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News of the Competition (10/31/2011)

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MADISON, Wis. (11/1/11)

  • One bank was closed Friday, bringing total bank failures this year to 85, the Federal Deposit Insurance Corp. (FDIC) announced. That compares with 157 for the entire year in 2010. The FDIC estimated the latest failure will cost the Deposit Insurance Fund $6.5 million. The failed bank is All American Bank, Des Plaines, Ill., assumed by International Bank, Chicago. The closed bank held roughly $38 million in assets …
  • MF Global Holdings Ltd. Monday filed for Chapter 11 bankruptcy protection for its U.S. parent company in Federal Bankruptcy Court in Manhattan (The New York Times and The Wall Street Journal Oct. 31). The firm's parent company listed assets of $100 million to $500 million, with liabilities of more than $1 billion, according to the court filing. The largest creditor is JPMorgan Chase--acting as a trustee on behalf of bondholders--with a claim of $1.2 billion. Interactive Brokers Group was expected to commit to buy MF Global's assets as part of the bankruptcy deal, the Times said. MF Global was run since 2010 by CEO John S. Corzine, former U.S. senator and governor of New Jersey …

Market News (10/31/2011)

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MADISON, Wis. (11/1/11)

  • Despite an uptick in employment, the U.S. economy grew at a slower pace in October, according to a survey of Chicago-area purchasing managers--the Institute for Supply Management (ISM) Chicago index (The Wall Street Journal and Moody's Economy.com Oct. 31). The Chicago business gauge dropped to 58.4 in October--the lowest reading since May--from 60.4 in September, ISM-Chicago said Monday. October was the 25th consecutive month that the ISM business gauge indicated economic growth. Readings above 50 indicate growth, and readings below 50 signal contraction …
  • Although consumers remain uncertain about the U.S. economy, they are continuing to spend (Bloomberg.com Oct. 30). Even though measures of household sentiment are at levels usually seen during a recession, a third-quarter consumer spending rise spurred growth to the highest level of 2011, the Commerce Department said last week. Consumers are still spooked about a stubborn 9.1% unemployment rate and escalating deficits that the government has been unable to help reduce, James Paulsen, chief investment strategist at Wells Capital Management in Minneapolis, told Bloomberg. However, they continue to spend, he added ...

Market News (10/28/2011)

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MADISON, Wis.  (10/31/11)

  • U.S. consumer spending increased in September despite consumers seeing their incomes stagnate for three consecutive months. The spending increase helped allay fears about another recession for the world's biggest economy (The New York Times and Bloomberg.com Oct. 28). Spending rose 0.6% in September, following a 0.2% gain in August, the Commerce Department said Friday. Many consumers may be spending instead of saving because the interest they are earnings on their savings is nearly insignificant, the Times said. Given the savings rate and consumer sentiment, the economy should see continued moderate spending, Sean Incremona, a senior economist at 4Cast Inc. in New York, told Bloomberg.  However, the depressed savings rate is an indication of the vulnerability of the economy, he added …
  • Gross domestic product (GDP), the value of all goods and services produced in the U.S., rose above its pre-recession level in the third quarter after 15 quarters at depressed levels--taking three times longer than the average recovery time for 10  previous recessions since World War II in the  1940s (Bloomberg.com Oct. 28). GDP grew at a 2.5% annual rate from July through September--the fastest paces in a year and 1.3% more than in the second quarter, the Commerce Department said Friday. GDP increased to $13.35 trillion in the quarter--besting the $13.33 trillion peak hit in the fourth quarter of 2007 … 

News of the Competition (10/28/2011)

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MADISON, Wis. (10/31/11)

  • For the third consecutive year, the number of bank branches per million U.S. households declined, according to data compiled by the Census Bureau and Federal Deposit Insurance Corp. (American Banker Oct. 27). The decline is partially erasing an industry-wide expansion of branches that took place for most of the past decade. The contraction has been especially strong in western states because of bank failures and consolidation thinning the number of financial institutions in the region, the Banker said. From mid-2008 to mid-2011, the number of banks and thrifts in the West fell by 13% …
  • Use of mobile financial services at U.S. banks has risen 45% from the fourth quarter of 2010 to the second quarter of 2011, according to ComScore's most recent mobile banking adoption research (American Banking Oct. 27). In that same time frame, use of mobile devices to obtain credit card information grew 43% for mobile apps and 17% for those using a mobile browser. Much of the high rate of growth is due to the popularity of smart phones, Marc Decastro, research director, consumer banking and community banking at IDC, told the Banker

News of the Competition (10/27/2011)

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MADISON, Wis. (10/27/11)

  • Seventy-one percent of banks surveyed in a Novarica study released Thursday said they lack the resources to keep them from counteracting fraud (American Banker Oct. 27). Also, 53% of those surveyed said lack of consumer awareness is an impediment to fraud detection. Just 6% of bankers surveyed think their tools for detection and prevention of fraud can detect cross-channel fraud patterns. Overall, 76% of those surveyed conducted knowledge-based authentication of account holders, and provide basic identification of account holders' devices, such as smart phones and computers, the survey indicated  …
  • Citizens Financial Group is offering  a new program called accessCARD Command that places limits  on corporate spending (American Banker Oct. 27). The $132 billion Providence, R.I.-based company's program deploys MasterCard's inControl platform to offer small businesses--those with annual revenues less than $25 million--the ability to install spending parameters by automating processes that usually are limited and sometimes thwarted by manual  processes, the Banker said ...

Market News (10/27/2011)

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MADISON, Wis. (10/28/11)

  • With businesses and consumers increasing their spending, U.S. economic growth picked up modestly in the third quarter, providing encouragement for an economic recovery and staving off fears of a slide back into recession (The Wall Street Journal and The New York Times Oct. 27). Gross domestic product--the widest gauge of all goods and services produced in an economy--grew at annual rate of 2.5% from July through September--nearly double the 1.3% second-quarter growth rate. Consumers spent more on services and durable goods such as cars and refrigerators in the third quarter. Also, business investment jumped, the Journal said. Although 4% growth would be desirable, 2.5% or 3% is heading in the right direction, Ian Sheperdson, the chief U.S. economist for High Frequency Economics, told the Times ...
  • Pending home sales declined in September, although activity remains above a year ago levels, according to the National Association of Realtors (NAR). The Pending Home Sales Index, a forward-looking indicator based on contract signings, fell 4.6% to 84.5 in September from 88.6 in August, but is 6.4 % higher than September 2010 when it stood at 79.4. The data reflects contracts but not closings. Lawrence Yun, NAR chief economist, said the housing market is excessively constrained. "A combination of weak consumer confidence and continuing tight lending criteria held back home buyers, even though the private sector added nearly two million net new jobs in the past 12 months," he said. For the NAR report, use the link …
  • Initial claims for U.S. unemployment benefits declined last week, while those receiving continuing benefits fell to a three-year low--indicating limited improvement in the labor market (Bloomberg.com Oct. 27). Initial claims declined 2,000--to 402,000--for the week ended Oct. 22, the Labor Department said Thursday. A quicker pace of hiring is necessary to reduce unemployment, bolster consumer confidence and spark the economic recovery, Bloomberg said. Meanwhile, continuing claims for unemployment benefits for the week ended Oct. 15 dropped to 3.645 million from 3.741 million the prior week (Moody's Economy.com Oct. 27) …

News of the Competitionbr (10/26/2011)

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MADISON, Wis. (10/27/11)

  • Rajat K. Gupta, a former Goldman Sachs high-ranking director, was charged Wednesday with insider trading  and surrendered to the Federal Bureau of Investigation for leaking confidential information while director at Goldman and Proctor & Gamble Co. (The New York Times Deal Book and The Wall Street Journal Oct. 26). Gupta is accused of telling hedge fund manager Raj Rajartnam of Goldman Sachs' corporate secrets. Rajartnam, the Galleon Group cofounder, was sentenced to 11 years in prison earlier this month for making tens of millions of dollars profit through insider trading.  A Manhattan federal grand jury charged Gupta with five counts of securities fraud and one count of conspiracy to commit securities fraud …                                 
  • All the financial troubles that bankers have experienced during the past few rough-and- tumble years may have a silver lining: a tax benefit derived from all the losses (American Banker Oct. 25). Using an accounting ploy called a valuation allowance, banks can move losses sustained in the first part of the economic downturn off their books to create benefits. When the losses are returned to their books, they essentially become tax credits and can also help bolster earnings, the Banker said. Deferred-tax benefits also can boost tangible common equity, the Banker added  ... 

