Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Market Archive

Market

News of the Competition (10/29/2010)

 Permanent link
MADISON, Wis. (11/1/10)
* Because banks are reviewing their foreclosure practices and delaying home seizures, U.S. home foreclosures are slowing in states that are most impacted by the real estate downturn (Bloomberg.com Oct. 29). Foreclosure auctions on courthouse steps--known as trustee sales--are down 42% since Sept. 20 in Arizona, California and Nevada, according to real estate tracking service Foreclosure Radar Bloomberg.com Oct. 29). The banks’ reviews could hamper the foreclosure process and delay a housing recovery--which won’t happen until home prices stop their descent. That could then postpone a U.S. economic recovery, Bloomberg said. “If what’s a hiatus turns into a moratorium, that would be problematic,” said Stan Humphries, chief economist for Zillow Inc., a real estate data provider. “It will delay the ultimate bottoming process in the market” … * Visa Inc. said it is prepared to take on the challenge of alternative and mobile payments (American Banker> Oct. 29). Through its July purchase of CyberSource Corp., Visa said it has the capability to respond to the evolving e-commerce and mobile payment sector. The card company also has worked with DeviceFidelity Inc. to place Visa payment capabilities in mobile phones through a data card that consumers can self-install, the Banker said. Visa will compete in the mobile payments arena with PayPal and “other emerging payment schemes,” said Joseph Saunders, Visa CEO and chairman …

Market News (10/29/2010)

 Permanent link
MADISON, Wis. (11/1/10)
* With consumer spending rising the most in nearly four years, the U.S. economy grew at a 2% annualized rate in the third quarter--a signal that economic growth is solidifying (Bloomberg.com Oct. 29). “Consumer spending is growing, business demand is still OK,” said Michael Feroli, Chase U.S. economist at JPMorgan Chase & Co. “We need to do better than this to get a real recovery in the labor market. The report leaves everything in place for more asset purchases by the Fed next week.” However, trade was a major negative (Moody’s Economy.com Oct. 29). During the next few quarters, the economy will experience sluggish growth as the spark from inventories and the stimulus diminish, and the likelihood of a recession during the next year is a relatively high one in three, Moody’s said … * U.S. consumer confidence dropped in October to the lowest level in nearly a year--which could hamper the largest part of the economy (Bloomberg.com Oct. 29). The Thomson Reuters /University of Michigan index of consumer sentiment dropped to 67.7 from 68.2 in September. An unemployment rate projected to remain above 9% through next year could dampen consumer optimism and lead to consumers limiting their purchases, Bloomberg said. “Main Street doesn’t really believe that the economy is out of recession until the unemployment rate comes down,” said Jonathan Basile, an economist at Credit Suisse in New York. “It’s difficult to see any kind of sharp move higher in confidence.” Inflation expectations--especially short-term expectations--increased, reversing the steep decreases in September (Moody’s Economy.com Oct. 29) …

News of the Competition (10/28/2010)

 Permanent link
MADISON, Wis. (10/29/10)
* Investors are planning a broad legal attack to force banks to repurchase mortgages, reported American Banker Oct. 27). At a conference held Wednesday, titled, “Robosigners and Other Servicing Failures,” plaintiffs’ attorneys were seeking to bring investors aboard in litigation against banks that sold and serviced mortgage-backed securities. The conference was hosted by Grais & Ellsworth, a firm already representing some Federal Home Loan banks in litigation concerning soured securities, the Banker said … * Wells Fargo & Co., the largest U.S. home lender, said that in roughly 55,000 foreclosure proceedings, it will file supplemental foreclosure affidavits to courts after Wells found some statements “did not strictly adhere to the required procedures” (Bloomberg.com Oct. 28). The bank said it found some lapses during a review of it processes. “The issues the company has identified do not relate in any way to the quality of the customers and loan data,” the San Francisco-based bank said in a statement. “Nor does the company believe that any of these instances led to foreclosures that should not have otherwise occurred” …

Market News (10/28/2010)

 Permanent link
MADISON, Wis. (10/29/10)
* Initial claims for U.S. unemployment benefits unexpectedly dropped last week to the lowest level in three months--a sign that the labor market may be recovering (Bloomberg.com Oct. 28). Claims declined by 21,000 to 434,000 for the week ended Oct. 23--the lowest level since early July, the Labor Department said Thursday. Consumer spending--which accounts for 70% of the U.S. economy--is starting to gain momentum and could give companies a reason to bolster their payrolls heading into the holiday shopping season, Bloomberg said. “Certainly these numbers are encouraging,” said Brian Jones, an economist at Societe Generale SA in New York. “[At the same time], given other labor-market readings, you want to be hesitant about saying we’ve turned the corner.” Also, continuing claims for unemployment benefits fell 122,000 to roughly 4.36 million for the week ended Oct. 16 (Moody’s Economy.com Oct .28) … * Less than a month after Bank of America Corp. and JPMorgan Chase Co suspended some seizures of homes, a 50-state task force that has been investigating U.S. foreclosure practices may meet with lenders as early as this week (Bloomberg.com Oct. 28). All 50 states announced Oct. 13 a coordinated inquest into whether banks and loan servicers used bogus documents and signatures to justify hundreds of thousands of foreclosures. “We’ve had several conference calls with major lenders,” said Colorado Attorney General John Suthers. “The banks want to sit down with the attorneys general. These meetings are being set up.” At least 17 states are conducting separate investigations to ascertain whether state laws were broken, Bloomberg said …

News of the Competition (10/27/2010)

 Permanent link
MADISON, Wis. (10/28/10)
* The results of the most recent Spectrem Millionaire Investor Confidence’s Index poll, which surveys people with $1 million or more in investible assets on how they feel about those investments, showed confidence significantly increased in October (The Wall Street Journal Oct. 27). The index leapt six points in the month to the highest level since the days before December 2007 when the recession began, said Chicago consulting firm Spectrem Group. The main impetus has been the rise of the stock market, Spectrem said. “While the stock market’s October gains clearly contributed to this positive trend, underlying economic fundamentals remain a top concern for America’s wealthiest investors,” said George H. Walper Jr., president of Spectrem Group …

Market News (10/27/2010)

 Permanent link
MADISON, Wis. (10/28/10)
* For a second consecutive month, sales of new U.S. homes increased in September to a level that indicates the housing industry is fighting to overcome the effects of an employment rate that’s nearly 10% (Bloomberg.com Oct. 27). Home purchases rose 6.6% to an annualized rate of 307,000 units, the Commerce Department said Wednesday. A scarcity of jobs is keeping consumers from gaining the confidence needed to buy homes--eclipsing lower borrowing costs and lower prices that are making homes more affordable, Bloomberg said. “These are still very low levels,” said Jim O’Sullivan, global chief economist at MF Global Ltd. in New York. “Ultimately, a significant recovery in housing will depend on a clear pickup in employment.” The months of housing supply dipped a little to eight from 8.6 the prior month, and the median sales price is up 3.3% from one year ago (Moody’s Economy.com Oct. 27) … * Mortgage loan application volume increased 3.2% on a seasonally adjusted basis for the week ended Oct. 22 from one week earlier, according to the Market Composite Index, part of the Weekly Mortgage Applications Survey released Wednesday by the Mortgage Bankers Association (MBA). On an unadjusted basis, the index rose 3.1%. The Refinance Index increased 3%. The seasonally adjusted Purchase Index went up 3.9%. The unadjusted Purchase Index increased 3.5% and was 30.3% lower than the same week one year ago. The four-week moving average for the seasonally adjusted Market Index is up 1.4%. The four-week moving average is down 0.7% for the seasonally adjusted Purchase Index, while this average is up 1.9% for the Refinance Index. For the MBA report, use the link … * New orders for U.S. durable manufactured goods increased 3.3% in September--more than reversing the 1% decrease in August, according to the Census Bureau (Moody’s Economy.com Oct. 27). The gain was mostly due to a rise in demand for transportation equipment. Excluding transportation, new orders decreased 0.8%. Inventories rose 0.5%--the ninth consecutive monthly increase--and shipments fell 0.4%. Overall, September’s report is consistent with a manufacturing recovery that is well-established, although weakening, Moody’s said …

News of the Competition (10/26/2010)

 Permanent link
MADISON, Wis. (10/27/10)
* The Federal Home Loan Bank of Seattle entered into a consent order Monday with the Federal Housing Finance Authority (FHFA), mandating that the bank take specific steps to elevate its capital position and it business operations (American Banker Oct. 26). The bank simultaneously announced that President/CEO Richard M. Riccobono resigned his position. No explanation was given for his resignation. The FHLB of Seattle’s board appointed Steven R. Horton as acting president/CEO, effective immediately … * U.S. chain store sales increased only slightly in the most recent week, and have alternated between gains and losses since late August, continuing a slow downward trend, according to the International Council of Shopping Centers (ICSC). Sales rose 0.3% for the week ended Oct. 23, ICSC said. Growth edged up 1.9% year-over-year. Much of the sales weakness--which was most acute at apparel and department stores--was due to unseasonably warm weather, ICSC said …

Market News (10/26/2010)

