell; Sarah Bloom Raskin; Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen. In dissenting, George noted concern that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.

Mortgage interest rates dip slightly: FHFA

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WASHINGTON (1/30/13)--U.S. mortgage interest rates dipped slightly in December to 3.29%, the Federal Housing Finance Agency reported Tuesday.

That National Average Contract Mortgage Rate for the Purchase of Previously Occupied Homes by Combined Lenders, used as an index in some adjustable-rate mortgage contracts, was based on loans closed in December. There was a decrease of 0.07% from November, FHFA said.

That rate has consistently gone down, for the most part, during the past year from a high of 4.25% on Feb. 28, 2012, according to FHFA's complete contract rate series.  

The average interest rate on conventional, 30-year, fixed-rate mortgage loans of $417,000 or less decreased seven basis points to 3.47 in December. Those rates are calculated from the FHFA's Monthly Interest Rate Survey of purchase-money mortgages. The results reflect loans closed during the Dec. 24-31 period. Typically, the interest rate is determined 30 to 45 days before the loan is closed, so the reported rates depict market conditions prevailing in mid- to late-November, FHFA said.

The contract rate on the composite of all mortgage loans--fixed- and adjustable-rate--was 3.28% in December, down eight basis points from 3.36% in November. The effective interest rate, which reflects the amortization of initial fees and charges, was 3.42% in December, down seven basis points from 3.49% in November.

The report contains no data on adjustable-rate mortgages due to insufficient sample size.

To view the report, use the link.

Fed policymakers not expected to change policy today

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WASHINGTON (1/30/13)--The first meeting for the year of the Federal Open Market Committee (FOMC)--the Federal Reserve's monetary policymaking group--will end today, with economists expecting no changes to the Fed's policies set in December.

The FOMC began its two-day meeting Tuesday and will issue a monetary policy statement at about 2:15 p.m. ET today. Many expect the meeting to be a "non-event" (International Business Times Jan. 29 and NASDAQ.com Jan. 29).

Instead, the committee will likely renew its commitment to asset buying, according to economists surveyed by Bloomberg. At December's meeting, the FOMC announced open-ended asset purchases of $85 billion a month until the jobless rate falls below 6.5%. The asset buying program includes purchasing $40 billion a month in mortgage backed securities and $45 billion a month of longer-term Treasury securities (News Now Dec. 13).

The minutes for the committee's December meeting indicated that some participants believe the Fed's quantitative easing policy may end sooner than the announced timeline. Fed Chairman Ben Bernanke, however, has said that policy will continue until gains in employment are substantial (Bloomberg.com Jan. 29).

Also, today's meeting will not provide a Summary of Economic Projections, as done in past January meetings. Instead, the projections will be revised for the FOMC's March 29-20 meeting.

Watch News Now and LiveWire for updates this afternoon.

FHFA house price index ticks up 06% in November

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WASHINGTON (1/24/13)--U.S. house prices rose 0.6% on a seasonally adjusted basis from October to November, according to the Federal Housing Finance Agency's monthly House Price Index.

The previously reported 0.5% increase in October was revised upward to a 0.6% increase. For the 12 months ending in November, U.S. prices went up 5.6%. The U.S. index is 15.2% below its April 2007 peak and is roughly the same as the August 2004 index level. National home prices have not declined on a monthly basis since January 2012.

For the nine census divisions, seasonally adjusted monthly price changes from October to November ranged from a decline of 1% in the East North Central division to a 2.1% increase in the Mountain division. The 12-month changes ranged from a 0.5% increase in the Middle Atlantic division to a 14.8% increase in the Mountain division.

FHFA uses the purchase prices of houses with mortgages owned or guaranteed by Fannie Mae or Freddie Mac to calculate the monthly index.

For the full report, use the link.

Biggest deposit drop for US banks since 9/11 attacks

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WASHINGTON (1/24/13)--Clients of the biggest U.S. banks withdrew their funds in January at the quickest weekly pace since the Sept. 11 attacks in 2001.

For the week ended Jan. 9, net withdrawals at the 25 biggest U.S. lenders tallied $114.1 billion, which drove deposits down to $5.37 trillion, according to data compiled by the Federal Reserve last week (Bloomberg.com Jan. 23).  

At year-end 2012, deposits were roughly $5.4 trillion--the highest monthly ending total during the year and $500 billion more than at the end of 2011, Fed data indicated.

Some banking industry analysts posit that bank customers may be moving their money as a result of the expiration of the Transaction Account Guarantee (TAG) program, which was set up during the financial crisis to guarantee non-interest bearing accounts above the federal share and deposit limit of $250,000. The program expired Dec. 31.

A TAG extension was hotly pursued by bank trade groups, but was opposed by the Credit Union National Association. CUNA had criticized the TAG extension by noting the program already has cost the FDIC nearly $2.5 billion. The defeat of a bill to extend TAG was noted as a significant victory for CUNA and credit unions by press outlets.

Also, for the two weeks ended Jan. 8, banks reported total money-market-fund assets climbed $70 billion to $2.7 trillion, according to money-fund research firm iMoneyNet in Westborough, Mass.  Assets fell to $2.69 trillion in the week ended Jan. 15.

Beige Book: Modest or moderate growth for all US districts

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WASHINGTON (1/17/13)--Economic activity has expanded in all 12 U.S. financial districts at either a modest or moderate growth pace, according to the Federal Reserve's Beige Book released Wednesday.

All 12 districts reported some growth in consumer spending, with inflation mostly unchanged.

Trends in wages, prices, and employment conditions stayed relatively unchanged in all districts. Input price pressures were reported to be steady overall, with mixed reports for specific commodity prices in several districts. Employment conditions also were little changed since the last report.