Market Newsbr

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MADISON, Wis. (10/27/11)

  • U.S. mortgage loan application volume increased 4.9% for the week ended Oct. 21 from one week earlier, according to the Market Composite Index, part of the Weekly Mortgage Applications Survey, issued Wednesday by the Mortgage Bankers Association (MBA). On an unadjusted basis, the index rose 4.8%. The Refinance Index climbed 4.4%. The seasonally adjusted Purchase Index went up 6.4%. The unadjusted Purchase Index jumped 6.1% and was 2.7% lower than the same week one year ago. The four-week moving average for the seasonally adjusted Market Index is down 3.61%. The four-week moving average is down 0.7% for the seasonally adjusted Purchase Index, while this average is down 4.41% for the Refinance Index. The refinance share of mortgage activity decreased to 77.3% of total applications from 77.6% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 5.9% from 5.8% of total applications from the previous week. For the MBA report, use the link ...
  • Sales of new U.S. homes rose more than anticipated in September, increasing 5.7% from August to an annualized rate of 313,000--the first new-home sales gain since April, according to data from the Census Bureau (Moody's Economy.com Oct. 26).  However, last month's sales are 0.9% below the September 2010 pace. Months' supply of homes on the market dropped to 6.2 from 6.6 in August.  September inventories were flat, and did not decline--for the first time since early 2007. Year-over-year, the median new-home price dropped 10% …
  • Notes issued by National Credit Union Administration (NCUA) Guaranteed Notes Trust 2011-C1 (the issuer) received affirmation by Fitch Ratings. They include: 209,564,390 senior I-A notes at 'AAAsf', Outlook Stable;--$546,372,007 senior II-A notes at 'AAAsf', Outlook Stable. The current collateral pool contains 148 assets with a notional value of roughly $2.8 billion. The notional balance has been reduced by 9.1% since closing, providing a corresponding principal reduction of the senior notes after the payment of fees and expenses. Proceeds from the issuing of the senior notes and the owner trust certificates were used to purchase a portfolio of 150 residential mortgage-backed securities previously owned by credit unions taken into conservatorship by the NCUA board since March 2009 (BusinessWire Oct. 26) …

Market News (10/25/2011)

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MADISON, Wis. (10/26/11)

  • U.S. home prices in August likely rose in 10 of 20 major cities, according to the Standard & Poor's/Case Shiller index--an indication that prices are stabilizing in some of the most severely impacted areas of the country (The New York Times  Oct. 25). August was the fifth consecutive month that a least half the cities in the survey posted monthly gains, the Times said. The largest price increases were in Washington, D.C., Chicago and Detroit, while the biggest decreases were in Atlanta and Los Angeles. Overall, the index dropped 3.5% in August from the same month in 2010, following a 4.1% decline in the year ended July, according to a Bloomberg News survey of 29 economists (Bloomberg.com Oct. 25). It will likely take several years for the 31% nosedive in home prices from their 2006 peak to be recovered because foreclosures place more properties on the market, depressing prices, Bloomberg said   …
  • With consumers' outlooks for employment and incomes souring, U.S. consumer confidence unexpectedly dropped in October to the lowest level since March 2009--when the U.S. economy was in recession (Bloomberg.com Oct. 25). Private research group, The Conference Board, said its index of consumer confidence dropped to 39.8 from 46.4 in September. The median forecast in a Bloomberg News survey for October was 46. Eroding home values, limited availability of jobs and the threat of a European debt default are dampening consumer sentiment, Bloomberg said …
  • U.S. mass layoff events--involving at least 50 workers from a single establishment--declined to 1,495 in September from 1,587 in August (Moody's Economy.com Oct. 25). September's layoffs involved 153,229 employees, compared with 165,547 in August. Although the modest decrease in events and employees affected is a positive sign, it does not indicate labor markets are positioned for escalating improvement, Moody's said …

News of the Competitionbr

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MADISON, Wis. (10/26/11)

  • Because of the ease and simplicity afforded by mobile payments, about half of adults in major global markets are interested in them, according to a survey by Accord Research Consultancy in Great Britain released earlier this month that looked at consumers in the U.S., Canada, Great Britain, Germany and Malaysia (American Banker Oct. 24). Survey results indicated respondents in Malaysia had the most interest in mobile payments at 56%, followed by Canada (49%), Germany (47%), the U.S. (47%) and Great Britain (42%). The survey of 2,000 consumers was conducted online in each country between March and July. The leading negative factor among consumers who said they found online payments unappealing was security concerns …
  • The U.S. Judicial Panel on Multidistrict Litigation made a ruling Friday that could be a financial windfall to banks (American Banker Oct. 24). The panel vacated an order that would have transferred an Ohio overdraft case to Miami, instead opting to leave it in its original jurisdiction. The ruling looks at whether banks of all sizes wrongly controlled the order in which they assessed overdraft charges to make the most of their revenues and increase the penalties paid by their customers, the Banker said. Several unconsolidated overdraft cases nationwide could be affected by the judicial panel's move. That's because the banks wanted to be able to handle the overdraft issue on a smaller case-by-case basis nationwide, Jeffrey Rengel, a plaintiff's attorney, told the Banker ...

News of the Competition (10/25/2011)

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MADISON, Wis. (10/25/11)

  • The Federal Deposit Insurance Corp. (FDIC) announced Friday it closed four banks, bringing total bank failures this year to 84, compared with 157 for the entire year in 2010. The failed banks are: Community Capital Bank, Jonesboro, Ga., assumed by State Bank and Trust Company, Macon, Ga.; Old Harbor Bank, Clearwater, Fla., assumed by 1st United Bank, Boca Raton, Fla.; Decatur First Bank, Decatur Ga., assumed by Fidelity Bank, Atlanta; and Community Banks  of Colorado, Greenwood, Colo., assumed by Bank Midwest, N.A., Kansas City, Mo. The closed banks held roughly $1.97 billion in assets. The FDIC estimated the newest failures will cost the Deposit Insurance Fund about $359 million ...
  • Bank of America (BofA) last week instituted a major reorganizing of top managers in the bank's consumer, home-lending and small-business units, according to an internal memo obtained by American Banker (Oct. 24). David Darnell, BofA co-chief operating officer, sent the memo Thursday, following  changes instituted a month ago by Brian Moynihan, BofA CEO, who ousted two top executives and reconstituted the chain of command under two top deputies--Darnell and Thomas Montag, the Banker said. BofA is laying off staff and selling asssets in attempts to return to its core banking operations, under its New BAC simplification project, Moynihan has said …
  • Although Atlanta-based SunTrust Bank Inc. reported a large third-quarter rise in profits due mostly to improvements in credit quality, it still had trouble reining in high overall expenses (American Banker Oct. 24). The cost issues are prevalent despite the bank trumpeting a cost-cutting program, the Banker said. Sun Trust's efficiency ratio worsened and now is among the worst of its peers, the publication said. The ratio--which measures a bank's level of costs--increased to 71.05% for the quarter from 64.8% a year ago. Because efficiency ratios are basically expenses divided by revenues, lower ratios are desirable because they indicate a bank is controlling expenses while attempting to make more money, the Banker said .…

Market News (10/24/2011)

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MADISON, Wis. (10/25/11)

  • FedEx Corp. Monday predicted record holiday shipping, and it plans to hire 20,000 seasonal workers--18% more than last year (The Wall Street Journal and Bloomberg.com Oct. 24). U.S. shipments from Thanksgiving through Christmas may rise 12% to more than 260 million--spearheaded by gains in FedEx's Smart Post, ground and home delivery businesses, the company said. FedEx said it expects to move 17 million packages overall on Dec. 12--what the company expects to be its busiest day of the year--up 10% from its busiest day during last year's holidays …
  • Some offbeat industries may represent the most lucrative commercial lending opportunities based on five-year growth potential and capital intensity, per an IBISWorld Study released at a Risk Management Association Conference last week. Some of the top picks are involved with solar power, information technology and manufacturing, such as tortilla production, said Richard Buczynski, IBISWorld's Chief economist, who researched 700 industries. Investors should look to industries that are historically capital intensive, so when an economic recovery occurs, these industries will have the ability to borrow heavily, Buczynski added ….        