 Permanent link
MADSION, Wis. (10/27/10)
* U.S. house prices rose 0.4% on a seasonally adjusted basis from July to August, according to the Federal Housing Finance Agency’s (FHFA) monthly House Price Index. The previously reported 0.5% decline in July was revised to a 0.7% decline. For the 12 months ending in August, U.S. prices fell 2.4%. The U.S. index is 13.6% below its April 2007 peak. The FHFA monthly index is calculated using purchase prices of houses backing mortgages that have been sold to or guaranteed by Fannie Mae or Freddie Mac. For the nine Census Divisions, seasonally adjusted monthly price changes from July to August ranged from -0.6% in the Mountain Division to +1.5% in the West South Central Division. For the FHFA report, use the link. In a related matter, existing home prices in 20 U.S. cities weakened in August, indicating that there was a softening of sales following the end of the homebuyer tax credit, according to the S&P/Case-Shiller index of home prices (Moody’s Economy.com Oct. 26). The index of property values rose 1.7% from August 2009--the smallest year-over-year gain since February (Bloomberg.com Oct. 26) ... * U.S. consumer confidence increased in October from a seven-month low, according to the Conference Board, a private New York-based research group (Bloomberg.com Oct. 26). The board’s confidence index rose to 50.2 from a revised 48.6 in September. However, the proportion of respondents who said jobs were plentiful dropped to the lowest level this year, and income expectations were the lowest since April 2009. “Confidence is still at a very low level and the present situation is more or less corroborating a very high unemployment rates,” said James O’Sullivan, global chief economist at MF Global Ltd. in New York. “These are clearly not double-dip numbers but we’re not seeing any hard evidence of strong bounce-back yet.” Stronger assessments of business conditions were partially offset by weaker assessments of labor market conditions (Moody’s Economy.com Oct. 26)…

Market News (10/25/2010)

 Permanent link
MADISON, Wis. (10/26/10)
* Existing U.S. home sales rose again in September, confirming that a sales recovery has begun, according to the National Association of Realtors (NAR). Existing-home sales--which are completed transactions that include single-family, townhomes, condominiums and co-ops--jumped 10% to a seasonally adjusted annual rate of 4.53 million in September from a downwardly revised 4.12 million in August. However, they remain 19.1% below the 5.60 million-unit pace in September 2009 when first-time buyers were ramping up in advance of the initial deadline for the tax credit last November. Lawrence Yun, NAR chief economist, said the housing market is in the early stages of recovery. “A housing recovery is taking place but will be choppy at times depending on the duration and impact of a foreclosure moratorium,” he said. “But the overall direction should be a gradual rising trend in home sales with buyers responding to historically low mortgage interest rates and very favorable affordability conditions.” For the NAR report, use the link … * Worldwide business sentiment remains down, mirroring the global economy, according to Moody’s Analytics Survey of Business Confidence (Moody’s Economy.com Oct. 25). Although the global economic recovery remains in place, growth is weak and not sufficient to hold off further increases in unemployment, Moody’s said. Sentiment is fairly similar worldwide, with confidence in South America--which had been the highest of all regions--recently weakening. The downward trend in responses to broad questions on present conditions and expectations regarding the outlook into spring is the most discouraging aspect of the survey, Moody’s said. The most positive aspect of the survey is that hiring and investment intentions remain fairly steady. Although pricing is soft, the likelihood of deflation is low, Moody’s said …

News of the Competition (10/25/2010)

 Permanent link
MADISON, Wis. (10/26/10)
* Seven banks were taken over Friday by regulators and six have entered into purchase-and-assumption agreements with other banks, according to the Federal Deposit Insurance Corp. (FDIC). The failures bring the 2010 total for bank failures to 139, compared with 140 for all of 2009. The banks include First Arizona Savings, A FSB, Scottsdale, Ariz., with the FDIC appointed receiver; First Suburban National Bank, Maywood, Ill., assumed by Seaway Bank and Trust Company, Chicago; Hillcrest Bank, Overland Park, Kan., assumed by HillCrest Bank, National Association, Overland Park, Kan., a newly chartered bank subsidiary of NBH Holdings, Corp. Boston; The First National Bank of Barnesville, Ga., assumed by United Bank, Zebulon, Ga.; The Gordon Bank, Gordon, Ga., assumed by Morris Bank, Dublin, Ga.; Progress Bank of Florida, Tampa, Fla., assumed by Bay Cities Bank, Tampa, Fla.; and First Bank of Jacksonville, Jacksonville, Fla,, assumed by Ameris Bank, Moultrie, Ga. The seven closed institutions held roughly $2.42 billion in assets as of June 30. The FDIC estimated that the failures will cost the Deposit Insurance Fund about $478 million ... * As Bank of America (BofA) resumed foreclosure proceedings Monday in 23 states, it confirmed that it had found errors in paperwork it had reviewed, including misspelled names and incorrect data (The New York Times Oct. 25). After denying for weeks the existence of any serious errors after conducting a review, BofA said Sunday it had discovered errors, but only in a small number of instances, said Dan Frahm, a spokesman for the bank. “These are examples of exceptions that were caught early in the process through control steps,’ Frahm said. “They do not reflect exceptions in final documents that are being resubmitted to the courts” …

News of the Competition (10/22/2010)

 Permanent link
MADISON, Wis. (10/25/10)
* Indiana Attorney General Greg Zoeller is suing 10 firms for allegedly taking advantage of homeowners who are looking to keep their home out of foreclosure (USA Today Oct. 22). Zoeller said the for-profit firms describe themselves as “foreclosure consultants,” but made bogus claims in their advertisements that include promises that they can save any home from foreclosure and that they guarantee their services 100%, the newspaper said … * General Motors Co. (GM) said it will unveil its battery-powered Chevrolet Volt car in China during the second half of 2011 (Blomberg.com Oct. 22). Automakers in China are adding more fuel-efficient models to the nation’s market, Bloomberg said. “The Volt will serve more to enhance GM’s green image,” said John Zeng, an analyst from J.D. Power & Associates. However, many Chinese consumers aren’t environmentally conscious and are first-time auto buyers, said Kevin Wale, president of the U.S. automakers’ China business. “The [sales] volumes in China won’t be large,” Wale said …

Market News (10/22/2010)

 Permanent link
MADISON, Wis. (10/25/10)
* The Group of 20 (G-20) industrial and developing nations came up with a proposal at its two-day meeting last week in South Korea to target cuts in current-account imbalances to avoid a “currency war.” However, the G-20 is seeing resistance from large exporting nations (The Wall Street Journal Oct. 22). The U.S. and Korea are spearheading an idea of commitments to take surpluses and deficits below specific levels. However, Germany and Japan--two countries whose export-led growth models have created major trade surpluses--are opposing such a solution at the G-20 meeting of central bankers and finance ministers, the Journal said. “Setting numerical targets would be unrealistic,” said Japanese Finance Minister Yoshihiko Noda (Bloomberg.com Oct. 22) ... * With U.S. labor markets stabilizing, the number of workers involved in mass layoffs--those of at least 50 workers from a single establishment--dropped to 1,486 in September from 1,546 in August, according to the Bureau of Labor Statistics. The layoffs in September involved 133,379 workers, compared with 150,192 in August. The unemployment rate has stabilized because of a decrease in layoffs, but the rate will not go down until hiring accelerates (Moody’s Economy.com Oct. 22) …

News of the Competition (10/21/2010)

 Permanent link
MADISON, Wis. (10/22/10)
* The Federal Housing Finance Agency (FHFA) Thursday released projections of the financial performance of Fannie Mae and Freddie Mac, including potential draws under the Preferred Stock Purchase Agreements (PSPAs) with the U.S. Department of the Treasury. To date, the enterprises have drawn $148 billion from the Treasury Department under the terms of the PSPAs. Under the three scenarios used in the projections, cumulative enterprise draws range from $221 billion to $363 billion through 2013. “These projections are intended to give policymakers and the public useful snapshots of potential outcomes for the taxpayer support of Fannie Mae and Freddie Mac,” said FHFA Acting Director Edward J. DeMarco. “These are not predictions; the results reflect the potential effects of a limited set of hypothetical changes in house prices, a key variable driving credit losses for the Enterprises.” For the FHFA release, use the link … * U.S. consumers still are looking to cut back on their discretionary spending--including purchases they usually place on their credit cards--according to a survey conducted by Hart Research Associates set to be published by Citigroup this week (American Banker Oct. 21). The survey indicates that 66% of respondents said they reduced their credit card spending, and nearly half said they only shop for necessities--or don’t shop at all. The survey also found that only 19% said they can shop for more than just their essential needs, and 72% said they have curtailed their daily expenditures. “Despite indications that the economy is modestly improving, a majority of Americans don’t seem to feel it and aren't acting like we’re in an economic recovery,” Jonathan Clements, Citi’s director of financial education for its personal wealth management business, said in a statement ...