However, hiring plans were more cautious for firms doing business in Europe or in the defense sector. Wage pressures were stable in all 12 districts, though several districts cited greater pressures for firms that reported difficulties finding qualified workers with specific skills.

Manufacturing activity was mixed, with six districts growing since the last Beige Book, three contracting, and two reporting little or no change.

Existing residential real estate activity expanded in all reporting districts. Growth rates were described as moderate or strong in nine districts. The Boston District attributed its strong sales growth to low interest rates, affordable prices and rising rents. All districts reporting on price levels saw increases, with New York and Chicago reporting only very minor increases. Five districts reported housing inventories are falling.

New residential construction--including repairs--expanded in all but one district reporting. The Kansas City District reported that increased lumber and drywall costs limited construction, causing a slight decline this period. Hurricane Sandy disrupted construction activity initially in New York, but that has since led to increased work for subcontractors on repairs and reconstruction.

Labor market conditions remained mostly unchanged in all districts. The Boston, Richmond, Atlanta, Chicago, Kansas City and San Francisco districts reported delayed hiring, often in defense manufacturing, due to fiscal cliff uncertainties.

Companies in the Chicago District with trade or investment exposures to Europe reduced their hiring plans. Manufacturers there choose to cut hours instead of reducing work forces in expectation of production rebounds in 2013. Atlanta and Kansas City cited health-care policy changes and costs as another cause for minimal hiring. The New York, Atlanta, Minneapolis and Dallas districts saw the labor market firming modestly. Several districts reported difficulties finding qualified workers in some fields.

Beige Book: Modest or moderate growth for all US districts

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WASHINGTON (1/17/13)--Economic activity has expanded in all 12 U.S. financial districts at either a modest or moderate growth pace, according to the Federal Reserve's Beige Book released Wednesday.

All 12 districts reported some growth in consumer spending, with inflation mostly unchanged.

Trends in wages, prices, and employment conditions stayed relatively unchanged in all districts. Input price pressures were reported to be steady overall, with mixed reports for specific commodity prices in several districts. Employment conditions also were little changed since the last report.

However, hiring plans were more cautious for firms doing business in Europe or in the defense sector. Wage pressures were stable in all 12 districts, though several districts cited greater pressures for firms that reported difficulties finding qualified workers with specific skills.

Manufacturing activity was mixed, with six districts growing since the last Beige Book, three contracting, and two reporting little or no change.

Existing residential real estate activity expanded in all reporting districts. Growth rates were described as moderate or strong in nine districts. The Boston District attributed its strong sales growth to low interest rates, affordable prices and rising rents. All districts reporting on price levels saw increases, with New York and Chicago reporting only very minor increases. Five districts reported housing inventories are falling.

New residential construction--including repairs--expanded in all but one district reporting. The Kansas City District reported that increased lumber and drywall costs limited construction, causing a slight decline this period. Hurricane Sandy disrupted construction activity initially in New York, but that has since led to increased work for subcontractors on repairs and reconstruction.

Labor market conditions remained mostly unchanged in all districts. The Boston, Richmond, Atlanta, Chicago, Kansas City and San Francisco districts reported delayed hiring, often in defense manufacturing, due to fiscal cliff uncertainties.

Companies in the Chicago District with trade or investment exposures to Europe reduced their hiring plans. Manufacturers there choose to cut hours instead of reducing work forces in expectation of production rebounds in 2013. Atlanta and Kansas City cited health-care policy changes and costs as another cause for minimal hiring. The New York, Atlanta, Minneapolis and Dallas districts saw the labor market firming modestly. Several districts reported difficulties finding qualified workers in some fields.

News of the Competition (01/17/2013)

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MADISON, Wis. (1/17/13)

  • More U.S. banks are viewing branch closures as a way to cut their costs (American Banker Jan. 15). Several bigger banks are selling off small branches judged to be too costly to operate. As an example, Bank of America is selling dozens of its branches to community banks, including Fayetteville, Ark.-based Arvest Bank, the Banker said. Keeping smaller branches operating is hard for many banks to justify, Jeff Marsico, executive vice president at consulting firm Kafafian Group, told the Banker. The typical U.S. bank branch produces yearly revenue about equal to 2% of its deposits, with the average annual cost being $500,000 to $600,000 to run a branch, he added. The annual expenses to run a bank with $10 billion in deposits could be triple the revenue needed, Marsico told the Banker. Consequently, many banks have decided to close money-losing branches than try to make them viable, Jamie Eads, an analyst at bank consultancy Bancography, told the publication …
  • JPMorgan Chase Wednesday released two of its internal London Whale Reports on mistakes that resulted in at least $6.2 billion trading loss. The bank said CEO Jamie Dimon would be hit with a 50% pay cut for 2012 because the failure was his "ultimate responsibility" (The Wall Street Journal Jan. 16). Dimon's 2012 salary and compensation were downgraded to $11.5 million from $23.1 million the prior year, according to a JPMorgan Chase filing made public Wednesday, the Journal said ...