Market News (10/23/2011)

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MADISON, Wis. (10/24/11)
  • Existing-home sales were down in September following a strong gain in August, but remain well above a year ago, according to the National Association of Realtors (NAR). Total existing-home sales--which are completed transactions that include single-family, townhomes, condominiums and co-ops--declined 3% to a seasonally adjusted annual rate of 4.91 million in September from an upwardly revised 5.06 million in August, but are 11.3% above the 4.41 million unit pace in September 2010. Lawrence Yun, NAR chief economist, said the market has been stable although at low levels, with plenty of room for improvement. "Existing-home sales have bounced around this year, staying relatively close to the current level in most months," he said. "The irony is affordability conditions have improved to historic highs and more creditworthy borrowers are trying to purchase homes, but the share of contract failures is double the level of September 2010. Even so, the volume of successful buyers is higher than a year ago and is remaining fairly stable--this speaks to an unfulfilled demand." For the NAR report, use the link …
  • U.S. consumer confidence in October dropped to the lowest level since the recession, accentuating the challenges faced regarding consumer spending, which constitutes 70% of the economy, according to the Bloomberg Consumer Comfort Index (Bloomberg.com Oct. 20). The index's monthly expectations gauge fell to -45, the worst reading since February 2009.  The overall weekly index of current conditions improved to -48.4 for the week ended Oct. 16 from -50.8 the previous week--nearly a record low. Scant hiring, a lack of wage gains and a volatile stock market dampened consumers' moods, Bloomberg said. In a related matter, the Economic Cycle Research Institute (ECRI) Weekly Leading Index---which measures economic growth--rose to 120.4 for the week ended Oct. 14 from a revised 120 the prior week (Moody's Economy.com Oct. 21) …

News of the Competition (10/22/2011)

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MADISON, Wis. (10/24/11)

  • Consumer mortgage default rates were higher for first and second mortgages in September compared with August, according to the S&P/Experian consumer credit default indices (American Banker Oct. 21). Default rates for first mortgages rose to 1.99% in September from 1.92% in August. Second-mortgage defaults climbed to 1.32% from 1.27% month-over-month. This is the first time mortgage default rates have risen since November 2010. The overall composite consumer credit default rate increased to 2.1%, a rise of .6% from the previous month. This figure is down more than 1% from the same time last year ...


  • Equifax, an Atlanta-based credit and analytics provider, is launching a new product to help mortgage investors analyzes loan portfolios (American Banker Oct. 21). Credit Risk Insight Whole Loan is a Web-based technology for lenders and investors to help them better predict delinquency, default and prepayment trends, said Equifax. Investors conducting due diligence ahead of a potential loan purchase may be interested in the product because they typically rely on consumer credit information from when the loan was originated. That data could be out-of-date and not indicative of the borrower's current financial situation, the Banker  said  …

News of the Competition (10/20/2011)

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MADISON, Wis. (10/21/11)
* Three primary bank regulators--one each at the Office of the Comptroller of the Currency, the Federal Reserve and the Federal Reserve’s Division of Banking Supervision and Regulations--are closely monitoring how community banks move into commercial and industrial lending (American Banker Oct. 19). With banks growing existing businesses and adding new product and services, the main concern of the government is to make sure the banks are managing their risk properly, Robert Walker, a senior supervisory financial analyst at the Fed, told the Banker. He added that regulators are looking at three aspects of new loans: the extent of upfront due diligence, how the bank controlled risk and whether the loan performed according to expectations …

Market News (10/20/2011)

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MADISON, Wis. (10/21/11)
* The index of leading U.S. economic indicators rose in September at a pace that suggests the economy will grow at a slower rate in the next few months, according to private research firm, The Conference Board (Bloomberg.com Oct. 20). The firm’s measure of the economic outlook for the next three to six months increased 0.2%, following a 0.3% gain in August. Five of the 10 components increased in September, compared with four in August (Moody’s Economy.com Oct. 20). Last month’s increase in the index was the lowest since a decline in April. However, September’s gain is consonant with expectations for an economic recovery in the second half of the year, Moody’s said ... * Initial claims for U.S unemployment benefits fell last week to a level that shows scant improvement in the labor market since the beginning of 2011 (Bloomberg.com Oct. 20). Claims decreased 6,000--to 403,000 for the week ended Oct. 15, the Labor Department said Thursday. The four-week average hit the lowest level since April. However, the economy still is “running in place,” Scott Brown, chief economist at Raymond James & Associates Inc., told Bloomberg. The data indicate tepid growth in the labor market and economy, he added. Meanwhile, continuing claims for unemployment rose to 3.719 million for the week ended Oct. 8 from 3.694 million the prior week (Moody’s Economy.com Oct. 20) …

News of the Competition (10/19/2011)

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MADISON, Wis. (10/20/11)
* Citigroup Inc. will pay nearly $300 million to resolve claims made by the Securities and Exchange Commission (SEC) that the bank misled investors regarding a financial product connected to risky mortgages, said a source familiar with the matter (Bloomberg.com Oct. 19). SEC commissioners must approve the settlement--which was scheduled for a vote Wednesday, the source said. In the case, a Citigroup executive and an employee of another firm involved in the deal are found to be at fault, the source said … * Bolstered by a large one-time accounting gain and strong performance in its core divisions, Morgan Stanley reported third-quarter earnings of $2.2 billion, or $1.15 per share (The New York Times DealBook and Bloomberg.com Oct. 19). That compares with a loss of $91 million a year ago. Earnings bested the 30-cent estimate of 25 analysts in a Bloomberg survey …

Market News (10/19/2011)

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MADISON, Wis. (10/20/11)
* U.S. mortgage loan application volume decreased 14.9% for the week ended Oct. 14 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). The unadjusted index declined 14.9%. The Refinance Index dropped 16.6%. The seasonally adjusted Purchase Index fell 8.8% and is at its lowest level since December 1996. Both conventional and government purchase activity declined last week, with the Conventional Purchase Index falling 11%, and the Government Purchase Index down 5.9% from the previous week. The unadjusted Purchase Index decreased 8.6% and was 5.1% lower than the same week one year ago. For the MBA report, use the link … * Housing starts in the U.S. increased more than expected in September, partially because builders saw rising demand for condominiums and apartments, with more consumers becoming renters (Bloomberg.com Oct. 19). Starts went up 15% to a 658,000 annualized rate last month--the most since April 2010--the Commerce Department said Wednesday. Analysts had predicted a 590,000 pace in September, according to a Bloomberg News survey. Beginning construction of multifamily dwellings spiked to their highest level since October 2008 …

Fed Beige Book Economic activity expanded in Sept.

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WASHINGTON (10/20/11)--Overall U.S. economic activity continued to expand in September, according to the Federal Reserve’s Beige Book, an overview of reports from the 12 Federal Reserve Banks regarding business and economic conditions in their districts. Consumer spending was slightly up in most districts, led by auto sales and tourism in several of them. Loan demand mostly declined, with the exception of an increase in mortgage refinancings in many districts, said the report which was released Wednesday. Business spending rose--especially for construction and mining equipment, and auto dealer inventories. However, many districts said hiring and capital spending plans were muted. A weaker and more uncertain economic outlook increased caution and dampened future spending plans, said contacts in some districts. Auto dealers were an exception because they continued to restock inventories that were depleted following the disruptions in the supply of auto parts caused by the earthquake and tsunami in Japan. Capital spending proceeded as planned in most districts. In the banking and financial sector, financial activity was reported to have weakened since the last report. Dallas noted that the improvement in financial conditions had stalled, and Chicago indicated a further tightening of credit conditions, particularly for financial firms. Consumer loan demand moved lower, said respondents in Cleveland, Chicago and Kansas City. Demand held steady in New York and San Francisco. However, New York, Philadelphia, Cleveland, Richmond, Chicago and Kansas City all saw an increase in mortgage refinancing activity, given lower mortgage rates. Cleveland also noted continued strength in auto lending and increased demand for business loans. Meanwhile, business loan demand was described as down somewhat in Philadelphia, Chicago, St. Louis and Kansas City, but was little changed in most other districts. Loan standards were described as still tight for many classes of borrowers. However, several districts indicated that strong competition among banks for high-quality borrowers was leading to lower rates and fees.