Market News (10/21/2010)

 Permanent link
MADISON, Wis. (10/22/10)
* Initial claims for U.S. unemployment benefits decreased last week, but the net change in claims during the past two weeks hasn’t been substantial enough to indicate any significant improvement in the labor market (The Wall Street Journal Oct. 21). Claims fell 23,000 to 452,000 for the week ended Oct. 16, the Labor Department said Thursday. The prior week’s figure was upwardly revised to 475,000 from 462,000. The latest decrease almost offsets the prior week’s gain, and claims haven’t yet significantly gone down, which indicates the labor market recovery is not gaining momentum (Moody’s Economy.com Oct. 16). Meanwhile continuing claims fell 9,000 to roughly 4.44 million for the week ended Oct. 9--although that figure does not include millions more people who are on extended and emergency benefits … * For the third consecutive month, the index of U.S. leading economic indicators went up in September, in a sign the economic recovery will continue into 2011, according to the New York-based private research firm The Conference Board (Bloomberg.com Oct. 21). The index--which is a gauge of the economic outlook for the next three to six months--rose 0.3%. “We’re clearly on the expansion path,” said Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi UFJ Ltd. in New York. “But we’re still short of a normal recovery. The economy is not growing fast enough to put all those millions of unemployed people back to work.” Key drags on the index were caused by building permits and supplier deliveries (Moody’s Economy.com Oct. 21). The leading index’s small gain is consonant with expectations for a slow pace of recovery going into 2011, Moody’ said …

Fed district banks paint a dull economy

 Permanent link
WASHINGTON (10/21/10)--Reports from the 12 Federal Reserve Districts indicate that national economic activity overall continued to rise at a modest pace during the reporting period from September to early October. Manufacturing activity continued to expand, with production and new orders rising in most districts, reported the Federal Reserve’s “beige book,” a survey of reports from businesses in each of the 12 districts. However, “hiring remained limited, with many firms reluctant to add permanent payrolls given economic softness,” said the report. The overall picture presented by the districts was different than the last beige book report at the beginning of September, when Fed districts reported “widespread signs of deceleration compared with previous periods.” In the banking and finance arena, lending activity was stable at low levels across most districts, but Richmond and Dallas districts reported competition for quality loans had picked up while the Chicago district noted credit conditions continued to improve there. On the consumer side, lending was sluggish, with “scattered reports of improvement.” Cleveland and Detroit districts reported growth in auto loans, Residential mortgage lending and refinancing activity increased in several districts, with San Francisco reporting that demand for nonconforming mortgage loans was up. Credit quality changed little on balance, the report said. New York reported delinquency rates on consumer loans were down, and Philadelphia and Richmond districts reported an improvement in overall quality of credit. Demand for nonfinancial services was stable to modestly increasing overall. Consumer spending was steady to up slightly. However, consumers remained price-sensitive, and purchases were limited to mostly necessities and nondiscretionary items, the report said. New-vehicle sales held steady or rose, and used-auto sales were strong. Also, activity in the travel and tourism sector increased. Housing markets remained weak, with most districts reporting sales below year-ago levels. Reports on prices suggested stability, however. Conditions in the commercial real estate section were subdued and construction was expected to remain weak, the Fed said. Agricultural conditions were deemed generally favorable, and above-average yields were expected in most districts. The energy sector’s activity continued to expand. For the full report, use the link.

News of the Competition (10/20/2010)

 Permanent link
MADISON, Wis. (10/21/10)
* U.S. bank executives may have to deal with a load of litigation as a result of sloppy home foreclosure paperwork (American Banker Oct. 20). Lawyers for foreclosed borrowers are looking to hold servicing executives personally liable for processes such as robo-signing--in which bank employees rubber-stamped foreclosure affidavits, neglecting to verify the information in them, the Banker said. Risk-management experts and mortgage executives contend that the key issue is how large banks’ internal audit and Sarbanes-Oxley controls failed to flag such systemic problems, the publication said. Mortgage servicers face the risks of lawsuits filed under the False Claims Act if they certified that their own internal servicing processes were in compliance with applicable law, according to some mortgage experts and lawyers, the publication said … * A federal judge approved Citigroup Inc.’s revised settlement with federal securities regulators to resolve charges that Citi misled investors about $39 billion in subprime mortgage assets it held (Dow Jones via American Banker Oct. 20). Citigroup still will pay the originally agreed upon $75 million fine with the Securities and Exchange Commission (SEC) under the new deal. Citi also agreed to keep disclosure and earnings committees for three years. The fine constitutes roughly 0.35% of Citi’s $20.7 billion third-quarter revenue (USA Today Oct. 20) … * Wells Fargo, the biggest U.S. consumer bank and home lender, reported record third-quarter earnings because of good performances by its retail franchise and the Wachovia Corp. branches it acquired two years ago (The New York Times Oct. 20). Earnings rose 7% with a $3.3 billion profit in the quarter--aided by the release of $650 million that Wells had set aside for loan losses as the economy declined, the Times said. “Earnings and growth were broad-based, with all business segments contributing to our record net income,” said Howard Atkins, Wells chief financial officer (The Wall Street Journal Oct. 20). The bank said it is not planning to halt foreclosures (Bloomberg.com Oct. 20) …

Market News (10/20/2010)

 Permanent link
MADISON, Wis. (10/21/10)
* Mortgage loan application volume decreased 10.5% on a seasonally adjusted basis for the week ended Oct. 15 from the prior week, according to the Market Composite Index, part of the Weekly Mortgage Applications Survey released Wednesday by the Mortgage Bankers Association (MBA). On an unadjusted basis, the index dropped 10.5%. This week’s results do not include an adjustment for the Columbus Day holiday. The Refinance Index fell 11.2%. The seasonally adjusted Purchase Index declined 6.7%. The unadjusted Purchase Index went down 6.6% and was 29.4% lower than the same week one year ago. The four-week moving average for the seasonally adjusted Market Index is up 0.4%. The four-week moving average is down 1.1% for the seasonally adjusted Purchase Index, while this average is up 0.7% for the Refinance Index. For the MBA report, use the link … * The world’s largest banks may have to deal with capital and liquidity rules that could vary “country to country,” said Mario Draghi, chairman of the Financial Stability Board--a global group of financial regulators (Bloomberg.com Oct. 20). Regulators will continue working on options for regulating large lenders, and measures to deal with the systemically important banks are “going to be different from country to country,” Draghi said. National variation in regulating important banks was inevitable, he added, saying this was a natural consequence of banks’ varying “business models” and “history.” Regulators are looking for ways to make sure that banks that are too big to fail are prepared to withstand financial upheavals, such as those that came in the aftermath of the collapse of Lehman Brothers Holdings Inc. in 2008, Bloomberg said ...

News of the Competition (10/19/2010)

 Permanent link
MADISON, Wis. (10/20/10)
* It is feared that the US. foreclosure crisis--which has caused loan closings to be halted in some regions--could spread to an area in which lenders have been experiencing great profits: originations, reported American Banker (Oct. 19). Connecticut’s recently enacted 60-day moratorium on foreclosure sales has caused Total Mortgage Services LLC in Milford to stop real estate owned (REO)-related closings during the past two weeks, and more could be coming, John Walsh, CEO of the company told the Banker. “The unintended consequence of this is that some people won't get to buy houses,” he told the publication. “This is not a good situation.” Further delays in closing REO transactions could result if Connecticut Attorney General Richard Blumenthal obtains a binding 60-day moratorium on foreclosures in the state, the Banker said … * After conducting a review of its processes, Bank of America Corp. (BofA) said Monday it will resume some foreclosure cases starting next week (American Banker Oct. 19). BofA will start resubmitting affidavits in the 102,000 foreclosure cases pending in the 23 states where foreclosures are handled by courts. “We anticipate over the course of this pause, fewer than 30,000 foreclosure sales will have been delayed,” the bank said in statement. “As was the case for our judicial state review, our initial assessment findings show the basis for our foreclosure decisions is accurate.” BofA said it will continue to delay foreclosure sales in the other 27 states where foreclosures can be handled outside of court until its review in those states is finalized. BofA is the only major U.S. mortgage-servicer to suspend foreclosure sales in all 50 states after it discovered some foreclosure documents were improperly filed ... * Banks worldwide will have until 2015 to completely put into operation rules on the amount of cash and liquid securities they must have to stave off a funding shortage in a crisis (Bloomberg.com Oct. 19). The rules are a component of a revamping of bank capital requirements the Basel Committee is preparing to obviate another financial crisis. “The committee is confirming that it’s backing away from implementing a stringent liquidity rule in the foreseeable future,” said Carlos Agea, a banking analyst at Morgan Stanley in London. “If the initial proposals had been adopted, it would have been very difficult for many European banks to sustain the size of their balance sheets and therefore their current business models” …

Market News (10/19/2010)

 Permanent link
MADISON, Wis. (10/20/10)
* U.S. housing starts rose more than expected in September, indicating the real estate market was settling at low levels as it headed into the recent foreclosure crisis upheaval (Bloomberg.com Oct. 19). Housing starts increased to an annualized rate of 610,000 units--the most since April and a 0.3% gain from a revised 608,000 rate in August, the Commerce Department said Tuesday. However, building permits in September fell 5.6% month-over-month and 10.9% year-over-year, indicating the pace of construction remains slow and the housing recovery still is not on track (Moody’s Economy.com Oct. 19). “At least we’re making some progress here,” John Herrmann, senior fixed-income strategist at State Street Global Markets, told Bloomberg. “It’s a slow, steady-as-she-goes improvement in builder activity.” Although the housing industry may be steadying, the moratorium on foreclosure activity engendered by faulty documentation at some of the largest U.S. banks, high unemployment and record-low home sales indicate that any economic rebound will need time to take hold, Bloomberg said … * Consumers in the U.S. plan to increase holiday spending by 1% this year, focusing more on quality and service and shopping less at discount stores, according to the National Retail Federation (NRF), an industry trade group (Bloomberg.com Oct. 19). A survey conducted by BIGresearch for NRF revealed consumers intend to spend an average of $688.87 on holiday-related shopping--more than last year’s estimated $681.83. Of that total, $518.03 will be spent on gifts--a 2.1% gain for 2009, the survey indicated. “Consumers will still shop with the economy in the back of their minds, but we are starting to see shoppers take steps toward a new normal,” said Matthew Shay, NRF president. “As Americans open up their wallets for more discretionary gifts like jewelry or take advantage of sales to buy for themselves, retailers will begin to truly believe that the worst is behind them.” In a related matter, U.S. chain store sales dropped 0.7% in week ended Oct .16, reversing the prior week’s 0.8% gain and continuing the erratic pattern and downward trend now in place, said the International Council of Shopping Centers (ICSC) (Moody’s Economy.com Oct. 19). Year-over-year growth fell to 1.7%--the weakest growth since May. Much of the weakness was due to warm weather keeping consumers out of stores, ICSC said …

CUNA to IAPI Market will focus on earnings this week

 Permanent link
NEW YORK and MADISON, Wis. (10/19/10)--Credit unions can expect the market to focus on better-than-expected earnings results of corporations this week, Mike Schenk, Credit Union National Association (CUNA) senior economist, told the Associated Press Monday. Already reports were focused on Citigroup Inc.’s results, which drove financial stocks higher and ended “a recent slide in bank shares.” Wells Fargo & Co. and JPMorgan Chase & Co. also had higher earnings. The market is likely to turn its focus to corporate earnings throughout the week as large companies release their earnings results, said the article (Oct. 18). Broad economic reports have been the main factor driving stock trading in recent months. “Earnings will be at the forefront,” Schenk, vice president of economics and statistics at CUNA, told AP. “Underlying that will be any information we get out of the consumer sector.” Schenk said the health of the consumer will likely be more apparent in earnings outlooks from consumer goods companies and Thursday’s weekly unemployment report.

