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Fed IBeige BookI notes slow moderate growth in economy

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WASHINGTON (12/1/11)--The U.S. economy expanded at a "slow to moderate" pace during the month prior to Nov. 18 in 11 of the Federal Reserve's 12 districts,  with St. Louis experiencing a decline in economic activity, according to the Fed's Beige Book.

The Beige Book is an assessment of key economic factors by each district and compiled by the Minneapolis Fed in preparation for Federal Open Market Committee meetings. The committee, the Fed's policymaking group, next meets on Dec. 13.

District reports indicated that consumer spending, which accounts for about 70% of  the U.S. economy, rose modestly during the period since the last report, with motor vehicle sales increasing and tourism stronger.  Business service activity was "flat to higher," with manufacturing activity expanding "at a steady pace across most of the country," said the Beige Book.

The districts saw generally subdued hiring. Some companies reported open positions but difficulty in finding qualified applicants. Wages and salaries remained stable, with overall price increases subdued, and some cost pressures easing.

Overall bank lending rose slightly, the Fed said, with home refinancing "growing at a more rapid pace." Changes in credit standards and credit quality varied among districts. Residential real estate activity remained sluggish, with a lackluster commercial real estate activity. Single family home construction was week, and commercial construction was slow.  Most districts reported favorable agricultural conditions. 

Several districts reported banking and finance trends. Among the highlights:

  • Small to medium banks in the Second District (New York) saw increased demand for commercial mortgages, no change in demand in other loans, and an increased demand for refinancing. They reported widespread decreases in average deposit rates, declining delinquency rates for commercial and industrial loans, and no delinquency change in other loan categories.
  • Third District bankers (Philadelphia) reported slight overall growth in loan volumes. However, one bank said margins are being squeezed as banks compete for share in a flat market. Another indicated it was picking up loans as foreign banks retreated from the market. Strongest loan growth occurred in commercial real estate, home equities and home mortgages, especially refinancings. Credit quality improved more slowly.
  • Fourth District (Cleveland) bankers said business loan demand moderately improved, with requests driven by energy, manufacturing, multi-family housing and healthcare. Consumer installment loan activity was flat or down, although direct and indirect auto lending continued to show strength. Banks saw less activity in residential mortgages with most applicants seeking to refinance. Many bankers reported that the number of applicants refinancing into 15-year mortgages picked up.  Overall core deposits grew, with business customers were driving deposit growth. Delinquencies either were steady or declined across loan categories.
  • Fifth District (Richmond) loan demand continued to be mixed. One major lender reported improved small business loans--mostly to expand production and upgrade office equipment and software. Mortgage refinancing continued to be strong. Few issued new mortgages. They also reported bottlenecks in the appraisal process that delayed closings. In central Virginia loan demand was reported as weak with most applicants failing to qualify for loans. An Eastern Shore bank reported no demand for business loan expansions; however, several bankers and small commercial contractors said getting approval for new construction loans was "extremely difficult," due to tight credit standards and a poor profitability outlook.
  • In the Sixth District (Atlanta), banks described weak lending from a soft demand by qualified borrowers and strict regulatory requirements. An informal poll of small businesses noted  a slim majority of mature firms received all or most of the of money they requested. However, many young businesses applying for credit to expand were either denied or offered unacceptable credit terms. Others were discouraged from applying for credit because they expected to be denied or offered unfavorable terms. Overall, 38% of all small businesses polled applied for credit, compared with 32% in second quarter.
  • In the Seventh District (Chicago), the MF Global bankruptcy filing was disruptive for many former clients. Business loan demand continued to be muted, with clients reluctant to take on growth-oriented projects due to economic and political uncertainty. The lower liquidity in high-yield and term-loan markets did not prompt much substitution of leveraged financing from bond and syndicated loan markets into individual bank loans. Business loan quality stabilized.
  • An Eighth District (St. Louis) survey of senior loan officers indicated little change in overall lending activity from second to third quarter.  Credit standards were basically unchanged  for commercial real estate, residential mortgage and consumer loans. The demand for consumer loans ranged from moderately weaker to moderately stronger.
  • The 10th District (Kansas City) said most banks reported steady or stronger loan demand, stable or improving loan quality, and increased deposits since the last survey. Overall loan demand increased marginally with stronger demand for commercial and residential real estate loans. Demand for consumer installment loans declined and demand for commercial and industrial loans weakened. Credit standards remained unchanged in all major loan categories, and deposits rose for the seventh consecutive survey. Bankers reported loan quality as steady or improving.
  • The 12th District (San Francisco) saw loan demand largely unchanged since the last report. Business remained cautious in capital spending, resulting in a depressed volume of new commercial and industrial loans. However, there was stiff competition among lenders to extend credit to well-qualified small and medium-sized businesses, which created downward pressure on rates and fees. Banks reported no changes in demand for consumer credit. They noted slight improvements in overall credit quality with lending standards remaining relatively restrictive for many types of business and consumer loans.
The first (Boston), ninth (Minneapolis) and 11th (Dallas) districts did not report specifically on the banking and finance industry.