News of the Competition (10/18/2011)

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MADISON, Wis. (10/19/11)
* Bank of America Corp. (BofA) has lost its No. 1 ranking as the biggest U.S. lender by assets to JPMorgan Chase & Co. because BofA CEO Brian Moynihan has slashed jobs and sold some of the bank’s units while rival bank JPMorgan expanded (Bloomberg.com Oct. 18). In the third quarter, JPMorgan’s total assets rose 1.9% to $2.29 trillion, while BofA Tuesday reported a 1.8% decline to $2.22 trillion. Measured by market value, Wells Fargo & Co. was the largest bank as of Monday’s close on the New York Stock Exchange … * Some small community banks have increased their deposits and market share in cities such as Boston; Hartford, Conn.; and New York where Bank of America or JPMorgan Chase & Co. have the largest market share (American Banker Oct. 17). Also, in communities where smaller banks are the top financial institutions--such as Kansas City, Mo., and San Antonio--they retained the top market share. By using a high level of personal service and trying to become close to customers through technology, community banks are competing in their usual manner, Mark Fitzgibbon, an analyst at Sandler O’Neil & Partners LP, told the Banker … * For the second consecutive fiscal year, the issuance of Ginnie Mae’s mortgage-backed securities (MBS) declined in 2011, according to the Government National Mortgage Association (American Banker Oct. 18). Residential lenders issued $350.3 billion of Ginnie Mae MBS in fiscal year 2011--down 15% from the prior fiscal year. Ginnie Mae guarantees investors the timely payment of principal and interest on MBS backed by federally insured or guaranteed loans--mainly loans insured by the Federal Housing Administration or guaranteed by the Department of Veterans Affairs …

Market News (10/18/2011)

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MADISON, Wis. (10/19/11)
* The probability that the U.S. economy will be in recession six months from now increased to 45% in September from 41% in August, according to Moody’s Economy.com (Oct. 18). For the past five consecutive months, the probability of recession has gone up, because the U.S. labor market is stagnant and problems in Europe are constricting financial markets. As business confidence remains splintered, the risk that consumers and businesses will cut back remains high, Moody’s said. Real gross domestic product should increase 2.2% this quarter--which is below the economy’s potential, Moody’s said. The economy can avoid another recession, Moody’s concluded … * U.S. homebuilders were less negative than anticipated in October because home price declines and near record-low borrowing costs increased sentiment that the housing market will improve during the next six months, said the National Association of Home Builders/Wells Fargo sentiment index (Bloomberg.com Oct. 18). The index rose to 18 in October--the highest level since May 2010--from 14 in September. Economists had forecast the gauge would rise to 15, according to a Bloomberg News survey. Readings below 50 indicate more respondents said conditions were poor. The four U.S. region subindices showed improvement, with the West region seeing its highest reading in more than a year (Moody’s Economy.com Oct. 18)…

News of the Competition (10/17/2011)

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MADISON, Wis. (10/18/11)
* The Federal Deposit Insurance Corp. (FDIC) announced Friday it closed four banks, bringing total bank failures this year to 80, compared with 157 for the entire year in 2010. The failed banks are: Piedmont Community Bank, Gray, Ga., assumed by State Bank and Trust Company, Macon, Ga.; Blue Ridge Savings Bank Inc., Asheville, N.C., assumed by Bank of North Carolina, Thomasville, N.C.; First State Bank, Cranford, N.J., assumed by Northfield Bank, Staten Island, N.Y.; Country Bank, Aledo, Ill., assumed by Blackhawk Bank &Trust, Milan, Ill. The closed banks held roughly $758 million in assets. The FDIC estimated the newest failures will cost the Deposit Insurance Fund about $222 million ... * Two big U.S. banks reported substantial third-quarter earnings Monday (The New York Times DealBook Oct. 17). CitiGroup Inc. announced a quarterly profit of $3.8 billion, or $1.23 per share--constituting a 74% increase from year ago. However, most of Citigroup’s profit came from a one-time accounting gain of $1.9 billion, the Times said. Wells Fargo--the biggest U.S. consumer lender--Monday said its third-quarter earnings increased $4.1 billion, or 72 cents per share--a 21% rise from a year ago. The bank’s gain was bolstered by advances in its lending and deposit division, and minimal exposure to the volatile investment banking business, the Times said … * Fitch Ratings said it may lower by one level Bank of America’s (BofA) viability rating if specific aspects of the bank’s exposure to the residential mortgage business are more significant than what the ratings agency anticipates (American Banker Oct. 14). Specifically, Fitch said it is worried about BofA’s litigation risk and its weaker capitalization in relation to its competition …

Market News (10/17/2011)

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MADISON, Wis. (10/18/11)
* U.S. industrial production barely increased in September, accentuating a lack of strength in the economy (The Wall Street Journal Oct. 17). Production increased 0.2% after having remained unchanged in August, according to the Federal Reserve. Previously, industrial production was reported to have stepped up 0.2% in August. For the third quarter, industrial production rose at an annual rate of 5.1%. Manufacturing output moved up 0.4% in September after gaining 0.3% in August. Production at mines advanced 0.8% in September, while the output of utilities decreased 1.8%. At 94.2% of its 2007 average, total industrial production for September was 3.2% above its year-ago level. Capacity utilization for total industry edged up to 77.4%, a rate 1.7 percentage points above its level from a year earlier but three percentage points below its long-run (1972-2010) average. For the Fed’s Industrial Production release, use the link … * Worldwide business sentiment is stable but on edge because of the possibility of recession, according to Moody’s Analytics Survey of Business Confidence (Moody’s Economy.com Oct. 17). The survey’s index was at 16.9 for the week ended Oct. 14--up from 13.8 the prior week but down from 17.3 two weeks ago. Sales and investment in new equipment remain strong, but hiring and office absorption are weak, Moody’s said. Pricing power also seems to be eroding. Expectations about the economy heading into 2012 are low because there is no sign that businesses will come out of their slump any time soon, Moody’s said ... * Pension funds and insurance companies could become the next large buyers of leveraged loans--which include collateralized loan obligations (CLOs) (American Banker Oct. 14). Pension funds and insurance companies already constitute a significant portion of the clients of Blackrock, the largest money manager in the world. The company is trying to sell CLOs to these kinds of investors by touting the returns, and diversification of their investments, the Banker said. Of the leveraged loan market’s $500 billion in assets, about half--$250 billion--is in CLOs, the publication said …

News of the Competition (10/14/2011)

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MADISON, Wis. (10/17/11)
* A lawsuit filed Wednesday by independent ATM operators alleges that MasterCard and Visa fixed prices and forced the operators to charge set fees to consumers (lincolndailynews.com Oct. 13). The suit claims MasterCard and Visa set contract terms that prevent the ATM operators from charging less when consumers use cards that can go into networks other than MasterCard’s and Visa’s. The ATM operators are pursuing class-action status for their antitrust claims. Independent ATM operators’ machines are not affiliated with financial institutions and usually are installed at convenience stores, drug stores and gas stations … * Ford Motor Co.’s workers who are members of the United Auto Workers’ union voted down a tentative four-year agreement at a third factory late last week, diminishing the automaker’s chances of obtaining approval of a labor contract (The Wall Street Journal Oct. 14). Local unions in Saline, Mich.; Chicago; and Wayne, Mich., rejected the contract last week. Nationally, the running vote tally as of Thursday was 3,915 against the contract and 3,256 for it. For the contract to be ratified, it must garner a majority of those voting …

Market News (10/14/2011)