News of the Competition (10/18/2010)

 Permanent link
MADISON, Wis. (10/19/10)
* Three banks were taken over Friday by regulators and have entered into purchase-and-assumption agreements with other banks, according to the Federal Deposit Insurance Corp. (FDIC). The failures bring the 2010 total for bank failures to 132, compared with 140 for all of 2009. The banks include Security Savings Bank, F.S.B. Olathe, Kan., assumed by Simmons First National bank, Pine Bluff, Ark.; WestBridge Bank and Trust Company, Chesterfield, Mo., assumed by Midland States Banks, Effingham, Ill,; and Premier Bank, Jefferson City, Mo., assumed by Providence Bank, Columbia, Mo. The three closed institutions held roughly $1.6 billion in assets as of June 30. The FDIC estimated that the failures will cost the Deposit Insurance Fund about $508 million ... * Wells Fargo & Co. will take another step toward absorbing Wachovia after the close of business Friday--two years after Wells reached a deal for Wachovia’s crisis acquisition (American Banker Oct. 18). Branch transition teams in Georgia will activate a computer system Friday and transfer all cash at the state’s 280 Wachovia branches into Wells accounts. The stores then will reopen Saturday morning. Wells has just begun to integrate Wachovia’s core markets, the publication said. The process has been purposely slowed down in some cases to avoid conducting sloppy transitions with high-profile retail operations, the Banker said ...

Market News (10/18/2010)

 Permanent link
MADISON, Wis. (10/19/10)
* In a sign residential construction is stabilizing at low levels, U.S. homebuilder confidence increased in October to the highest level in four months (Bloomberg.com Oct. 18). The National Association of Home Builders (NAHB)/Wells Fargo confidence index rose to 16 from 13 in September--a 23.1% increase for the month, although still down 5.9% from October 2009, NAHB said Monday (Moody’s Economy.com Oct. 18). The measure was forecast to increase to 14, according to projections in a Bloomberg survey. “It is encouraging to see a little more optimism on the housing side, which might mean the sector is starting to stabilize,” said John Ryding, chief economist at RDQ Economics LLC. With the expiration of the home buyer’s tax credit in April and a plethora of cheaper homes on the market due to foreclosures, housing construction will be slow to recover, Bloomberg said ... * Industrial production decreased 0.2% in September--the first drop after six consecutive monthly gains--after having increased 0.2% in August. The drop indicates that the sector that led the economy out of the recession is slowing (Bloomberg.com Oct. 18). The indexes both for manufacturing and for manufacturing excluding motor vehicles and parts also moved down 0.2% in September. Production at mines moved up 0.7%, while the output of utilities fell 1.9%. For the third quarter as a whole, total industrial production rose at an annual rate of 4.8% after having advanced about 7% in both the first and second quarters of this year. The index for manufacturing decelerated sharply in the third quarter: After having jumped at an annual rate of 9.1% in the second quarter, factory output gained 3.6% in the third quarter. At 93.2% of its 2007 average, total industrial production in September was 5.4% above its year-earlier level. The capacity utilization rate for total industry edged down to 74.7%, a rate 4.2 percentage points above the rate from a year earlier but 5.9 percentage points below its average from 1972 to 2009. For the Fed statistical release, use the link … * The U.S.’s probability of being in recession six months from now inched lower in September, but housing and labor markets still are experiencing turmoil, causing concern, said Moody’s Economy.com (Oct. 18). The likelihood of recession dipped to 32% in September from 33% in August. Although this is the first decrease since April, it is significantly above the average of 24% in the second quarter, Moody’s said. Real gross domestic product is forecast to have risen at an annualized rate of about 2% last quarter--which would be enough to lower the unemployment rate. With economic growth slowing this quarter, the need for an additional stimulus arises, Moody’s said. With disinflation still filtering through the economy and the unemployment rate near 10%, the Fed is expected to resume large-scale purchases in November, Moody’s predicted …

CUNA to IForbesI Fed must stimulate consumers to spend

 Permanent link
MADISON, Wis. (10/18/10)--Forbes.com, in coverage of Federal Reserve Board Chairman Ben Bernanke’s signal Friday that the Fed will start a second round of quantitative easing (QE2) in November, turned to a Credit Union National Association (CUNA) economist to analyze what Bernanke’s speech means. Mike Schenk, senior economist at CUNA and vice president of CUNA’s economics and research, told Forbes that what is at stake for the Fed isn’t boosting the financial markets but the boosting consumer spending. “Yes, QE2 is factored in the equity markets, but it’s not factored into the bond markets,” Schenk said. What matters then is the “stimulatory effect from the consumer sector, specifically the housing sector,” Schenk added. Bernanke, who stressed the possibility of deflation, pointed at aggregate demand as one of the main causes of high unemployment. He said that the bulk of the increase in unemployment since the recession began is attributable to the sharp contraction in economic activity and the continuing shortfall of aggregate demand since then, rather than to structural factors, the article reported. “Schenk clarified the statement,” the article reported. “The bigger issue isn’t expanding credit, credit is readily available,” Schenk said. “If you go to an average American and ask him if he wants a car loan for 5%, he’ll say no. If you ask him if he wants it for 2% instead, he’ll say no. We are ready and able to spend, but demand for loans just isn’t there.” He noted that as asset prices have been hit, liabilities have remained. American households are deleveraging, which brings down liabilities and increases net worth. Schenk added he expects housing markets will strengthen in the short run as fewer foreclosed homes will mean less downward pressure on house prices. But, he warned, “in the long run, this can significantly drag out the time it takes to fix the [housing] market; these foreclosures will probably happen eventually.” Bernanke had said there appears to be a case “for further action,” which confirmed economists’ expectations that the central bank will have a second round of purchasing Treasury debt. With short-term interest rates already as low as they can go at 0% to 0.25%, Bernanke noted the means of providing additional monetary stimulus, if warranted, would be to expand the Fed’s holdings of longer-term securities.

News of the Competition (10/15/2010)

 Permanent link
MADISON, Wis. (10/18/10)
* The U.S. mortgage foreclosure crisis hit banks this week, driving down the prices of their stocks and impacting mortgage bonds because investors took a dim view of their potential costs (The Wall Street Journal Oct. 16). “The level of uncertainty in the economy is at extraordinarily high levels to begin with,” said Jack Scott, chief investment officer at BlackHawk Capital management. “The foreclosure problem adds another layer of acute uncertainty.” Analysts’ estimates of the potential toll of the mortgage imbroglio varied greatly, but the stock market showed the fear, with share prices of Bank of America dropping 5.2%, and shares of JPMorgan Chase falling nearly 2.5% last week, said The New York Times (Oct. 14). “The market never likes uncertainty, and it seems like every day we’re adding to the list of things we need to worry about with the financials,” said Jason Goldberg, an analyst with Barclays Capital. “The industry needs to work quickly to put this issue behind it” … * A settlement may be near in a securities fraud lawsuit filed by the Securities and Exchange Commission (SEC) against three former executives of Countrywide Financial Corp., according to sources involved with case (The New York Times Oct. 14). The issue was set to go on trial Tuesday in Los Angeles federal district court. However, settlement talks between the SEC and at least one of the defendants intensified last week. The SEC filed civil fraud and insider trading charges in June 2009 against Angelo Mozilo, former Countrywide CEO. The agency also sued two of Mozilo’s top aides: David Sambol, the firm’s former president, and Eric Sieracki, the former chief financial officer …

Market News (10/15/2010)

 Permanent link
Madison, Wis. (10/18/10)
* For a third consecutive month, U.S. retail sales rose in September with a stronger than anticipated showing that should allay concerns of a double-dip recession, but not signal a strong recovery (The Wall Street Journal Oct. 15). Retail sales increased 0.6% in September--the largest increase in five months--following a revised 0.7% gain (from 0.4%) in August, the Commerce Department said Friday. Economists had forecast that September sales would rise by 0.4%, according to a Dow Jones Newswires survey. “They’re reasonably solid consumption numbers,” said Jim O’Sullivan, global chief economist at MF Global Ltd. in New York. “Momentum is going to be up again in the fourth quarter” (Bloomberg.com Oct. 15). Auto dealers and electronic and appliance retailers headed the September gains, while apparel and department stores were the biggest drags (Moody’s Economy.com Oct. 15). Sales were 7.3% ahead of their year-ago level---the strongest year-over-year growth since April, Moody’s said … * In a sign that companies are holding down prices to stimulate demand, the cost of living in the U.S., as measured by the consumer price index, rose less than anticipated in September (Bloomberg.com Oct. 15). The index rose 0.1%--half the expected increase. Food and energy indices again made positive contributions, but the impetus for energy prices was much weaker (Moody’s Economy.com Oct. 15). For the second consecutive month, core prices failed to increase, pushing year-ago inflation down to 0.8%--the lowest in nearly four decades, Moody’s said. “The immediate concern is not for additional price pressure,” Robert Dye, senior economist at PNC Financial Services Group Inc., told Bloomberg. “In a weak-growth environment, retailers in particular will have difficulty raising prices” … * Total U.S. business inventories rose 0.6% in August--slightly above expectations (Moody’s Economy.com Oct. 15). Because the recession is over, companies still are increasing inventories now that demand is no longer nose-diving, Moody’s said. Retail inventories saw the most pronounced gain, increasing 1% from July, and are 6.1% above year-ago levels--the strongest year-ago growth since August 2006. However, increases also were seen in manufacturing and wholesale sectors ... * The University of Michigan consumer sentiment index dipped slightly in October to 67.9 from 68.2 in September, according to a preliminary report (Moody’s Economy.com Oct. 15). The whole decrease was driven by consumers’ lessened view of current conditions, Moody’s said. The expectations component rose by nearly four points. Expectations of short-term inflation rose--reversing much of September’s steep fall-off in short-term expectations. Consumers still are very uncertain about the economic climate and outlook, Moody’s said …