Market News (01/17/2013)

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MADISON, Wis. (1/17/13)

  • Homebuilder confidence in the U.S. during January remained at the highest level in more than six years, according to the National Association of Homebuilders/Wells Fargo Index of Builder Confidence. The latest figure adds toevidence that the residential real estate market will help boost an economic expansion (Bloomberg.com, Moody's Economy.com Jan. 16). The index was at 47 this month--matching December as the highest reading since April 2006. Low borrowing costs and stronger sales are elevating traffic for lenders. Also, rising household formation and property values may continue to bring residential real estate sales and prices back to pre-recession levels, Bloomberg said. Although housing industry fundamentals continue to improve, hardships in obtaining accurate home appraisals, political squabbling over economic concerns, and ongoing stringent mortgage credit conditions still are obstacles to a housing recovery, NAHB Chief Economist David Crowe said …
  • Mortgage applications in the U.S. jumped 15.2% for the week ended Jan. 11 from one week earlier, according to the Market Composite Index released Wednesday by the Mortgage Bankers Association (MBA). The index is part of the MBA Weekly Mortgage Applications Survey. On an unadjusted basis, the index surged 45%. The Refinance Index increased 15%, while the refinance share of mortgage activity remained unchanged at 82% of total applications from the previous week. The seasonally adjusted Purchase Index rose 13% to the highest level since April 2011. The unadjusted Purchase Index spiked 47% and was 5% higher than the same week one year ago. The adjustable-rate mortgage share of activity increased to 3% of total applications. The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) remained unchanged at 3.61%, with points decreasing to 0.38 from 0.41 (including the origination fee) for 80% loan-to-value ratio loans. For the MBA report, use the link …

News of the Competition (01/16/2013)

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MADISON, Wis. (1/16/13)

  • The board of Bank of America (BofA) has agreed to pay $62.5 million to settle a lawsuit, arising from its purchase in 2009 of Merrill Lynch (American Banker Jan. 14). U.S. District Judge Kevin Castel in Manhattan approved the agreement Friday. It resolves claims made by at least four pension funds, alleging the bank's officers and directors did not disclose information about a drop-off in Merrill's financial health before BofA asked shareholders to approve the deal. As a result of the settlement, an insurance policy that shields the bank from damages from derivative lawsuits will reimburse BofA, the Banker said …
  • Federal regulators publicly announced enforcement orders regarding JPMorgan Chase's multibillion dollar loss connected to trading activity in London (American Banker Jan. 14). Currently, the orders involve no monetary penalties. The Office of the Comptroller of the Currency and the Federal Reserve Board ordered JPMorgan Chase to rectify its internal controls, and exert more oversight on, and  invest more resources in, its trading activities, the Banker said  …

Market News (01/16/2013)

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MADISON, Wis. (1/16/13)

  • U.S. retail sales increased more than expected in December, even though consumers finished their holiday shopping--indicating people looked beyond lawmakers' budget battles and suggesting consumer spending gained momentum at year-end  (Bloomberg.com, The New York Times and Moody's  Economy.com Jan. 15). Sales rose 0.5% following a 0.4% gain in November, the Commerce Department said Tuesday. Economists had forecast a 0.2% retail-sales rise in December, according to a Bloomberg survey and a separate Reuters survey. Growth in incomes, an improving labor market, and discounting by chains boosted consumer spending, which constitutes roughly 70% of the U.S. economy, Bloomberg said. However, at the same time, higher payroll taxes, which kicked in this month, will reduce take-home pay and make it harder for households to increase their purchases, Bloomberg added …
  • For the third consecutive month, U.S. wholesale (producer) prices slid 0.2% in December, indicating that inflation remained tame as energy costs continue to decrease (The Wall Street Journal, The New York Times and Moody's Economy.com Jan. 15). The producer-price index--which is a gauge of how much manufacturers and wholesalers paid for finished goods--fell to a seasonally adjusted 0.2% in December from November, the Labor Department said Tuesday. A 0.9% decrease in food prices and a 0.3% decline in energy costs drove the index's drop, the Journal said …

Market News (01/15/2013)

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MADISON, Wis. (1/15/13)

  • U.S. retailers are worried that the expiration of the Social Security tax break on paychecks the past two years will cause consumers to cut back on their spending (The Wall Street Journal Jan. 13). Congress allowed the tax break--which gave consumers a temporary 4.2% reduction for Social Security taxes on their paycheck from the standard 6.2%--to expire at the beginning of this year. With consumers remaining cautious during tough economic times, the noticeable subtraction from paychecks is a threat that could curtail economic growth, the Journal said. That reduction in personal income could add to consumers' already-frugal approach to spending. It also could result in less spending at restaurants and a shift to less costly store brands, the Journal said …
  • Worldwide business confidence has risen since the fall, despite political wrangling in Washington, D.C., over government fiscal policy--especially the fiscal cliff and raising the Treasury debt ceiling, according to Moody's Analytics Survey of Business Confidence (Moody's Economy.com Jan. 14). Assessments of the present business situation have risen into a range between 33.3 and 38.9 the past few weeks from 23.8 at the end of November. Likewise, expectations for the economy six months from now have increased to 26.5 for the week ended Jan. 11 from 17.6 for the week ended Nov. 30. However, despite those improved readings, businesses still are worried, and the survey readings continue to indicate a soft economy, Moody's concluded …

News of the Competition (01/15/2013)

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MADISON, Wis. (1/15/13)

  • The Federal Deposit Insurance Corp. (FDIC) announced a bank closing Friday, the first bank failure in 2013. There were 51 bank failures in 2012. The failed bank is Westside Community Bank, University Place, Wash., which was assumed by Sunwest Bank, Irvine, Calif. The closed bank held about $98 million in assets as of Sept. 30. The FDIC estimated the failure will cost its Deposit Insurance Fund roughly $20 million …
  • Some U.S. Bank customers soon can use the bank's new Go Mobile payment system--which allows iPhone owners to use a near-field communications-furnished case to make contactless payments (American Banker Jan. 11). The first to test the system before a wider introduction later this year will be New FlexPerks Travel Rewards Visa Signature Cardholders in Portland, Ore., and Salt Lake City, the bank announced Thursday …

News of the Competition (01/14/2013)

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MADISON, Wis. (1/14/13)