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MADISON, Wis. (10/17/11)
* U.S. retail sales in September increased more than expected because consumers spent more on cars, clothes and fuel, allaying worries that negligible hiring and sagging consumer confidence will disrupt the largest sector of the U.S. economy (The Wall Street Journal and Bloomberg.com Oct. 14). Sales rose 1.1% to an adjusted $395.47 billion--the biggest gain since February--following a 0.3% increase in August, the Commerce Department said Friday. Economists had forecast a 0.8% September increase, according to a Dow Jones Newswires survey. Last month’s retail sales constitute a strong showing, and retailers are in a solid position to have a profitable holiday season, Guy Lebas, chief fixed-income strategist at Janney Montgomery Scott LLC in Philadelphia, told Bloomberg … * The University of Michigan Consumer Sentiment Index unexpectedly fell 1.9 points in October, belying expectations for a slight improvement (Moody’s Economy.com Oct. 14). The index dropped to 57.5 from September’s 59.4 reading, indicating that consumers still are uncertain of the condition of the economy and what the future holds, Moody’s said. Also, short- and long-term expectations inched downward. In a related matter, the Bloomberg Consumer Comfort Index slid to -50.8 from -50.2 for the week ended Oct. 9. This most recent decline keeps the index near its lowest level of the year … * The Economic Cycle Research Institute (ECRI) Weekly Leading Index--which measures economic growth--fell to 120.2 for the week ended Oct. 7 from a revised 120.5 the prior week (Moody’s Economy.com Oct. 14). The smoothed, annualized growth rate dropped to -9.6% from a revised -8.7%. The index has declined nine out of the past 10 weeks. Its current growth rate is on the threshold of indicating a recession soon, ECRI said ...

News of the Competition (10/13/2011)

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MADISON, Wis. (10/14/11)
* PayPal Inc., a San Jose, Calif.-based payments company and unit of eBay Inc., is using a series of new partnerships with established bank vendors to provide services to consumers at every point of contact in the banking relationship--spanning from account opening to payments to reward redemption (American Banker Oct. 12). The partnerships include: BancVue Ltd. for online banking, MFoundry Inc. for mobile banking, Meridian Link for funding new accounts, and NCR Corp. and S1 Corp. for ATM payments. The company will continue to work with any large banks that want to integrate PayPal’s payments system into custom software, the publication said … * As part of a settlement with a U.S. attorney over questionable foreclosure practices, New York’s biggest foreclosure law firm will pay $2 million (American Banker Oct. 12). Steven J. Baum PC, in Amherst, N.Y., admitted to making what it termed inadvertent errors in its legal filings in state and federal court, according to Preet Bharara, the U.S. Attorney for the Southern District of New York. Baum and a default servicing firm that Baum created in 2007, Pillar Processing, did not admit to any wrongdoing, according to a 12-page settlement agreement … * JPMorgan Chase’s profit dropped 4% in the third quarter because of continuing mortgage troubles and poor results in investment banking (The New York Times DealBook Oct. 13). Fear of a new U.S. recession and fiscal problems plaguing Europe impacted the bank’s consumer and Wall Street businesses, the Times said. JPMorgan announced a profit of $4.26 billion, or $1.02 per share, compared with $4.4 billion, or $1.01 per share, in the same period a year ago …

Market News (10/13/2011)

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MADISON, Wis. (10/14/11)
* The U.S. trade deficit in August sustained its sharp drop from July, with a larger surplus in services offsetting a small increase in the goods deficit (Moody’s Economy.com Oct. 13). The deficit was $45.6 billion for August--the same as July, the Commerce Department said Thursday. The trade deficit widened in real terms by $1 billion to $47 billion. However, even with the deficit increase, new exports are positioned to add slightly to third-quarter gross domestic product growth, Moody’s said. Because of the weakening worldwide economy, the trend in import and export volumes has slowed, Moody’s said. In a related matter, the U.S. trade deficit with China reached a new record in August, rising to $28.96 billion from $26.96 bilion in July (The Wall Street Journal Oct. 13) … * Initial U.S. claims for unemployment benefits barely changed last week, indicating the labor market is making minimal progress (Bloomberg.com Oct. 13). Claims declined 1,000 in the week ended Oct. 8--to 404,000, the Labor Department said Thursday. Although employers hired more workers than expected in September, rising job cuts indicate that companies may be hesitant to add to their payrolls in the next few months, Bloomberg said. Hovering around 400,000 initial claims per week, the labor market essentially is “treading water,” and not showing any quick improvement, Joshua Shapiro, chief U.S. economist at Maria Fiorini Ramirez Inc. in New York, told Bloomberg. Meanwhile, continuing claims for U.S. unemployment benefits for the week ended Oct. 1 decreased to 3.67 million from 3.725 million the prior week (Moody’s Economy.com Oct. 13) ... * After recording an uptick in August, U.S. foreclosure filings decreased 5.8% in September, according to RealtyTrac (Moody’s economy.com Oct. 13). The overall decline was broad-based, signaling that lenders will need time to get through foreclosure delays because of faulty documentation. This will cause foreclosure activity to be volatile in the meantime, Moody’s said. With September’s decline, last month’s foreclosure filings are 34% lower than a year ago. As servicers work through the glut of foreclosures in the pipeline, total foreclosure activity will rise in the months ahead, Moody’s said …

FOMC minutes reveal unease over growth forecast

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WASHINGTON (10/13/11)--During its Sept. 20-21 meeting, the Federal Reserve's policymaking group, the Federal Open Market Committee (FOMC), reviewed three monetary policy options, including another round of quantitative easing or asset purchases, before deciding upon the "Operation Twist," a shifting of maturities in the maturity extension program. The FOMC minutes, released Wednesday, indicate that officials were uneasy about their forecast of a gradual pickup in economic growth over the coming quarters, said MarketWatch (Oct. 12). According to the minutes, the committee considered a reinvestment maturity extension program, a System Open Market Account (SOMA) portfolio maturity extension program, and a large-scale asset purchase program. Meeting participants expressed a range of views on the potential efficacy of the tools they were considering. "Many judged the policies could provide additional monetary policy accommodation by lowering longer-term interest rates and easing financial conditions at a time when further reductions in the federal funds rate are infeasible," the minutes said. "However, a number saw the potential effects on real economic activity as limited or only transitory, particularly in the current environment of balance sheet deleveraging, credit constraints, and household and business uncertainty about the economic outlook." The minutes also indicated that "a number of participants saw large-scale asset purchases as potentially a more potent tool that should be retained as an option in the event that further policy action to support stronger economic recovery was warranted. "Some judged that large-scale asset purchases and the resulting expansion of the Federal Reserve's balance sheet would be more likely to raise inflation and inflation expectations than to stimulate economic activity and argued that such tools should be reserved for circumstances in which the risk of deflation was elevated." The committee members also reviewed options to detail their stance on monetary policy and clarify their long-term goals to the public, and considered reviewing the potential implications if the Fed lowered the interest rate that it pays on reserve balances held by banks. The minutes revealed that committee members did not agree on policy tools. Some members indicated that the options would only provide temporary relief. However, most agreed that they could provide additional support for the economy by lowering long-term interest rates and loosening tight financial conditions (The Street Oct. 12). Some FOMC members indicated they would consider another asset purchase plan if economic conditions warrant stronger support for the recovery. Others, however, said that would be more likely to raise inflation than boost activity in the economy. Policymakers concluded the Fed would purchase $400 billion of longer-term Treasury securities and sell an equal amount of securities having maturities of three years or less. Committee members Richard Fisher, Narayana Kocherlakota and Charles Plosser dissented, saying they did not support additional policy accommodation at this time, according to the minutes.