News of the Competition (11/30/2011)

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MADISON, Wis. (12/1/11)

  • Ratings agency Standard & Poor's downgraded its financial ratings Tuesday on some of the world's biggest financial institutions (The New York Times DealBook Nov. 29). The agency applied new standards to 37 financial institutions worldwide, resulting in a downgrade of 15 banks. S&P lowered its long-term credit ratings by one level on some of the largest U.S. banks, including Bank of America, Citigroup, Goldman Sachs, Morgan Stanley and JPMorgan Chase. Of the eight biggest U.S. banks that S&P reviewed, only State Street, based in Boston, was not downgraded …
  • The Federal Reserve, The Bank of Canada, the Bank of England, the Bank of Japan, the European Central Bank and the Swiss National Bank Wednesday announced coordinated actions to enhance their capacity to provide liquidity support to the global financial system. The purpose of the actions is to ease strains in financial markets, mitigate the effects of the strains on the supply of credit to households and businesses, and help spark economic activity. The six central banks agreed to lower the pricing on the existing temporary U.S. dollar liquidity swap arrangements by 50 basis points so that the new rate will be the U.S. dollar overnight index swap rate plus 50 basis points. This pricing will be applied to all operations conducted from Dec 5. The authorization of the swap arrangements has been extended to Feb. 1, 2013. For the Fed release, use the link …
  • Because of turmoil and slow growth in the financial industry, smaller U.S. banks and savings institutions are cutting jobs (The Wall Street Journal Nov. 30). In the third quarter, more than 2,500 banks reduced the size of their work forces, collectively cutting 20,332 jobs, a 2.5% reduction, according to a Journal analysis of filings with federal banking regulators. The banking industry overall grew by 5,012 jobs in the third quarter to 2.1 million workers--the smallest gain since bank employment declined in first quarter 2010 …

Market News (11/30/2011)

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MADISON, Wis. (12/1/11)

  • Third-quarter U.S. worker productivity increased at a slower rate than originally estimated, an indication that gains in worker efficiency are adding less to companies' bottom lines (Bloomberg.com Nov. 30). The gauge for employee output per hour rose at a 2.3% annualized rate, following a decline the past two quarters, the Labor Department said Wednesday. The original third-quarter figures indicated a 3.1% productivity gain. Expenses per employee for the quarter decreased at a 2.5% rate--up from an originally estimated 2.4% decline. Because unit labor costs remain significantly below their peak in late 2008, companies will bolster their hiring, which will boost job growth in 2012 (Moody's Economy.com Nov. 30) …
  • U.S. mortgage loan application volume decreased 11.7% for the week ended Nov. 25--which includes an adjustment for the Thanksgiving holiday weekend--from one week earlier, according to the Market Composite Index. The index is part of the Weekly Mortgage Applications Survey released Wednesday by the Mortgage Banker Association (MBA). The unadjusted Purchase Index decreased 33.7%, and was 18.2% lower than the same week one year ago. The refinance share of mortgage activity decreased to 73.9% of total applications from 75.9% the previous week. The refinance index is at its lowest level since July 2011. Adjustable-rate mortgages (ARM) increased to 5.8% from 5.7% of total applications from the previous week. For the MBA report, use the link. Also, pending home sales rose strongly in October and remain above year-ago levels, according to the National Association of Realtors (NAR). The Pending Home Sales Index--a forward-looking indicator based on contract signings--surged 10.4% to 93.3 in October from 84.5 in September and is 9.2% above October 2010 when it stood at 85.5. The data reflects contracts but not closings. Lawrence Yun, NAR chief economist, said improved contract activity is a hopeful sign. "Home sales have been plodding along at a sub-par level while interest rates are hovering at record lows, and there is a pent-up demand from buyers who normally would have entered the market in recent years. We hope this indicates more buyers are taking advantage of the excellent affordability conditions," he said. For the NAR report, use the link …
  • Hiring for U.S. private-sector jobs increased by 206,000 in November, according to a national employment report published by payroll company Automatic Data Processing Inc. (ADP) and consultancy Macroeconomic Advisers (The Wall Street Journal and Bloomberg.com Nov. 30). November's gain was the largest in 2011 and followed a revised 130,000 increase in October, ADP said Wednesday. In a related matter, U.S. employers announced fewer job cuts in November than in November 2010, a sign the biggest global economy is expanding enough to forestall job cuts (Bloomberg.com Nov. 30). Planned job cuts fell 13% to 42,474 in November  from a year ago, according to the Challenger Report, issued Wednesday by the firm of Challenger, Gray & Christmas Inc. …

News of the Competition (11/29/2011)

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MADISON, Wis. (11/30/11)