  • No women were among the promotions of executives announced Monday by Citigroup CEO Michael Corbat (American Banker Jan. 11). The 13 executives currently reporting to Corbat are male. When Corbat announced the bank changes and promotions in a memo, the only woman mentioned was Sara Wechter, Corbat's new chief of staff, who held the same position for Chairman Michael O'Neill, the Banker said. Although male-dominated executive circles at large U.S. banks is nothing new, Citigroup appears to be an extreme example, with only one woman among it 24-member operating committee, the Banker said …
  • To better their bottom lines, small U.S. community banks are again attempting to streamline operations and reduce costs (American Banker Jan. 10). Several banks have instigated plans to cut long-term costs by upgrading technology, trimming work forces and pruning branch networks, the Banker said. However, management teams have had to return to the drawing board to reduce expenses, because compliance costs are rising and the interest-rate environment remains problematic, the Banker said …

Market News (01/14/2013)

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MADISON, Wis. (1/14/13)

  • The U.S. trade deficit unexpectedly grew in November. Contributing factors were imports of nonpetroleum products such as cellphones reaching record highs, a rebound in demand for foreign autos after Hurricane Sandy, and U.S. retailers stockpiling imported goods for holiday shoppers (The Wall Street Journal, Bloomberg.com and Moody's Economy.com Jan. 11). The trade gap widened 15.8% to $48.73 billion from $42.06 billion in October, the Commerce Department said Friday. Economists had predicted the November gap would shrink to $41.2 billion, according to a Dow Jones Newswires survey. Imports and exports both will rise as the U.S. and global and economies improve, Brian Jones, senior U.S. economist at Societe Generale in New York, told Bloomberg. However, Jones said imports will grow more than exports  …
  • The Economic Cycle Research Institute (ECRI) Weekly Leading Index--which measures economic growth--increased to 128.3 for the week ended Jan. 4 from 126.6 the prior week (Moody's Economy.com Jan. 11). The smoothed, annualized growth rate inched up to 5.1% from 5%, picking up for the sixth week in the past eight. Although both gauges continue to fluctuate, the weekly leading index is gradually improving, and the smoothed, annualized growth rate still is near its year-to-date high, ECRI said. Since both measures tend to lead changes in the business cycle, they suggest an uptick in future economic growth, ECRI said  ...

News of the Competition (01/11/2013)

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MADISON, Wis. (1/11/13)

  • In the coming two years, decreases in accretable yield--mainly an accounting benefit that accrues from acquisitions of troubled banks--will cause net interest margins to drastically fall this year for 18 small- and mid-cap banks identified byKeefe, Bruyette & Woods, Inc., an investment banking firm headquartered in New York City (American Banker Jan. 9). Those banks' median margin is expected to drop 29 basis points in 2013, and 23 basis points in 2014. The issue is not exclusive to banks on that list--the problem will be confronted by any banks that acquired troubled financial institutions in the past few years, analysts  told the Banker. Although the yield has been a significant force propelling earnings for banks acquiring troubled institutions from the Federal Deposit Insurance  Corp. the past few years, as the loans are worked out or paid off, the benefit gradually shrinks, net interest margins get leaner, and profits decline as a consequence, the Banker said …
  • American International Group (AIG) said Wednesday it will not join a lawsuit against the U.S. government regarding its government-sponsored $182 billion financial crisis bailout (The New York Times DealBook Jan. 9). AIG's board of directors made the decision after a public hubbub occurred when it was reported Monday that the insurance company was considering whether to joins a $25 billion lawsuit--filed by former AIG CEO Maurice R. Greenberg on behalf of fellow shareholders. Greenberg had urged AIG to join the suit--a move that could push the government to enter settlement talks, the Times said (Jan. 7). Although the suit does not say that government help was unnecessary, it posits that the rescue was onerous because it took a 92% ownership stake in AIG, involved high interest rates and sent billions of dollars to AIG's Wall Street clients, the Times added ...

Market News (01/11/2013)

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MADISON, Wis. (1/11/13)

  • Initial claims for U.S. unemployment benefits rose more than expected last week, an indication that labor market improvement still is uneven. However, the number of workers filing continuing claims for unemployment benefits fell to the lowest level in more than four years (Bloomberg.com, The Wall Street Journal, The New York Times and Moody's Economy.com Jan. 10). Initial claims increased 4,000--to 371,000--in the week ended Jan. 5, the Labor Department said Thursday. Economists had forecast a decline to 367,000, according to a Bloomberg survey. Continuing claims for unemployment benefits--those issued to workers for more than a week--decreased 127,000--to 3.109 million--the lowest level since July 2008. Claims have remained in a fairly stable range, with the key factor not being job cuts as much as it is hiring, Michael Hanson, a senior U.S economist at Bank of America Corp. in New York, told Bloomberg. Although hiring is slowly moving forward, it needs to pick up to engender quicker economic growth, he added. In a related matter, the number of job openings in November remained at roughly the same as October--3.7 million, according to the Job Openings and Labor Turnover Survey (JOLTS), issued by the Bureau of Labor Statistics (Moody's Economy.com Jan. 10) …
  • As more citizens prepared to lose a larger percentage of their pay to taxes, U.S. consumer confidence slid last week to the lowest level in a month, according to the Bloomberg Consumer Comfort Index (Bloomberg.com and Moody's Economy.com Jan. 10). The index dropped to -34.4 for the week ended Jan. 6 from -31.8 the prior week--the largest one-week decline since August. All three subcomponents of the gauge--personal finance, perceptions over the buying climate and views on the state of the economy--lost ground. Paychecks will be lighter after Congress agreed last week it will allow the payroll tax that finances Social Security benefits to go back to its original 6.2% of pay, from 4.2 % …  

Market News

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MADISON, Wis. (1/10/13)