News of the Competition (10/14/2010)

 Permanent link
MADISON, Wis. (10/15/10)
* For the third consecutive week, U.S. mortgage rates dropped to the lowest level on record, extending a downward trend in borrowing costs as housing demand continues to be weak (Bloomberg.com Oct. 14). For the week ended Oct. 14, 30-year fixed rate loans fell to 4.19% from 4.27 the previous week, said Freddie Mac. It was the lowest rate since the company began tracking data in 1971. The 15-year rate fell to 3.62% from 3.72%. In a related matter, more than 100,000 U.S. homes were seized by lenders in September--a record number that likely will decrease in the next few months as large banks suspend home repossessions to review their foreclosure practices, Bloomberg said. Last month, lenders took over 102,134 properties, according to a RealtyTrac report issued Thursday … * A New York State Supreme Court judge dismissed a lawsuit against a Bank of America Corp. (BofA) settlement related to predatory-lending accusations (Dow Jones via American Banker Oct. 14). The suit, filed by investors, challenged an $8.4 billion settlement between BofA and state attorneys general. The bank agreed to modify roughly 400,000 mortgages serviced by Countrywide Financial Corp.--which BofA acquired. Judge Barbara Kapnick said in an Oct. 7 ruling that investors are not allowed to bring the suit because they did not satisfy terms established in pooling and servicing agreements for bond deals …

Market News (10/14/2010)

 Permanent link
MADISON, Wis. (10/15/10)
* Initial U.S. claims for unemployment benefits unexpectedly rose last week in a sign the U.S. job market is having a hard time recovering (Bloomberg.com Oct. 14). Claims increased 13,000 to 462,000 for the week ended Oct. 9, the Labor Department said Thursday. However, the total number of people receiving unemployment benefits fell to the lowest level since November 2008, while people receiving extended benefits also declined. It will take more time for employers to add sufficient workers to reduce an unemployment rate that’s close to a 26-year high, Bloomberg said. “You have modest, at best, job growth and it reflects a slow-moving jobs market,” said Jill Brown, an economist at Credit Suisse in New York. “We’re not in a recession, so we expect the labor market to continue to improve, just not at a rapid pace.” Meanwhile, continuing claims for unemployment benefits declined by 112,000 to roughly 4.4 million (Moody’s Economy.com Oct. 14) … * For a second consecutive month, U.S. wholesale (producer price) costs, excluding food and energy, increased in September at a pace that indicates limited demand is holding back inflation (Bloomberg.com Oct. 14). The producer price index rose 0.1% last month, the Labor Department said Thursday. Wholesale prices--when including volatile food and energy costs--went up 0.4%. Companies are hindered in their capacity to pass on gains in commodity costs to consumers because of the slowing of the economic recovery, Bloomberg said. “We’re kind of in a zone where neither inflation nor deflation is an overly significant concern,” said Russell Price, a senior economist at Ameriprise Financial Inc. “Core prices remain in check as demand remains subdued.” Excess capacity remains high enough to keep any upward price pressure from being passed on to finished-goods prices (Moody’s Economy.com Oct. 14) … * The U.S. trade deficit broadened more than anticipated in August because domestic demand for capital equipment and foreign autos overwhelmed gains in exports (Bloomberg.com Oct. 14). The trade gap grew 8.8% to $46.3 billion, the Commerce Department said Thursday. That amount exceeded the $44 billion forecast by economists in a Bloomberg News Survey. “When U.S. domestic demand is growing at a reasonable pace, that means import gains tend to more than offset export growth,” said Dean Maki, chief U.S. economist a Barclays’s Capital Inc. “The trade deficit will remain on a gradual widening trend.” The increase in purchases of foreign-made goods is a positive sign that U.S. companies are continuing to invest in new equipment and rebuilding inventories, Bloomberg said

News of the Competition (10/13/2010)

 Permanent link
MADISON, Wis. (10/14/10)
* Foreclosed loans total in the billions of dollars for the largest U.S. lenders (Dow Jones via American Banker Oct. 13). Banks with the biggest dollar amounts of foreclosed home loans include: Bank of America Corp. (BofA), JPMorgan Chase & Co. and Wells Fargo & Co., according to SNL Financial, an analyst firm. Several large banks--including BofA and JPMorgan Chase--have initiated wide-ranging stoppages of foreclosures because of concerns about documentation, Dow Jones said. The stoppages are being implemented when many of the largest lenders are having trouble with nonperforming assets weighing down their bottom lines, Dow Jones added. BofA has agreed to halt foreclosures in all 50 states, while JPMorgan Chase stopped foreclosures in 23 states and said it intends to expand the stoppage to a few more … * The Obama administration is implementing a $30 billion small-business lending fund that is the main focal point in its attempts to stimulate lending in communities nationwide (American Banker Oct. 13). However, the response to the initiative from banks has been at best lukewarm, the publication said. Some bankers can’t get beyond the bad memory of the Troubled Asset Relief Program (TARP) and said they do not want to do business with the government again because of TARP, the Banker said. “It's like all their programs,” Thomas O'Brien, president/CEO of State Bank of Long Island in Jericho, N.Y., told the publication. “They're just subject to change and revision, and someday they'll turn around and attack or revile their participants, and I don't think any of us want to go through that anymore” …

Market News (10/13/2010)

 Permanent link
MADISON, Wis. (10/14/10)
* Mortgage loan application volume increased 14.6% for the week ended Oct. 8 on a seasonally adjusted basis from one week earlier--the first gain in six weeks--according to the Market Composite Index, part of the Weekly Mortgage Applications Survey released Wednesday by the Mortgage Bankers Association (MBA). On an unadjusted basis, the index rose 14.8%, compared with the previous week. The Refinance Index went up 21%. The seasonally adjusted Purchase Index decreased 8.5%. The unadjusted Purchase Index dropped 8.3% and was 37.1% lower than the same week one year ago. “After five weeks of steadily declining rates to yet another new low, borrowers who had been on the fence jumped off, which factored into refinance activity surging more than 20%,” said Michael Fratantoni, MBA vice president of research and economics. “Refinance application volumes are now close to the highest level this year. Purchase activity remains generally weak, but applications for conventional purchase mortgages are now at their highest level since the beginning of May following the expiration of the tax credit.” For the MBA report, use the link … * Prices of U.S. imported goods declined more than anticipated in September, adding to a slowing of inflation that is worrying the Federal Reserve (Bloomberg.com Oct. 13). The month’s 0.3% decline in the import-price index was more than the 0.2% drop forecast by economists in a Bloomberg News survey, according to Labor Department figures released Wednesday. During the past 12 months, the 3.5% increase was the smallest year-over-year gain since November. “Inflation is still too low, and the Fed would like to see it accelerate,” said Ryan Sweet, a senior economist at Moody’s Analytics Inc. “There’s a tremendous amount of slack in the economy.” A 3.1% decrease in oil prices led the lowering of import prices (Moody’s Economy.com Oct. 13). Excluding oil, import prices increased 0.3% in September--a slight speeding up of August’s 0.2% gain and the biggest since May, Moody’s said … * In a record surge, China’s foreign exchange reserves ballooned to $2.648 trillion at the end of September, indicating how much the nation intervened in currency markets during a time of mounting worldwide tensions about exchange rates (The Wall Street Journal Oct. 13). China’s reserves are by far the largest in the world and surged $194.03 billion in the third quarter--the country’s largest-ever quarterly gain. China’s trade surplus and the recent drop in the value of the U.S. dollar drove China’s increase in reserves, economists said. “The huge increase last quarter will make it hard for China to argue that its policy interventions are not a major driver of global imbalances,” said Mark Williams of Capital Economics of London. International disagreements about exchange rates dominated last weekend’s meetings of the International Monetary Fund in Washington, D.C., and the rates are anticipated to be a hot issue at November’s summit of The Group of 20 major economies in Seoul, Korea, the Journal said …

Fed indicates more easing in meeting minutes

 Permanent link
WASHINGTON (10/13/10)--Federal Reserve policymakers may be considering either buying more Treasury bonds to drive down loan rates or suggesting they are open to higher prices later as steps to boost the economy, according to the minutes of the Federal Open Market Committee's Sept. 21 meeting. The minutes indicate that Fed policymakers held off a second round of quantitative easing--the term the Fed uses for purchasing government debt-- in September so they could gather more data and discuss how to best communicate a new economic stimulus. They also talked about setting a higher inflation target to prompt more consumer spending in the short term. Fed officials indicated they were prepared to provide additional relief "before long." Economists say that indicates a sign that the Fed is ready to introduce a second round of economic stimulus (USA TODAY and MarketWatch Oct. 12). The minutes did not specify how large the debt purchase would need to be or how the program would be structured. A Fed purchase of government debt would aim to drive down interest rates on mortgages, corporate debt and other loans in the hopes that lower rates would translate to more spending by American consumers.