News of the Competition (10/12/2011)

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MADISON, Wis. (10/13/11)
* Wells Fargo & Co. is aiming to expand its remittance business through a deal announced Tuesday with UniTeller Financial Services Inc.--a U.S. money transfer company of Grupo Financierio Banorte (American Banker Oct. 11). Though the arrangement, Wells Fargo has new remittance-distribution partnerships with nine banks and alternative financial services providers in Latin America and Asia. Those partnerships will allow people to pick up money sent by Wells Fargo customers at locations in Colombia, Ecuador, Guatemala, Honduras, Peru, the Philippines and Vietnam. Credit unions have their own remittances program through IRnet, a program made available through a partnership between the Credit Union National Association and the World Council of Credit Unions … * Three credit card issuers are allowing customers to redeem credit card rewards points when they shop on Amazon.com Inc. (American Banker Oct.11). American Express Co. and JPMorgan Chase & Co. have been allowing customers to do this, and now are being joined by Discover Financial Services, which is integrating its card with Amazon.com’s checkout process, the Banker said. Amazon.com displays a points balance at checkout when a card is linked to a shopper’s account. Users do not need to wait for a minimum number of points to accrue, but rather are allowed to spend any number of points on an order ...

Market News (10/12/2011)

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MADISON, Wis. (10/13/11)
* For the first time in four months, job openings in the U.S. decreased in August, indicating that a prolonged labor market recovery will need more time to take hold (Bloomberg.com Oct. 12). The number of jobs waiting to be filled fell by 157,000--to 3.06 million, the Labor Department said Wednesday. Hiring rose by 38,000--to 4.01 million. Payrolls increased by 103,000 workers in September, beating forecasts. With an uncertain economic outlook, companies don’t want to risk making more hires, Chris Rupkey, chief financial economist at Bank of Tokyo-Mitsubishi in New York, told Bloomberg … * Mortgage loan application volume increased 1.3% for the week ended Oct. 7 from one week earlier, according to the Market Composite Index, part of the Weekly Mortgage Applications Survey released Wednesday by the Mortgage Bankers Association. On an unadjusted basis, the index rose 1.3%. The Refinance Index climbed 1.3% from the previous week. The seasonally adjusted Purchase Index went up 1.1%. The unadjusted Purchase Index increased 1.2% and was 2.9% lower than the same week one year ago. The increases were driven mainly by the government loan category, with the Government Purchase Index up 2.4% and Government Refinance Index rising 9.9%. The Conventional Purchase and Refinance indexes inched up 0.1 % and 0.2%, respectively. For The MBA report, use the link …

News of the Competition (10/11/2011)

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MADISON, Wis. (10/12/11)
* The Federal Deposit Insurance Corp. (FDIC) Tuesday updated its loss, income, and reserve ratio projections for the Deposit Insurance Fund (DIF) during the next several years. The projected cost of FDIC-insured institution failures from 2011 through 2015 is $19 billion, compared to estimated losses of $23 billion for banks that failed in 2010. While the loss projections are subject to uncertainty, under these projections and current assessment rates, the fund should reach 1.15% of estimated insured deposits in 2018, FDIC said. The Dodd-Frank Wall Street Reform and Consumer Protection Act requires that the fund reserve ratio reach 1.35% by Sept. 30, 2020. A future rulemaking will implement the Dodd-Frank requirement that the FDIC offset the effect of increasing the reserve ratio from 1.15% to 1.35% on institutions with assets of less than $10 billion. After seven consecutive quarters of negative balances, the DIF became positive in the second quarter of 2011, standing at $3.9 billion as of June 30. The fund’s balance has increased for six quarters in a row, following seven quarters of decline. Cumulatively, the DIF balance has risen by almost $25 billion from its negative $20.9 billion low point at the end of 2009 ... * The Federal Deposit Insurance Corp. (FDIC) announced Friday it closed two banks, bringing total bank failures so far this year to 76, compared with 157 for the entire year in 2010. The failed banks are: The RiverBank, Wyoming, Minn., assumed by Central Bank, Stillwater, Minn.; and Sun Security Bank, Ellington, Mo., assumed by Great Southern Bank, Springfield, Mo. The closed banks held roughly $773 million in assets. The FDIC estimated the newest failures will cost the Deposit Insurance Fund about $190 million ... * Citigroup Inc. is ramping up its business-to-business social media strategy (American Banker Oct. 11). In 2009, the bank began redesigning its client interface in its Global Transaction Services (GTS) unit, which primarily deals with institutional investors, including an internal collaboration with employees to solicit ideas. As part of that redesign, GTS also introduced social media in two closed-loop sites aimed at clients, including Marketguide, which delivers video and other content from Citi’s worldwide experts to its capital markets clients, the Banker said. Businesses using social media have different challenges than consumer social media--which use FaceBook, LinkedIn and Twitter--because businesses operate in a less open environment, the Banker said …

Market News (10/11/2011)

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MADISON, Wis. (10/12/11)
* Confidence among U.S. small businesses increased in September from a 13-month low--which breaks a string of six consecutive monthly declines and indicates more optimism about the sales and economic outlook, according to the National Federation of Independent Business (NFIB) Index (Bloomberg.com and Moody’s Economy.com Oct. 11). The index rose to 88.9 from 88.1 in August. Despite the uptick, the index still is depressed, having registered below 90 for three consecutive months, Moody’s said. In the six-year expansion that ended in December 2007, the gauge averaged 100.7, Bloomberg said. The fact that the index didn’t decline is the lone bright spot, William Dunkelberg, NFIB chief economist, told Bloomberg, adding that nothing has happened to bolster confidence that the economic recovery would gain momentum now or in the foreseeable future … * The International Council of Shopping Centers (ICSC) chain-store sales index dropped 0.1% for the week ended Oct. 8--the third consecutive week of minimal change (Moody’s Economy.com Oct. 11). Inclement weather had a small negative impact on sales, ICSC said. Year-over-year growth fell to 2.8%, nearly taking back the gain of the prior week. Spending is continuing its trend of modest growth, ICSC said … * The securities industry in New York City could shed nearly 10,000 jobs by the end of 2012, according to a prediction by the New York state comptroller in a report released Tuesday. Also, Wall Street bonuses are likely to be reduced this year because of lower profits, said Comptroller Thomas P. DiNapoli. New York has seen 22,000 jobs in the securities industry disappear since January 2008. If Dinapoli’s forecast of 10,000 more jobs leaving by the end of next year comes true, that would be decline of 17%, the Journal said ...

Consumer credit down for August up for CUs

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WASHINGTON (10/11/11)--Consumers in the U.S. borrowed an unexpected $9.5 billion less in August than forecast--resulting in the largest decline in more than a year, reported the Federal Reserve Friday. Both revolving and nonrevolving credit dropped. However, borrowing at credit unions bucked that trend, with increases in overall borrowing, revolving and nonrevolving credit. Consumers borrowed more than $2.444.9 trillion, a decrease at an annual rate of 4.5%. Economists had predicted August's debt would grow by nearly $8 billion (Reuters Oct. 7). The decline follows an increase in July of $11.92 billion, reported the Fed's Consumer Credit report. August's results came after total debt rose for 10 straight months and nonrevolving debt had grown for 14 months.. Credit union members in August borrowed $225 billion, up from the $222.6 billion added to their debt in July. Their borrowing has increased steadily since first quarter. The figures compare with $224.9 billion borrowed during third quarter of 2010. Revolving credit--or credit card debt--decreased at a 3.5% annual rate or $2.27 billion to a total of $790.1 billion, down from $792.3 billion in July. At credit unions, members borrowed $36.3 billion in August, up from $36 billion in July and $35.3 billion in third quarter of 2010. Nonrevolving credit--which measures student, auto and mobile home loans--decreased $7.23 billion--a 5.25% annual rate-- to $1.654.8 trillion, from $1.662.1 trillion in July. Mortgage loans are not addressed in the Fed's report. Nonrevolving loans at credit unions totaled $188.7 billion, up from $188.6 billion in July, but down from $189.6 billion in third quarter 2010. Decreasing credit means households are continuing to either pay down debt or cut spending on non-essentials, according to Bloomberg.com (Oct. 7). Analysts attributed August's results to consumers' uncertainty about adding more debt when stock markets were volatile and Congress was unable to iron out solutions on the nation's deficit.