  • With 11 months of data reported, 2012 will go down as a record year for favorable housing affordability conditions and a great year for buyers who could get a mortgage, according to the National Association of Realtors (NAR). NAR's national Housing Affordability Index stood at 198.2 in November, based on the relationship between median home price, median family income and average mortgage interest rate. The higher the index, the greater the household purchasing power. An index of 100 is defined as the point where a median-income household has exactly enough income to qualify for the purchase of a median-priced existing single-family home, assuming a 20% down payment and 25% of gross income devoted to mortgage principal and interest payments. For first-time buyers making small down payments, the affordability levels are lower. For all of 2012, NAR projects the housing affordability index to be a record 194, up from 186 in 2011, which was the previous record. November's reading was 2.5 index points below October, but up 1.5 index points from a year earlier. For the NAR release, use the link …
  • U.S. mortgage loan application volume increased 1.7% for the week ended Jan. 4 from one week earlier, according to the Mortgage Bankers Association (MBA) Market Composite Index. The index is part of  MBA's Weekly Mortgage Applications Survey released Wednesday. On an unadjusted basis, the index rose 49%. The Refinance Index increased 12% and is up less than 1% from two weeks ago, the week before the holidays. The seasonally adjusted Purchase Index grew 10%, down 2% from two weeks ago. The unadjusted Purchase Index went up 49% and was 8% lower than the same week one year ago. The refinance share of mortgage activity remained constant at 82% of total applications. Adjustable-rate mortgage activity was unchanged, at 3% of total applications. The Home Affordable Refinance Program share of refinance applications decreased to 25% from 27% the prior week. For the MBA report, use the link

News of the Competition

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MADISON, Wis. (1/10/13)

  • The volume of U.S. collateralized loan obligations (CLOs) quadrupled last year, reaching $55.2 billion (American Banker Jan. 8). In 2013, analysts are forecasting issuances of $60 billion to $70 billion--which would push CLOs nearer to the $92.8 billion peak reached in 2007, the Banker said. Banks are interested in that market's performance because they invest in and market CLOs, while CLOs also invest in bank-syndicated loans. After the CLO market started to recover from the financial crisis, it struggled with a narrow investor base, the publication said. After some new potential investors--foundations and endowments, public pensions and regional banks--in 2011 began looking at the market, the CLO investor base substantially widened in 2012, the Banker said …
  • Morgan Stanley intends to slash 1,600 jobs in the nest five weeks. The job cuts will be in its institutional securities business--roughly 6% of its investment banking and trading unit and support staff, according to a source familiar with the matter (The Wall Street Journal and Bloomberg.com Jan. 9). The layoffs will concentrate on senior employees, with half the cuts occurring in the U.S. and half abroad. The sixth-biggest U.S. bank by assets intends to tell employees about the cuts during the next few weeks, the source said …

News of the Competition (01/09/2013)

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MADISON, Wis. (1/9/13)

  • After receiving one of the largest government bailout packages during the financial crisis, the board of directors at American International Group Inc. (AIG) is contemplating whether to join a lawsuit accusing the U.S. government of implementing too-onerous terms in its bailout package of 2008-2009 (The Wall Street Journal Jan. 8 and The New York Times DealBook Jan. 7). AIG's board will meet today to listen to arguments for and against joining the $25 billion lawsuit, a source familiar with the matter told the Journal. In 2011, Maurice R. Greenberg, former CEO of AIG, who still is a major investor in the company, filed a lawsuit on behalf of fellow shareholders. Greenberg has urged AIG to join the suit--a move that could push the government to enter settlement talks, the Times said. Although the suit does not say that government help was unnecessary, it posits that the rescue was onerous because it took a 92% ownership stake in AIG, involved high interest rates and sent billions of dollars to AIG's Wall Street clients, the Times said. That rescue obviated tens of billions of dollars that shareholders would have received--and also was in violation of the Fifth Amendment, which forbids ceasing private property for "public use, without just compensation," the Times said. The case is pending in federal claims court in Washington, D.C., and the government will present the case against joining the lawsuit, the source told the Journal
  • Bank of America (BofA) Monday sold off roughly 20% of its mortgage loan-servicing business as a component of its agreement to pay Fannie Mae more than $11 billion to settle an ongoing dispute over bad mortgages (The New York Times DealBook Jan. 7). The move is a continuance of BofA's large-scale retreat from an expensive expansion into the home mortgage market, the Times said. That payment settles allegations that before the financial crisis BofA made bad mortgages that home buyers had a difficult time repaying, and then sold the problem mortgages to the U.S. government, the Times said. Taxpayer-supported Fannie Mae sustained huge losses when borrowers defaulted, the Times said …

Consumer borrowing up $37B at CUs in November

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WASHINGTON (1/9/13)--Consumer borrowing during November rose a seasonally adjusted 7% to nearly $2.769 trillion, announced the Federal Reserve Tuesday. Members' borrowing from credit unions was up $3.7 billion for the month--to $242.5 billion.

November's $16.05 billion increase in the overall debt was the fourth consecutive monthly increase, said the Fed's Consumer Credit report. Economists polled by Reuters had forecast a $12.75 billion hike in November, while those polled by Bloomberg had forecast a $12.8 billion rise (Bloomberg.com and FoxBusiness.com Jan. 8).

November's figures follow a slightly revised to 6.2% or a $14.08 billion rise during October, said the report. October's total debt was more than $2.752 trillion, compared with nearly $2.632 trillion at the end of 2011.

At credit unions, consumers' debt increased from October's $238.8 billion. November's figure was also $19.5 billion greater than the $223 billion members borrowed from credit unions during fourth quarter 2011.

(Editor's note: For a more detailed look at credit unions' lending in November, check the Credit Union National Association's Monthly Credit Union Estimates at the link.)

Non-revolving credit, which includes auto and student loans, rose 9.5%, accounting for nearly all of November's increase in consumer debt. Consumers borrowed slightly more than $1.91 trillion in these loans during November, compared with nearly $1.895 trillion in October and $1.78 trillion in fourth quarter 2011.