News of the Competition (10/12/2010)

 Permanent link
MADISON, Wis. (10/13/10)
* In attempts to help the U.S. avoid the “very bad” economic prospects of a renewed recession, the Federal Reserve likely will boost its Treasury purchases at a policy meeting next week, according to Goldman Sachs Group Inc. (Bloomberg.com Oct. 11). A 95,000-job loss in September will cause the Fed to act, said Jan Hatzius, Goldman Sachs chief U.S. economist. Federal policymakers are expected to announce about $500 billion of Treasury purchases through the middle of 2011, with indications they may buy more, said Goldman--one of 18 primary dealers that trade directly with the Fed. The Fed may have to keep interest rates at current levels until 2015 or later, Hatzius said … * Citigroup Inc. said it has stopped using a Florida law firm for foreclosure work because the firm’s filings used to support home seizures are being investigated by the Florida attorney general (Bloomberg.com Oct. 12). “Pending the outcome of the [attorney general’s] investigation, Citi is not referring new matters to this firm,” the New York-based bank said. Citi had used the law offices of David J. Stern PA. The Florida Attorney General’s office is looking into whether Stern and two other firms filed “improper documentation” with the state’s court to hasten foreclosure proceedings, Florida Attorney General Bill McCollum said Aug. 10 …

Market News (10/12/2010)

 Permanent link
MADISON, Wis. (10/13/10)
* U.S. consumer confidence increased 2.4% in October from September, because consumers were emboldened by gains in the stock market and optimism that the upcoming elections will engender policy change that will bolster job creation (The New York Times Oct. 12). Investors’ Business Daily and TechnoMetrica Market Intelligence said their IBD/TIPP Economic Optimism Index went up to 46.4 in October from 45.3 in September. Readings above 50 point to optimism, with those below 50 indicating pessimism. “Our data clearly show that, while disappointed with federal policies, Americans are looking forward to change in 2011 that will result in material improvement in their finances and in the economy,” said Terry Jones, IBD associate editor. “That could spell big trouble for incumbents on election night” … * Small-business confidence in the U.S. barely moved in September, indicating the economic recovery did not gain momentum late in the third quarter, according to the National Federation of Independent Business (NFIB) Small Business Economic Trends Index. Small-business optimism was 89 for September, compared with 88.8 in August. Since the recession ended in June 2009, the index has risen only 1.2 points, NFIB said. A measurable improvement in hiring or investing is not imminent, the September NFIB survey indicated. While real gross domestic product grew slightly more than anticipated last quarter, it is not enough to reduce the unemployment rate and will not be sufficient to keep the Federal Reserve from providing more support, NFIB said (Moody's Economy.com Oct. 12)…

News of the Competition (10/11/2010)

 Permanent link
MADISON, Wis. (10/12/10)
* U.S. bankers say the fragile economic recovery will be undermined if federal bank regulators pursue a new round of capital and liquidity rules beyond those agreed upon internationally last month through the Basel Committee of Banking Supervision (Bloomberg.com Oct. 11). At weekend meetings in Washington, D.C., central bankers told executives to expect more financial rules--particularly for the biggest firms--in the wake of international regulators establishing minimum standards last month in Basel, Switzerland. “There are growing signs that global coordination is fizzling and unilateral actions are pending,” said Josef Ackerman, CEO of Deutsche Bank and chairman of the Institute of International Finance, which represents more than 400 financial institutions. “Global banks will have to comply with the higher rules in every jurisdiction, regardless of their home base. That will steal from credit to companies and hurt job creation,” Ackerman said … * American International Group Inc. (AIG) is asking a federal judge to deny class-action status for a lawsuit filed against it by other insurance companies for alleged under-reporting of premiums on workers-compensation policies (The Wall Street Journal Oct. 11). AIG lawyers accuse two insurers that are plaintiffs in the case of acting “at the behest of” Liberty Mutual Insurance Co.--a rival that under-reported its own workers-compensation premiums, AIG alleged in documents filed Friday in a U.S. District Court in Illinois. AIG has been enmeshed in a long-running dispute with its rivals about the reporting of workers-compensation policies, the Journal said. Insurers in many states are required to contribute funds to a pool to help fulfill payment obligations to injured workers--with contribution amounts predicated on the size of each insurer’s workers-compensation business. In court filings and other venues, rivals and others have accused AIG of under-reporting the size of its workers-compensation business for decades, the Journal said …

Market News (10/11/2010)

 Permanent link
MADISON, Wis. (10/12/10)
* A foreclosure freeze at the biggest U.S. mortgage lenders could cause potential buyers worried about legal issues to delay home purchases in an environment in which nearly 25% of all transactions involve distressed properties (Bloomberg.com Oct. 11). Buyers are having concerns about property titles--the right of home possession--because of mistakes that have been revealed in foreclosure proceedings, said Richard DeKaser, chief economist at Woodley Park Research. “The legal problems we’re seeing will hit sales as people worry about the legitimacy of the process,” DeKaser said. “The implications are that there’s been shoddy work.” A lack of confidence in the legality of repossessions will diminish foreclosures more than a reduction of available properties because the housing market is awash with repossessed homes, DeKaser added … * The worldwide economic recovery remains in place, although the recovery is weak, according to Moody’s Analytics Survey of Business Confidence (Moody’s Economy.com Oct. 11). Since spring, growth has slowed and now is barely consistent with the potential of the global economy, Moody’s said. Sentiment varies worldwide, with South America, which had higher confidence levels, recently weakening. A steep drop-off in responses to questions regarding present conditions and expectations heading into spring are the most discouraging component of the survey, Moody’s said. The most positive component of the survey is that hiring and investment intentions are still good. Also, pricing is soft, but prospects of deflation remain low, Moody’s added …

News of the Competition (10/08/2010)

 Permanent link
MADISON, Wis. (10/11/10)
* In attempts to recoup more than $1 billion in losses resulting from the credit crisis, the Federal Deposit Insurance Corp. (FDIC) has authorized more than 50 lawsuits against directors and officers of failed banks (Bloomberg.com Oct. 8). The agency reviews losses for every bank failure. The FDIC board authorized the lawsuits--which haven’t been made public--during its closing sessions. The FDIC has closed 294 lenders since the beginning of 2008, but has held court action in abeyance while conducting settlement talks with executives whose actions may have precipitated bank failings, said Richard Ostermann, FDIC acting general counsel. The agency has brought only one case against officers or directors connected with the recent collapses--a July suit seeking $300 million in damages from four IndyMac Bancorp Inc. executives … * An audit of the Treasury Department’s Public-Private Investment Program (PPIP) suggests U.S. officials may have hurt taxpayers by favoring the biggest money managers in selecting participants for a program geared to buying toxic debt from banks (Bloomberg News via American Banker Oct. 8). The PPIP is an effort by the Treasury to spark purchases of devalued mortgage-backed securities that brought down banks’ balance sheets and helped cause the 2008 financial crisis. Treasury told prospective applicants in the program that they must prove they could raise private capital totaling $500 million. However, Treasury then waived the threshold for two firms that failed to reach it, according to a report released Thursday by the Troubled Asset Relief Program (TARP). “The taxpayer may have lost the benefit of the participation of qualified, albeit smaller, fund managers because they were avoidably deterred from applying or unnecessarily rejected,” wrote Neil M. Barofsky, TARP special inspector general …

Market News (10/08/2010)

 Permanent link
MADISON, Wis. (10/11/10)
* Job layoffs by local governments and of temporary Census workers caused an unexpectedly steep decline of U.S. nonfarm jobs in September (The New York Times Oct. 8). Employers cut 95,000 workers following a revised 57,000 decrease in August, the Labor Department said Friday. Most economists had forecast a decline of only a few thousand jobs, the Times said. Private payrolls, which exclude government agencies, rose 64,000--less than forecast--indicating the economic bounce-back from the recession has been slow and could require an easing of monetary policy (Bloomberg.com Oct. 8). “The private-sector growth is somewhat heartening but in total you have to expect that state and local and government jobs are going to be a drag for a number of months and perhaps a number of quarters,” said Bill Gross, co-chief investment officer at Pacific Investment Management Co. He added that the report is a “strong signal” for further Fed action ... * The Economic Cycle Research Institute (ECRI) weekly leading index--which measures economic growth--rose to 123.8 for the week ended Oct. 1 from an unrevised 122.5 the prior week (Moody’s Economy.com Oct. 8). The smooth, annualized rate went up to -7% from an unrevised -7.8%. Despite positive recent indications from the ECRI index, it is too soon to project economic expansion in the first half of 2011, ECRI said. Also, for the second consecutive month, the U.S. ECRI future inflation gauge increased in September to 98 from 97.3 the prior month. However, inflationary forces remain contained because of the struggling economic recovery, ECRI said …

Consumer credit for August down CUs saw increase

 Permanent link
WASHINGTON (10/8/10)--In August, overall consumer credit in the U.S. decreased by $3.3 billion or 1.75% from the previous month, reported the Federal Reserve Thursday, indicating consumers are still leery of borrowing until the economy recovers more. Consumers borrowed fewer dollars from large banks and finance companies. But for credit unions, borrowing rose by $0.6 billion for August. Overall, consumers borrowed $2.414 trillion in August. Revolving credit dropped 7.25% from July to $822.2 billion, while nonrevolving credit increased at an annual rate of 1.25%.--to $1.592 trillion. Credit unions loaned $228.1 billion in August--up from $227.5 billion in July, but down from third quarter 2009, when members borrowed $240.3 billion from their credit unions. For revolving credit, consumers borrowed more in August from credit unions--$35.5 billion compared with July's $35.3 billion. Borrowing also increased from third quarter's $34.2 billion in revolving loans. At commercial banks, borrowing dropped to $620.4 billion from $621.2 billion. Finance companies saw an increase to $67.3 billion from the previous month's $66.6 billion. Nonrevolving credit at credit unions also grew -to $192.6 billion from July's $192.2 billion. However, these loans were less that the amount they loaned out during third quarter 2009 at $206.1 billion. For more information, use the link.