News of the Competition (10/10/2011)

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MADISON, Wis. (10/11/11)
* Private student loan debt could be discharged in bankruptcy--reversing changes made in 2005--if legislation introduced in May by U.S. Sen. Dick Durbin (D-Ill.) and U.S. Rep. Steve Cohen (D-Tenn.) becomes law (American Banker Oct. 7). If the bill becomes law, it could reduce demand for private student loan securitizations, some analysts warned. However, the immediate concern is that more students are becoming delinquent in their loan payments, said Claire Mezzanotte, a managing director of structured finance at DBRS, a Toronto credit rating agency. Thirty-five organizations representing consumers, students and higher education institutions are supporting the legislation, said DBRS … * Many community banks are stockpiling shares of common stock to use if bank merger and acquisition activity returns (American Banker Oct. 6). Since early August, more than 24 community banks of differing sizes have authorized repurchase programs, and buyback programs are taking place nationwide, the Banker said. The spike in repurchase activity has been keyed by an overall reluctance by banks to use capital aggressively to fund acquisitions--partly because of stock market volatility and worldwide economic problems, it added …

Market News (10/10/2011)

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MADISON, Wis. (10/11/11)
* The Economic Cycle Research Institute (ECRI) Weekly Leading Index--which measures economic growth-- declined to 121.2 for the week ended Sept. 30 from a revised 121.8 the prior week (Moody’s Economy.com Oct. 7). The smooth, annualized growth rate dropped to -8.1% from an unrevised -7.2%. The index fell for the eighth time in nine weeks, and is approaching recessionary levels, ECRI said. In a related matter, the ECRI U.S. future inflation gauge rose--for a second consecutive month--to 99.9 in September from an unrevised 99.5 in August (Moody’s Economy.com Oct. 7). The gauge had been moving downward since its cyclical peak in March. Last month’s gain doesn’t alter the consensus that U.S. inflation pressures are waning, Moody’s said … * U.S. employers hired more workers than expected in September, allaying some fears that the economy is at risk for another recession. However, the economy still is growing too slow to make a significant dent in the unemployment rate--which remained the same as in August at 9.1% (The New York Times, Bloomberg.com andThe Wall Street Journal Oct. 7). Employers added 103,000 jobs last month, the Labor Department said Friday. Although the economy is not performing well, it didn’t lose momentum as many in the marketplace worried, Michael Englund, chief economist at Action Economics LLS in Boulder, Colo., told Bloomberg. The U.S. economy is seeing steady growth but at a very slow pace, he added. In a related matter, the U.S. Monster Employment Index, which measures help-wanted ads placed online by U.S. employers, increased one point--about 0.7%--from August to September (Moody’s Economy.com Oct. 7) ... * Newtek Businesss Services, the Small Business Authority, announced that its SB Authority Index for August is up 0.76% from July, hitting 108.06 points. “The small business economy continues to struggle along as consumer spending and employment trends are clearly reducing economic activity,” said Barry Sloane, Newtek president/CEO. “The recent announcement of monetary policy by the Federal Reserve may increase interest rates to small businesses as most small businesses borrow on a prime rate basis and off the short end of the yield curve. Again, if the strategy works it will be most beneficial to the long end of the market, which drives residential mortgage rates lower and the cost to refinance lower. This should put increased cash and disposable income in hands of consumers and take several months before we can see the effects. Short-term rates hikes to small businesses will be effective immediately.” Newtek is a CUNA Strategic Services Provider. For Newtek Business Services, use the link …

News of the Competition (10/06/2011)

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MADISON, Wis. (10/7/11)
* Some federal funds earmarked to trigger small-business lending instead were used to repay bailout money that banks received through the government’s Troubled Asset Relief Program (TARP) (The Wall Street Journal Oct. 6). More than half of the $4 billion distributed through the Small-Business Lending Fund (SBLF) designed to bolster capital standards at smaller banks was used by the banks to eliminate higher-cost TARP debt and tougher restrictions, the Journal said. Treasury Department data revealed that of 332 banks that received SBLF money, 137 used at least a portion--which totaled $2.2 billion--to pay off TARP funds … * Bank of America (BofA) decided this week that it will no longer provide retail lending in six low-volume states (American Banker Oct. 6). The states are Alabama, Alaska, Montana, Nebraska, Wisconsin and Wyoming. The bank’s online and telesales divisions will continue to serve mortgage customers in those states, a BofA spokesman told the Banker. BofA exited the six states because it does not have a big market presence in them and wants to “streamline” its mortgage operations, he said … * Visa Inc. has hired Gavin Krugel, a senior director at GSMA, a global mobile industry association, to work on the card network’s global mobile team to help the card company reach unbanked consumers in developing economies (American Banker Oct. 6). Krugel will be the head of consumer strategy and market activation for Fundamo--a South African mobile payments company that Visa purchased in June for $110 million …

Market News (10/06/2011)

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MADISON, Wis. (10/7/11)
* Last week’s U.S consumer confidence rating culminated in the worst quarterly performance in more than two years--when the economy still was in recession--according to the Bloomberg Consumer Comfort Index (Bloomberg.com Oct. 6). The index climbed to -50.2 in the week ended Oct. 2 from the prior week’s -53, which was the second lowest reading on record. Last week’s index rise was the first since late August. Falling incomes and a down labor market are stressing households, Joseph Brusuelas, a senior economist at Bloomberg LP in New York, said. Stagnant incomes and higher prices will likely further dampen consumer sentiment, he added … * September sales for U.S. retailers posted a 5.1% increase at stores open at least a year--as retailers prepare for the holiday season, according to a Thomson/Reuters report that tracked 23 retailers. September is deemed a critical month for retailers because they begin stocking cold weather gear while clearing out the remnants of summer goods. That and back-to-school shopping can be a gauge of how consumers view the future (The Wall Street Journal and The New York Times Oct. 6). However, heavy promotions have boosted some sales, the Times said. Retailers likely will use more aggressive discounting to maximize their holiday sales, Chris Donnelly, an executive in the retail practice for consulting company Accenture, told the Times … * Initial claims for U.S. unemployment benefits increased only slightly last week--less than expected--indicating companies may be starting to lessen the pace of job cuts (The Wall Street Journal and Bloomberg.com Oct. 6). Claims climbed 6,000--to a seasonally adjusted 401,000--for the week ended Oct. 1, the Labor Department said Thursday. Economists had forecast claims to rise by 19,000, according to a Dow Jones Newswires survey. When claims go below the 400,000 level, economists generally believe the economy is adding more jobs than it is losing. The labor market appears to be stagnating at this time, Sean Incremona, a senior economist at 4Cast Inc. in New York, told Bloomberg ...

News of the Competition (10/05/2011)

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MADISON, Wis. (10/6/11)
* Large banks and thrifts that have $10 billion or more in assets controlled 72% of the U.S.’ bank deposits as of June 30--up from 70% at the same time in 2010 and 68.5% in 2008, according to data released Tuesday by the Federal Deposit Insurance Corp. (FDIC) (American Banker Oct. 4). During the same time, deposits declined year-over-year in eight of the FDIC’s nine other asset classes. The only banks to post deposit gains were in the $1 billion- to -$3 billion-asset category, FDIC said. Bank of America was the largest bank holding company by deposits with more than $1 trillion … * Several U.S. banks, including HSBC and Bank of America, are looking to obtain the same group of “mass affluent” customers, who typically have between $50,000 and $1 million in investable assets (American Banker Oct. 4). Because there is a frequent disconnect between front-line financial advisers--who receive incentives to enroll as many clients as they can--and bank management, which sees advantages in limiting higher-end depositors, banks have a difficult path to follow to a worthwhile mass affluent program, Sophie Schmitt, a senior analyst in the wealth management division of Aite Group in Boston, told the Banker … * Amazon.com Inc.’s Kindle Fire, a low-cost tablet, is another remote-access device banks need to consider for advertising and online banking, said the American Banker (Oct.4). Banks need to be where their customers are, and the addition of the tablet, coupled with Amazon’s substantial Internet sales presence, provides a mixture of opportunity and threat to banks, the publication said. Some bank customers who are not even online are happy to do paper banking, Mary Monahan, director of mobile research for Javelin Research & Strategy, told the Banker. But because those customers are becoming more comfortable with e-readers, Kindle could make more of those users convert to online banking via the Kindle device by blending the e-reader with a tablet, she added …