For credit unions, nonrevolving credit in November totaled $202.6 billion. That amounts to a $1 million increase from the $202.5 billion they loaned to members in October, and a $17 million increase from $185.1 billion loaned at the end of 2011.

November's revolving credit--largely credit card debt--also rose, at an annual rate of 1% to $834.3 billion. That compares with  more than $823.8 billion borrowed  in October and $851.4 billion at the end of 2011.

Credit union members' revolving credit totaled $39.9 billion, an increase from $38.2 billion in October and a $37.9 billion at the end of 2011.

The Fed's report does not track debt related to real estate, such as mortgages and home equity lines of credit.

Market News (01/09/2013)

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MADISON, Wis. (1/9/13)

  • U.S. small-business sentiment slightly improved in December, but is only marginally higher than November's reading, which was the lowest reading since 2009 of the National Federation of Independent Business (NFIB) Small Business Optimism Index (Moody's Economy.com Jan. 8). The composite index inched up to 88 last month from 87.5 in November. Earnings still are down, resulting in small companies reducing hiring and investment plans, NFIB said. Also, many small firms intend to let inventories decrease--an indication that future business expectations are soft, NFIB said. Small companies will see tough times in the next several months because the consumer recovery likely will idle in the best-case scenario and could decline at worst. That's because the combined effect of political squabbling and tax hikes will erode buyers' confidence, NFIB concluded  …
  • State and local governments in the U.S. will have a buffer to withstand federal budget cuts. They will be able to hire and spend on their own because they are in their best financial condition since the recession (Bloomberg.com Jan. 7). State and local authorities will add employees in 2013, after cutting their work forces by roughly 500,000 in the past five years, Mark Zandi, chief economist at Moody's Analytics Inc. in West Chester, Pa., told Bloomberg.  He forecasts that fourth-quarter payrolls will be 220,000 more than in the same period for 2012. Also, St. Louis-based Macroeconomic Advisers projects that state and local government expenditures and investments will rise 1.8%--triple the increase last year. That shift to regional spending will help the country withstand the jolt from federal spending cuts and tax increases--keeping the economic recovery on track, Zandi said …

Market News (01/08/2013)

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MADISON, Wis. (1/8/13)

  • Business sentiment worldwide unevenly improved in the past six weeks, with no real spike after Congress passed its tax deal to avoid the fiscal cliff, according to Moody's Analytics Survey of Business Confidence (Moody's Economy.com Jan. 7). Toward the end of last year, expectations about the prospects of the economy heading into 2013 improved. However, business sentiment still is tenuous and is likely to rapidly decline if federal policymakers cannot fix the remaining debt-ceiling and spending issues in a proper manner, Moody's said. Current business sentiment continues to be an indicator of a fragile economy, Moody's said …
  • The Basel Committee on Banking Supervision, comprising the world's top central bankers and regulators, Sunday announced it will relax a rule intended to make sure that large banks can get through financial crises without running out of cash (The Wall Street Journal Jan. 7). Banks said the rule--known as the "liquidity coverage ratio"--was not workable and was financially risky. They have intensely lobbied the committee for two years to change it, said the Journal. The regulatory committee succumbed to the pressure and made it easier for banks to comply with the rule and also delayed its complete implementation until 2019, the Journal said …

News of the Competition (01/08/2013)

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MADISON, Wis. (1/8/13)

  • Bank of America Corp. (BofA) has agreed to pay more than $10 billion to resolve home-loan repurchase claims that arose from troubled mortgages that soured during the housing crisis (Bloomberg.com, The New York Times DealBook and The Wall Street Journal  Jan. 7). BofA, the second-largest U.S. lender by assets, will pay Fannie Mae $3.6 billion to settle home loan repurchase claims and $6.75 billion to buy back mortgages it sold to Fannie Mae, the government-sponsored enterprise said Monday. The loans were created by Countrywide Financial Corp., which BofA purchased in 2008. Fannie Mae, Freddie Mac and other mortgage buyers claimed  Countrywide loans were based on erroneous data regarding borrowers and properties, Bloomberg said …
  • A federal judge has ruled that a lawsuit against Citigroup and MidFirst Bank regarding force-placed insurance may proceed (American Banker Jan. 4).  Borrowers Gordon Casey in Syracuse, N.Y., and Duane Skinner in Maryland allege the banks perpetrated wrongdoing in the force-placing of flood insurance on their homes. U.S. District Judge David Hurd in Utica, N.Y., ruled Wednesday their lawsuit can proceed. In the suit--filed in May on behalf of themselves and other borrowers serviced by affiliates of Citigroup and MidFirst Bank--the two men claim the banks made them buy flood insurance in amounts that were illegally excessive, the Banker said. Force-placed insurance is a form of hazard coverage banks buy to protect the properties of buyers who let their homeowners' insurance lapse …

Market News (01/07/2013)

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MADISON, Wis. (1/7/13)