News of the Competition (10/07/2010)

 Permanent link
MADISON, Wis. (10/8/10)
* Alleging GMAC Mortgage improperly foreclosed on homes, Ohio Attorney General Richard Cordray filed a civil lawsuit in state court Wednesday against GMAC and its parent company Ally Financial (USA Today Oct. 7). The suit alleges the companies used fraudulent affidavits and documents to mislead courts involved in hundreds of Ohio home foreclosures, the newspaper said. Cordray said Ally Financial’s actions raise questions, not just in Ohio, but also in 22 other states. Cordray’s lawsuit also seeks a court order preventing GMAC from proceeding with foreclosures in Ohio, the paper said … * For the eighth consecutive quarter, U.S. bank loans appear to have declined, according to Federal Reserve preliminary data (American Banker Oct. 7). Although indications that the decline might abate are low, a near break-even reading on commercial and industrial loans provided a ray of hope, the Banker said. Loans at U.S.-chartered commercial banks dropped $136 billion since June 30 to a seasonally adjusted $6.2 trillion on Sept. 22, according to Fed estimates based on a sample of institutions. If that level was maintained for the final week of September, balances would have fallen at an annual rate of 8.3% during the second quarter--or nearly twice as quick as the 4.3% contraction rate in the prior quarter, the publication said … * Wells Fargo & Co. will expand principal reductions and loan modifications for underwater homeowners--those who owe more than their homes are worth--the bank and eight state attorneys general said in an agreement announced Wednesday (American Banker Oct. 7). The deal will resolve without court intervention the eight states’ inquiries into Wells Fargo’s marketing of loans, the Banker said. Wells acquired the loans in question--a $120 billion pool of option adjustable-rate mortgages--through its 2008 acquisition of Wachovia Corp. Under the agreement, Wells will pay $24 million to states for borrower assistance and outreach. Wells also has earmarked more than $700 million in principal and interest rate reductions to pick-a-pay mortgages--[also described as an option adjustable-rate mortgage (ARM) or cash flow ARM]--the publication said ...

Market News (10/07/2010)

 Permanent link
MADISON, Wis. (10/8/10)
* In a sign the labor market may be improving, initial claims for U.S. unemployment benefits decreased last week to the lowest level in three months (Bloomberg.com Oct. 7). Claims fell 11,000 to 445,000 for the week ended Oct. 2--the lowest level since July 10, the Labor Department said Thursday. Fewer cuts indicate companies are becoming more confident that sales will be solid in coming months--a requisite step toward increasing hiring, which will bolster the economic recovery, Bloomberg said. “The trend is in the right direction, we’re making progress, but the levels aren’t quite there yet to crack open the champagne,” said Sal Guatieri, a senior economist at BMO Capital Markets. “Companies are hiring but at a very slow rate. The numbers raise hopes of a pickup in job growth in October but [at] a growth rate that remains subpar.” Meanwhile, continuing claims for unemployment benefits declined 48,000 to roughly 4.46 million for the week ended Sept. 25--which does not include millions on extended and emergency benefits (Moody’s Economy.com Oct. 7). In a related matter, the U.S. Monster Employment Index--which measures help-wanted ads placed online by employers--rose two points between August and September to 138, according to Monster Worldwide Inc. Also, the Job Openings and Labor Turnover Survey (JOLTS) for August indicated job separations fell to 3.2% from 3.4% the prior month, but the hiring rate dipped to 3.2% from 3.3% (Moody’s Economy.com Oct. 7) … * For a 13th consecutive month, U.S. retail sales grew because consumers confronting a weak economy increased purchases for discounted merchandise at teen apparel chain stores during the back-to-school shopping season (Bloomberg.com Oct. 7). For Abercrombie and Fitch Co. stores open at least a year, sales increased 13%--ahead of the 3.6% average estimates compiled by Retail Metrics Inc. Also posting sales gains that beat forecasts were Limited Brands Inc. and American Eagle Outfitters Inc., Bloomberg said. Overall, U.S. chain store sales rose 2.6% in September--the lowest gain since May, in spite of several individual retailers besting seemingly low expectations, according to the International Council of Shopping Centers (ICSC) (Moody’s Economy.com Oct. 7). Consumers still are spending but not aggressively, ICSC said ...

Market News (10/06/2010)

 Permanent link
MADISON, Wis. (10/7/10)
* U.S. companies unexpectedly cut jobs in September by 39,000--the largest decline since January, according to ADP Employer Services (Bloomberg.com Oct. 6). Economists had forecast a 20,000 gain in jobs, according to a Bloomberg News survey (Oct. 6). “It’s more evidence of a lousy job market,” said Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. “Here we are, 18 months into a recovery, and we’re not doing much on the job front. Until we digest the excesses built up over decades, you’re not going to see sustained gains in jobs or the overall economy.” Due out this week, the Labor Department’s report on September job markets is anticipated to show the private sector added 75,000 jobs last month and that the unemployment rate increased to 9.7% (The New York Times Oct. 6). Job growth is expected to be flat. In a related matter, the Challenger Report’s compilation of corporate layoff data indicates improvement in the labor market, according to the firm Challenger, Gray and Christmas (Moody’s Economy.com Oct. 6). However, September’s announced cutbacks rose 6.9% to 37,151, the report said. With the economy struggling, prospects are diminishing for unemployed workers who were counting on seasonal retail jobs to get them through the holidays, the Times said …. * Mortgage loan application volume decreased 0.2% for the week ended Oct. 1 from the previous week, according to the Market Composite Index, part of the Weekly Mortgage Applications Survey released Wednesday by the Mortgage Bankers Association (MBA). On an unadjusted basis, the index dropped 0.3%. The Refinance Index fell 2.5%. The seasonally adjusted Purchase Index went up 9.3% and is the highest observed in the survey since the week ending May 7. The unadjusted Purchase Index rose 9.1% and was 34.7% lower than the same week one year ago. “The increase in purchase activity was led by a 17.2% increase in Federal Housing Administration (FHA) applications, while conventional purchase applications also increased by 3.6%,” said Jay Brinkmann, MBA chief economist. “This is the second straight weekly increase in purchase applications and the highest Purchase Index level since the expiration of the homebuyer tax credit program. One possible driver of last week’s big increase in FHA applications was a desire by borrowers to get applications in before new FHA requirements took effect Oct. 4, which included somewhat higher credit score and down payment requirements.” For the MBA report, use the link … * Worldwide economic growth will decline in 2011 more steeply than anticipated because advanced economies are cutting their budgets amid the ongoing sovereign debt crisis, the International Monetary Fund (IMF) said Wednesday (The Wall Street Journal Oct. 6). China and India--two emerging markets--are forecast to remain growth champions, while European public debt maladies will continue to hurt recovery in industrialized nations, the IMF said. Prospects for U.S. growth received the IMF’s largest downgrade, dropping to 2.3% from a previous estimate of 2.9%. “The most likely prospect for the U.S. economy is for a continued but slow recovery, with growth far weaker than in previous recoveries,” said the IMF in the report. “Much of the weakness of this recovery is due to sluggish personal consumption” …

News of the Competition (10/06/2010)

 Permanent link
MADISON, Wis. (10/7/10)
* The Federal Deposit Insurance Corp. (FDIC) announced a settlement with Monterey (Calif.) County Bank (MCB) for deceptive practices regarding solicitations for its balance transfer credit card program (Balance Transfer Card) and debit card program. The FDIC had said the practices violate Section 5 of the Federal Trade Commission Act and Section 807 of the Fair Debt Collections Practices Act. Under the settlement, MCB agreed to a consent order and to pay restitution of roughly $2 million in credits or cash refunds to about 15,500 Balance Transfer Card customers. It also agreed to pay $250,000 in cash restitution in connection with the debit card program. MCB will pay a civil money penalty of $500,000. MCB will contact consumers entitled to restitution. Affected consumers do not need to take any action, FDIC said. MCB also is going to donate $300,000 toward consumer financial education and counseling ... * Wells Fargo & Co. said its foreclosure filings are in order and it will not follow its competitors in delaying home seizures (Bloomberg.com Oct. 6). The move comes after an employee testified in a May 20 deposition that he signed 50 to 125 documents per day for foreclosure proceedings without personally reviewing records. The records included statements describing debts and which borrowers used to justify foreclosures, Bloomberg said. His testimony was in a civil claim in Washington state court against the bank. In June, a judge dismissed the case. The bank said Tuesday it doesn’t intend to stop repossessions because its “procedures and daily auditing demonstrate that our foreclosure affidavits are accurate” … * Citigroup Inc. sold $1.6 billion of retail credit card assets to GE Capital, an arm of General Electric Co., the companies announced Wednesday (American Banker Oct. 6). Terms of the deal were not disclosed. “Going forward, we are better positioned for future growth as we continue to partner with premier brand retailers across a broad spectrum of industries and retailing specialties,” Bill Johnson, CEO of Citi’s Retail Partner Cards business, said in a statement ...