Market News (10/05/2011)

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MADISON, Wis. (10/6/11)
* U.S. private-sector businesses added 91,000 jobs in September--more than expected--according to a national employment report issued Wednesday by payroll processor Automatic Data Processing Inc. (The Wall Street Journal Oct. 5). Economists had forecast a September gain of 75,000 jobs, in a Dow Jones Newswires survey. However, in a related matter, the number of overall job cuts more than doubled in September, hitting 155,730--the highest total since April 2009--from 51,100 in August, according to the Challenger Report issued by Challenger, Gray and Christmas Inc. (Moody’s Economy.com Oct. 5). The cuts were mostly explained by planned reductions in financial services and in the military, the report said. Looking forward, leading U.S. retailers said they expect to make more hires for the holiday season--or at least as many as last year, when temporary hiring rose nearly 50% over recession lows (The New York Times Oct. 4) … * Mortgage loan applications decreased 4.3% for the week ended Sept. 30 from one week earlier, according to the Market Composite Index, part of the Weekly Mortgage Applications survey, released Wednesday by the Mortgage Bankers Associations (MBA). On an unadjusted basis, the index declined 4.5%. The Refinance Index dropped 5.2%. The seasonally adjusted Purchase Index fell 0.8 %. The unadjusted Purchase Index decreased 1.7% and was 12.1% lower than the same week one year ago. “Interest rates continued to fall last week, driven by the latest Federal Reserve actions to invest in longer-term Treasury and mortgage securities, but potential borrowers largely remained on the sidelines, seemingly unimpressed by the lowest (by any measure) mortgage rates since the 1940s,” said Mike Fratantoni, MBA vice president of research and economics. “Refinance application volume declined and purchase volume was little changed. Purchase borrowers continue to value the government lending programs that permit lower down payments. The government share of purchase applications decreased slightly to 41.6% last week, and while this is down from a recent peak of 50.4% in April 2010, it is still well above the pre-2009 survey average of 23.6%. Many refinance borrowers are opting to deleverage by moving to a 15-year term, with this product accounting for 27% of refinance volume last week,” Fratantoni said …

Market News (10/04/2011)

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MADISON, Wis. (10/5/11)
* Forty percent of 188 bank risk-management executives expect credit card delinquencies to rise during the next six months, reports a new online survey from FICO, the credit scoring company owned by Fair Isaac Corp. (American Banker Oct. 4). In the August survey, 49.8% of those surveyed said they believe average credit card balances will rise for the same period; however, 63.9% indicated that credit card use won't reach pre-recession levels during the next five years. Also, half of those surveyed said it is unlikely that the nation's housing prices would return to 2007 levels before 2020. Almost half (48.3%) indicated they are concerned that the nation is heading into another recession … * The Federal Reserve is ready to take more steps needed to promote stronger U.S. economic growth in the context of price stability, said Fed Chairman Ben Bernanke in testimony Tuesday before Congress' Joint Economic Committee. However, he warned legislators to avoid fiscal actions that could hinder the sluggish economy, saying the recovery is close to faltering (Bloomberg.com and The New York Times Oct. 4). He noted the economy is growing more slowly than expected because of unexpected events such as Japan's earthquake, the debt crisis in Europe and problems such as housing in the U.S. The fed's main focus will remain on the pace of price increases or inflation, which the Fed would like to maintain at about 2% annual rate …

News of the Competition (10/04/2011)

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MADISON, Wis. (10/5/11)
* Citigroup Inc. may start charging checking customers $15 per month unless they maintain a balance of at least $6,000. The decision comes about a week after Bank of America Corp.'s announced that it will start charging customers $5 per month to use their debit cards (American Banker Oct. 4). Although Citigroup said last week that it would not charge customers fees for using their debit cards, the $15 fee would raise the overall price of the underlying account. Stephen Troutner, Citigroup's head of banking products for U.S. consumer banking, argues the bank's checking accounts will remain competitive with the rest of financial services industry … * Coffee giant Starbucks has partnered with the Opportunity Finance Network, the national network of community development financial institutions (CDFIs), to create a nationwide fund to create and sustain jobs in underserved communities. To launch the program, called Create Jobs for USA, Starbucks Foundation is donating $5 million to the fund. Beginning Nov. 1, Starbucks will provide $35 of financing for community businesses for every $5 contributed by consumers. Consumers who contribute at least $5 to the fund will receive a red, white and blue wrist band. “Create Jobs for USA is exactly the kind of innovative and entrepreneurial solution that America needs to get its economy back on the right track,” said Moody’s Analytics chief economist Mark Zandi. “CDFIs are well known to be highly effective at creating local jobs in communities that need them the most, especially when it comes to helping community businesses that are having difficulty securing credit during the current economic climate” …

News of the Competition (10/03/2011)

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MADISON, Wis. (10/4/11)
* The Federal Deposit Insurance Corp. (FDIC) announced Friday it closed a bank, bringing total bank failures so far this year to 74, compared with 157 for the entire year in 2010. The failed bank is First International Bank, Plano, Texas, which was assumed by American First National Bank, Houston. The closed bank held roughly $240 million in assets. The FDIC estimated the newest failure will cost the Deposit Insurance Fund about $54 million ... * If Fannie Mae and Freddie Mac participate in a feasible refinancing program for underwater borrowers, U.S. consumers could save more than $63 billion per year, according to Moody’s Investors Service (American Banker Sept. 30). Although not all of those savings would come to fruition, even a fraction of that amount would be a substantial positive for the economy, the ratings agency said. Moody’s cost-savings calculation is based on 18 million potential borrowers, with a $200,000 average loan size, having their interest rate reduced to 4% from 5.75% … * Mortgage settlement negotiations between the top five U.S. mortgage servicers and states’ attorneys general imploded Friday when California walked away from the negotiations that involve foreclosures and mortgage-servicing abuse (American Banker Sept. 30). The move essentially nullifies any prospect of a multi-state settlement, which means bank regulators and the Justice Department will have to cut a deal with servicers, industry observers said ... * Online hackers’ actions that result in corporate-account takeovers at commercial banks could create up to $210 million in losses in 2011, and could increase to $371 million by 2015, according to the initial installment of a five-part cybercrime report that Aite Group is scheduled to release in early 2012, said the American Banker (Sept. 30). By the end of this year, hackers could release as many as 25 million new strains of malware, with the total hitting 87 million by the end of 2015, the report said …

Market News (10/03/2011)

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MADISON, Wis. (10/4/11)
* The Case-Shiller Home Price Index inched up in the second quarter, but it was unable to make up much of the steep decrease from the first quarter (Moody’s Economy.com Oct. 3). The national index increased at an annualized rate of 1.2%, following an 8.5% drop in the first quarter. Despite the second-quarter rise, house price declines still were widespread nationally, with more than half of the metropolitan areas recorded in the index posting a quarter-over-quarter decline. The index is down 6% on a year-over-year basis … * U.S. manufacturing unexpectedly expanded in September, mitigating worries that the largest economy in the world is stagnating (Bloomberg.com Oct.3) . However, a lack of demand for new goods going forward is bothersome (The Wall Street Journal Oct. 3). The Institute for Supply Management’s (ISM) factory index increased to 51.6 last month from 50.6 in August. A reading above 50 shows expanding economic activity. Economists had forecast a decline to 50.5 in September, according to a Bloomberg News survey. Although a rebound in auto production and sales following a parts shortage from the earthquake and tsunami in Japan pushed up the production index, new orders still are lackluster due to underlying weakness in the sector, Julia Coronado, chief economist for North America at BNP Paribas in New York, told Bloomberg … * New-auto sales in the U.S. during September jumped 27% at Chrysler and 20% at General Motors (GM), the companies reported Monday. The sales indicate the auto industry, with its continued strong demand, was a highlight amid the economic uncertainty in the U.S., as it showed continuing strong demand (The New York Times and The Wall Street Journal Oct. 3). September was the 18th consecutive month of year-over-year sales growth for Chrysler. GM said it anticipates entire-year sales for the auto industry to go above 13 million vehicles--even though sales were below that pace from May through August ...