  • U.S. employers ended 2012 by adding 155,000 jobs in December, keeping the slow growth pace of the past two years, said the Labor Department Friday (The New York Times and The Wall Street Journal Jan. 4).  December's increase follows a revised upward gain of 161,000 in November. The unemployment rate held at 7.8%. Economists surveyed by Dow Jones Newswires had expected a gain of 160,000 in payrolls and a 7.7% jobless rate, said the Times, while 52 economists surveyed by Bloomberg had projected a 152,000 increase (Bloomberg.com Jan. 4). Health care, food services, construction and manufacturing gained the most, with the latter two areas boosted by rebuilding after Hurricane Sandy. During 2012, roughly 1.8 million jobs were added in the U.S.  At the current pace of job growth, it will take seven years for the unemployment rate to return to pre-2007 levels, said the TimesAnnual hourly earnings rose 2.1% from December 2011 to $23.73, the largest gain in one year, said Bloomberg. The average work week climbed six minutes--to 34.5 hours …
  • Factory orders in the U.S. were basically flat during November, with orders for manufactured goods increasing a less-than-expected $211 million to reach $477.7 billion, reported the Commerce Department Friday (Moody's Economy.com and The Wall Street Journal Jan. 4). Economists surveyed by Dow Jones Newswires had projected a 0.1% increase.  Orders for durable goods--or goods meant to last at least three years--rose 0.8% after a slight revision upward from 0.7% and shipments of durable goods rose 1.6% from October. Nondurable goods orders declined 0.6%. Core capital goods orders increased 2.6%, a revision downward from earlier estimates of a 2.7% gain. Shipments for November were revised up to a 2% gain instead of the previous estimate of a 1.8% gain …
  • The Economic Cycle Research Institute's (ECRI) Future Inflation Gauge was 104 in December,near its recovery period high of 104.7 set in March 2011, according to Moody's Economy.com (Jan. 4).  The figure is up from the revised 102.6 reading for November, which had originally been estimated at 102.5. The December reading is at a still-low level and consistent with Moody's view that inflation does not pose much threat in 2013 to the U.S. economic recovery. Inflation has been well-contained the past year, said Moody's, noting the gauge tends to lead changes in inflation by nine to 12 months. Headline inflation, measured by the personal consumption expenditure price index, will accelerate slowly and barely breach the Federal Reserve's 2% target later this year, Moody's added …

News of the Competition (01/07/2013)

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MADISON, Wis. (1/7/13)
  • Some community banks are increasing CEO salaries and compensation before the financial institutions file their proxy statements. Glacier Bancorp in Kalispell, Mont., and F.N.B. Corp. in Hermitage, Pa., are among the financial institutions whose boards have approved salary hikes for their top executives (American Banker Jan. 4). CEO compensation increased in 2012 from a year earlier at Pulaski Financial in St. Louis and Meta Financial in Sioux Falls, S.D., according to disclosures. Bank CEO salaries could increase up to 4% this year, according to a survey by the consulting firm Pearl Meyer & Partners …
  • Treasury Inspector General Eric Thorson gave JPMorgan Chase & Co. a Jan. 11 deadline to turn over documents to the Office of the Comptroller of Currency (OCC) investigating the bank's ties to Bernard Madoff's Ponzi scheme or risk sanctions for blocking the agency's oversight (Bloomberg Jan. 4). JPMorgan contends the information is protected by attorney-client privilege. In a letter sent Dec. 21 to JP Morgan, the inspector general said the OCC could not do its work if banks were allowed to withhold information on that basis. In March 2009, Madoff pleaded guilty to 11 federal felonies and admitted to turning his wealth management business into a massive Ponzi scheme that defrauded thousands of investors of billions of dollars …
  • In an e-mail sent to its customers, PNC Bank apologized for disruptions caused both by the ongoing cyberattacks on its website and the bank's own attempts to block the attacks. The e-mail advises customers experiencing problems to use other channels, such as branches, ATMs, or phone banking (American Banker Jan. 4). PNC's website has been hit with a volume of traffic "consistent with threatened cyberattacks," according to the e-mail. The banks' efforts to fend off the attacks may also have blocked access to "a small percentage" of legitimate customers, the e-mail said. PNC reassured its customers that their accounts and personal data are safeguarded by encryption software …

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 Economy.com 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 …

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.

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 …

Market News (01/03/2013)

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MADISON, Wis. (1/3/13)

  • U.S. construction spending fell an unexpected 0.3% in November--to $865.99 billion from October--as home building slowed and the government braced for possible cutbacks from the fiscal cliff, reported the Commerce Department Wednesday (The Wall Street Journal Jan. 2).  It was the first decline in spending since March, but the November figure was a 7.7% gain from the November 2011 total of $804 billion (Moody's Economy.com Jan. 2). October's spending report was revised downward to a 0.7% increase from an estimated 1.4% gain.  For November, private residential construction grew 0.4% to $295.3 billion, compared with 1.3% and 2.9% growth in October and September, respectively. Private nonresidential construction fell 0.7% to $294.46 billion for the period, indicating hesitancy by businesses to invest given the uncertainty in November surrounding the fiscal cliff. Public sector construction also declined 0.4%, with a 5.5% drop in federal spending …
  • Small business hiring rose modestly in December, with a 0.09% increase to 94.1 from November's upwardly revised 94 (from 93.8), according to The Intuit Small Business Employment Index. That means roughly 15,000 jobs were created in December (Moody's Economy.com Jan. 2). During 2012, small firms added 24,000 payrolls. November's revised figures show payrolls that month grew about 25,000, down from the original 30,000 estimate for that month. Average hours worked rose 0.1%, for an average of 107.4 hours in December, up from the revised 107.3 hours in November, which was revised downward from 110 hours.  This translates to about 24.8 hours per week, roughly the same as in November. Average compensation rose by $13 or 0.5%, the biggest monthly increase since December 2007. However, Moody's said this statistic was "suspicious" and likely would not survive a revision in the coming months …
  • Manufacturing in the U.S. expanded slightly more than expected, to 50.7, in December, from November's 49.5, while employment rose, according to the Institute for Supply Management's (ISM) manufacturing-purchasing managers index (PMI) (The Wall Street Journal and Moody's Economy.com Jan. 2).  A reading of more than 50 indicates expansion.  Economists had expected the PMI to improve to 50.5, according to a Dow Jones Newswires survey of economists.  The employment index rose to 52.7 in December--the highest reading since September--from 48.4 in November. New orders for December remained the same as November--at 50.3. The exports index grew to 51.5 from November's 47, reflecting the first expansion in foreign demand since May.  The production index was 52.6 in December, down from November's 53.7 …