News of the Competition (10/05/2010)

 Permanent link
MADISON, Wis. (10/6/10)
* U.S. community bankers are unhappy about a Federal Deposit Insurance Corp. plan requiring banks to provide customers with an opportunity to opt out of overdraft programs for checks and other transactions (American Banker Oct. 5). The bankers claim the plan is restrictive, creates burdens and would place community banks at a competitive disadvantage with the biggest financial institutions, the publication said. The agency’s August plan goes beyond the new rules implemented in July by additionally restricting automated clearing house transactions and checks, and urging banks to assist customers with more than six overdrafts per year to find more economical alternatives, the Banker said. Dozens of bankers voiced objections to the plan, saying it went too far, the publication said. (SEE RELATED STORY: “CUNA seeks tweaks on overdraft disclosure rule” in the Washington section of News Now) …

Market News (10/05/2010)

 Permanent link
MADISON, Wis. (10/6/10)
* The Federal Reserve likely will increase its Treasury purchases to jumpstart a nearly stalled U.S. economy, portfolio investor Paul McCulley at Pacific Management Co. (Pimco), wrote on the company’s website (Bloomberg.com Oct. 5). U.S. gross domestic product (GDP) will range from 1.5% to 2% during the next year, estimated Pimco, which operates the world’s largest mutual fund. GDP growth was 1.7% in the second quarter, the Commerce Department said. Inflation will dip to a range of 0.75% to 1.25%, McCulley said in his report. “A new round of quantitative easing is likely,” McCulley added. “The bottom line for the U.S is a growth trajectory so slow you’d nearly call it stalled” … * In a sign the economic recovery is gaining momentum, U.S. service industries grew at a quicker pace than projected in September (Bloomberg.com Oct. 5). The Institute for Supply Management’s (ISM) index of non-manufacturing businesses--which accounts for 90% of the U.S. economy--increased to 53.2 from 51.5 in August. Economists had forecast the index would increase to 52, according to a Bloomberg News survey. The survey includes utilities, retailing, health care, housing, finance and transportation. The measure--in which readings above 50 indicate growth--averaged 55.3 during the six-year economic expansion that ended in December 2007. “Consumer spending seems to be plodding forward,” said Nigel Gault, chief U.S. economist at IHS Global Insight in Lexington, Mass. Faster services growth would help bolster the economy at a time when factory growth--which helped lead the recovery--is slowing down, Bloomberg said. However, with unemployment predicted to average above 9% through 2011, retailers and home builders may have a tough road to increasing sales, Bloomberg said … * U.S. chain store sales declined 0.8% last week, leaving them 2.4% ahead of last year--the weakest mark in four weeks--according to the International Council of Shopping Centers (ICSC). Above-average temperatures acted as a drag on customer traffic and sales. The decrease was bigger than anticipated, ICSC said. Sales in recent weeks have been volatile--which is common, ICSC said. Despite the recent declines, ICSC said it expects sales to be up between 2.5% and 3% for September from one year ago (Moody’s Economy.com Oct. 5) …

Market News (10/04/2010)

 Permanent link
MADISON, Wis. (10/5/10)
* For a second consecutive month, contracts for pending sales of U.S. existing homes rose, indicating the housing market is starting to stabilize (Bloomberg.com Oct. 4). The National Association of Realtors (NAR) index of pending home resales increased 4.3% in August. Compared with August 2009, pending sales were down 18.4%. “[Housing is] bouncing along the bottom, unable to gain any traction, but with little reason to believe it’s going to go any lower,” said Eric Green, chief market economist at TD Securities Inc. “All of the froth has been eliminated from the bubble and all we need now is for confidence to turn higher and job growth to accelerate.” The August index is at 82.3, which is only slightly higher than its record low mark during early 2009 (Moody’s Economy.com Oct. 4). Three of the four U.S. census regions saw a sales increase in August, while the Northeast posted a decline … * New orders to U.S. factories for manufactured goods dropped in August, reflecting a large decline in demand for commercial aircraft (The New York Times Oct. 4). Factory orders fell 0.5%--the third drop in the past four months, the Commerce Department said Monday. Orders had increased 0.4% in July. Nondurable inventories in August decreased 0.3%. Core capital-goods revisions were small and indicate that the manufacturing expansion is intact, although it is slowing (Moody’s Economy.com Oct. 4). “The trend in business investment is still quite solid,” said James O’Sullivan, global chief economist at MF Global Ltd. in New York. “Business investment is still one of the stronger parts of the economy. There is certainly no collapse here, though we are seeing a fading in the contribution from inventories, and certainly the trend in manufacturing output has slowed,” he added (Bloomberg.com Oct. 4) … * Worldwide business confidence still is consonant with a global economy that is barely growing at its potential, according to the most recent Moody’s Analytics Survey of Business Confidence (Moody’s Economy.com Oct. 4). Global business confidence was at 16.8% for the week ended Oct. 1, compared with 18% the prior week. The four-week moving average registered 19.8%, compared with 21.3% the prior week. Sentiment is fairly similar worldwide. Confidence, which had been more robust in South America, recently has weakened, Moody’s said. European confidence also has dipped in recent weeks. However, responses to broad questions regarding present conditions and expectations about the outlook heading into spring saw a steep decline, Moody’s said. The most positive component of the survey is that hiring and investment intentions are solid, Moody’s said. …

News of the Competition (10/04/2010)

 Permanent link
MADISON, Wis. (10/5/10)
* Two banks were taken over Friday by regulators and have entered into purchase-and-assumption agreements with other banks, according to the Federal Deposit Insurance Corp. (FDIC). The failures bring the 2010 total for bank failures to 129, compared with 140 failures for all of 2009. Friday’s failed banks include Shoreline Bank, Shoreline, Wash., assumed by GBC International Bank, Los Angeles, and Wakulla Bank, Crawfordville, Fla., assumed by Centennial Bank, Conway, Ark. The two closed institutions held roughly $528 million in assets as of June 30. The FDIC estimated that the failures will cost the Deposit Insurance Fund about $155 million ...

News of the Competition (10/01/2010)

 Permanent link
MADISON, Wis. (10/4/10)
* As investors seek higher yields, the dollar dropped Friday to a six-month low versus the euro (Bloomberg.com Oct. 1). The dollar also declined against the Japanese yen, indicating that worldwide economic recovery will be maintained because it will be propped up by investors pursuing higher yields, Bloomberg said. “The dollar is being sold on an across-the-board basis as investors search for yield,” said Michael Woolfolk, senior currency strategist at Bank of New York Mellon Corp. “With the Fed upping the ante by saying they’re keeping the door open for quantitative easing, that has not only introduced an element of additional risk and uncertainty, but likely pushed off the day of reckoning for rising interest rates” … * The pace of U.S. home foreclosures is slowing because some lenders and their lawyers are being accused of taking short cuts as they attempt to rapidly repossess homes (The New York Times Sept. 30). Evictions are expected to steeply decline, housing analysts predict, because state and federal law enforcement officials are examining questionable foreclosure practices that came to light with two of the biggest U.S. home lenders--JPMorgan Chase and GMAC Mortgage--in the past two weeks, the Times said. “Maybe this is shock therapy,” said economist Karl E. Case. “Maybe this will actually get the lenders to the table and encourage them to work out deals that are to the benefit of everybody” …

Market News (10/01/2010)

 Permanent link
MADISON, Wis. (10/4/10)
* U.S. consumer spending in August increased more than anticipated because incomes rose, giving credence to the Federal Reserve’s forecast that the U.S. economy--the world’s biggest--will continue to grow at a “modest” pace (Bloomberg.com Oct. 1). Purchases rose 0.4%--a second consecutive monthly gain, the Commerce Department said. Purchases surpassed the 0.3% increase predicted by economists in a Bloomberg News survey. Also, personal incomes rose 0.5%--the largest gain this year, boosted by the reinstatement of extended and emergency unemployment benefits--as wage gains diminished. “Consumers are doing OK, they are not retrenching, but neither are they splurging,” said Sal Guatieri, a senior economist at BMO Capital Markets Inc. “This sets us up for a better holiday-shopping season than the past few years. The recovery is on track, but remains lackluster” … * Because public construction rebounded, U.S. construction spending unexpectedly increased in August, but private-project investment dropped to its lowest level in more than 12 years (The New York Times Oct. 1). Construction spending increased 0.4% to an annualized rate of $811.8 billion, the Commerce Department said Friday. Economists had forecast a 0.4% drop in August construction spending, according to a Reuters poll. Spending on public projects rose 2.5% after falling 1.1% in July. State and local government spending on construction projects went up 2.7% in August after dipping 0.2% the prior month. Private construction investment in August declined 0.9% to $498.2 billion--the lowest since January 1998 … * Although U.S. consumer sentiment improved more than anticipated in September, it was still mired at its weakest level in more than a year because of economic concerns of upper-income families, according to a survey released Friday (The New York Times Oct. 1). The Thomson Reuters/University of Michigan Consumer Sentiment Index for September was 68.2--up from a preliminary figure of 66.6 but a decline from 68.9 in August. Analysts had predicted a month-end figure of 67. Households with incomes under $75,000 accounted for all of the late September gain, while upper-income households reported significantly less favorable economic prospects, said survey director Richard Curtin. The outlook difference between the two income groups was partly attributed to concerns about drawn-out delays to an extension of federal tax cuts to families with incomes above $250,000, he said … * U.S. manufacturing in September grew at the slowest pace in 10 months, supporting the forecast of “modest” growth in the next few months, according to the Institute for Supply Management’s (ISM) factory index (Bloomberg.com Oct. 1). The index fell to 54.4 from 56.3 in August, ISM said Friday. Readings above 50 indicate growth. “The manufacturing sector is growing at a more subdued but still-positive rate,” said Paul Dales, a U.S. economist for Capital Economics Ltd. in Toronto. “It’s still positive growth but not as splendid as a few months ago” …