News of the Competition (01/03/2013)

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MADISON, Wis. (1/3/13)

  • China, Israel, France and Russia are the most dangerous countries for banks to operate within, according to Americas at Control Risks Group, a London-based company that monitors political, security, operational and regulatory risk (American BankerJan. 2). U.S., Russia and Netherlands top the list of countries that are points of origin for malware, according to the company. Americas at Control has lately been tracking corruption, and has found improvement in the strength of regulators in the U.S. Banks are increasingly seeking to move into "frontier markets" such as Myanmar, Belize, North Africa, sub-Saharan Africa, Eastern Europe and Latin America …
  • U.S. light-vehicles are in the midst of their best sales streak since 1973 as consumers replaced cars and trucks that are, on average, the oldest ever on the nation's roads, according to a Bloomberg survey of analysts (Bloomberg Jan. 2). Car and light truck sales in the U.S. were expected to rise 9.6% in December, Bloomberg said. That would mark the third-straight annual gain of at least 10%, the best streak in nearly four decades. Replacement demand from owners of damaged vehicles and purchases deferred by Hurricane Sandy on the East Coast added about 50,000 to December sales totals, according to Credit Suisse Group AG. The annualized industry sales rate, adjusted for seasonal trends, was estimated to be 15.4 million for December, according to analysts' estimates …

News of the Competition (01/02/2013)

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News of the Competition

MADISON, Wis. (1/2/13)

  • Bank of America (BofA) has sold 21 branches in Iowa and Maine since March, and the Charlotte-based megabank has made deals to sell an additional 38 branches in the central U.S. Community banks are set to purchase all of the branches, which total about $1.5 billion in assets (American Banker Dec. 31). Northwest Bank has sought to acquire BofA branches for several years, according to Greg Post, Northwest president/CEO. Northwest wanted the branches for what they offer in customer relationships, employees and real estate, Post said. Locations that are irrelevant for BofA are meaningful for community banks, said Chris Marinac, an analyst with FIG Partners …
  • Banks paid a record $1.2 billion in fines to U.S. and state authorities this year. About half of that amount was related to improper mortgage practices. A $1.5 billion mortgage settlement with major home lenders was announced in February to create a fund to pay borrowers whose homes were improperly sold or taken into foreclosure (CNNMoney Dec. 31). Another $3.5 billion was awarded to state and federal governments to fund counseling and legal aid. Wells Fargo paid $175 million in July to help minority homeowners who were sold subprime loans when they qualified for traditional mortgages. Also, UBS agreed in December to pay $1.2 billion for manipulating the London interbank offered rate …
  • Canadian Imperial Bank of Commerce (CIBC) has agreed to pay $149.5 million to settle a claim with the estate of Lehman Brothers related to collateralized mortgage obligations that led to the failure of the Wall Street bank (Reuters Dec. 31). The estate claimed had Lehman Brothers contracts that gave it senior payment priority on derivatives and collateralized debt obligations, but that the bankruptcy improperly placed the priority of the payments. The claims were filed against CIBC and numerous other financial institutions in September 2010, two years after Lehman Brothers went bankrupt. CIBC previously recognized a $841 million gain and reduced its financial commitment to zero after Lehman filed for bankruptcy in September 2008 …

Market News (01/02/2013)

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MADISON, Wis. (1/2/13)

  • The U.S. is on pace for the slowest decade of population growth since the 1930s, as the country emerges slowly from the worst economic downturn since the Great Depression, according to the Census Bureau (Bloomberg.com Dec. 30). Roughly 315.1 million people were estimated to live in the U.S. on New Year's Day, a 7.3% increase from last year's estimate and 2.05% more than the most recent census report in April 2010. If the current pace of growth continues, that means the nation's population will grow by 7.3% during the decade. That would be the lowest level recorded since the 7.25% growth between 1930 and 1940, said Bloomberg. In the aftermath of the 2007-2009 recession, the nation's birth rate and immigration dropped. Between 2000 and 2010, the nation's population grew by 9.7%. Five Mountain states in the West--Wyoming, Utah, Nevada, Colorado and Arizona--were among the top 10 growth states. Two states--Vermont and Rhode Island--lost population during 2012 …
  • Holiday shoppers were more likely to use smartphones for mobile assistance this year, said GfK Roper, which asked smartphone owners how they used their devices for holiday shopping (eMarketer Dec. 31). Every activity surveyed increased in percentages: 82% said they used smartphones for research and browsing of products (up from 67%); 74% bought something (up from 55%); 62% used an e-mail offer from a retailer (up from 45%); 56% used a consumer rating site to help decide to buy a product (up from 40%); 35% used a global positioning system/location feature on their phone to help with shopping (up from 31%); 27% used a QR code to find more information about a product (up from 19%);  33% used a mobile coupon (up from 18%).  In addition, 9% said they used a Black Friday or Cyber Monday mobile app, and 7% said they purchased something on their tablet …

FOMC sets 2013 meeting schedule

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WASHINGTON (1/2/13)--The Federal Open Market Committee (FOMC)--the monetary policymaking body of the Federal Reserve--has set its 2013 calendar.

The FOMC will meet on these dates:

  • Jan. 29-30;
  • March 19-20;
  • April/May 30-1;
  • June 18-19;
  • July 30-31;
  • Sept. 17-18;
  • Oct. 29-30; and
  • Dec. 17-18.
The March, June, September and December meetings will be associated with the Fed's Summary of Economic Projections and a press conference by the chairman, said the Fed's website.

The FOMC is the body responsible for setting the fed funds targeted interest rates and for taking measures, such as its recent string of quantitative easing measures involving buying back bonds, to adjust to the nation's economic conditions.