  • Roughly $200 million that disappeared from defunct commodity brokerage MF Global is believed to have been found at JPMorgan Chase in Britain, according to sources briefed on the matter (The New York Times DealBook Nov. 28). The discovery could be the most significant development in the search for the missing funds that has been ongoing for a month, the Times said. MF Global allegedly overdrew an account at JPMorgan during its final tumultuous days, according to a source familiar with the matter. In the days before it filed for bankruptcy on Oct. 31, MF Global allegedly transferred about $200 million, sources said. Some investigators now believe the brokerage firm used customer funds to at least partially plug a hole created by the over-withdrawals--which would constitute a substantial violation of federal law, the Times said …
  • If the Japanese yen stays at record highs against the U.S. dollar or strengthens further, Toyota Motor Corp. may consider moving some of it compact-car production from Japan (The Wall Street Journal Nov. 28). The Japanese automaker may also rearrange its supplier base to remain globally competitive, said Toyota President Akio Toyoda. Exporting compact cars at the current yen rate isn't a wise business decision, so the automaker might move production abroad, use different suppliers and raise local procurement levels, Toyoda told the Journal

Market News (11/29/2011)

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MADISON, Wis. (11/30/11)

  • U.S. home prices declined more than expected in September, indicating the housing industry continues to face challenges in the aftermath of the 2008 financial crisis (Bloomberg.com and The Wall Street Journal Nov. 29).  Property values in 20 U.S. cities fell 3.6% in September from September 2010, following a 3.8% decline in the year ended in August, according to the S&P/Case Shiller index of property values. A 3% decrease was forecast by 32 economists in a Bloomberg News survey. Housing demand heading into next year will likely be dampened by taut lending standards, an unemployment rate at about 9%, and a glut of distressed properties that could be a further drag on home values, Bloomberg said. In a related matter, the monthly Federal Housing Finance Agency purchase-only index climbed 0.9% in September from August, although it still is down 2.2 % on a seasonally adjusted basis from September 2010 (Moody's Economy.com Nov. 29) …
  • With Americans becoming more positive about employment and income prospects, U.S. consumer confidence increased in November by the most in more than eight years (Bloomberg.com and Moody's Economy.com Nov. 29). Private research group The Conference Board's Index of Consumer Confidence jumped to 56 from a revised 40.9--previously 39.8--reading in October--the largest monthly gain since April 2003. The index is at its highest level since July. The gain was led by the expectations component, which rose to 67.8 from a revised 50--previously 48.7, Moody's said. Improving sentiment could help sustain holiday shopping sales, which constitute as much as 40% of annual revenue for retailers, Bloomberg said …

News of the Competition (11/28/2011)

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MADISON, Wis. (11/29/11)

  • The European debt crisis remains "a key risk to the world economy" and the global economic outlook has significantly deteriorated, the Organization for Economic Cooperation and Development (OECD) said in a new report (The New York Times and The Wall Street Journal Nov. 28). The European crisis could put the worldwide economy in peril and cause credit to freeze up in the global banking system, despite renewed efforts by European leaders to keep the euro monetary union from splitting apart, OECD said. In a related matter, central banks from five continents are attempting the most widespread reduction in borrowing costs since 2009 to avoid a worldwide economic downturn arising from Europe's sovereign-debt problems (Bloomberg.com Nov. 28). In the past three months, the U.S., the United Kingdom, nine other countries and the European Central Bank have strengthened monetary stimulus. Six additional countries--including Mexico and Sweden--likely will reduce benchmark interest rates by the end of March, forecast JPMorgan Chase & Co …
  • The acting president/CEO of Federal Home Loan Bank (FHLB) of Seattle retired Nov. 18 (American Banker Nov. 23). Steve Horton will be temporarily replaced--while the bank searches for a permanent president/CEO--by a committee of four executive officers at the Home Loan Bank: Vincent Beatty, the acting chief operating officer; Mike Brandeberry, chief counsel; Christina Gehrke, the chief accounting and administrative officer; and John Stewart, chief risk officer. Horton became acting president on Oct. 25, 2010, previously serving as chief operating officer and chief risk officer. He joined FHLB in 1986 …

Market News (11/28/2011)

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MADISON, Wis. (11/29/11)

  • The past weekend saw a robust start to the holiday shopping season with retailers combining early openings with website investment and steep discounts (The Wall Street Journal Nov. 28). Black Friday sales on the day after Thanksgiving increased 6.6% from a year ago, according to ShopperTrak--a retail data and consulting firm that relies on equipment placed in stores to measure traffic. In 2010, sales increased a weak 0.3%. For the four days beginning with Thanksgiving, sales rose 16.4% from a year ago, according to a survey of 3,826 people by the National Retail Federation. Also, this year saw a record-breaking Black Friday for online shopping, in which shoppers spent $816 million--26% more than Black Friday 2010 (The New York Times Nov. 28). Seventy-eight percent of retailers surveyed are offering promotions, according to industry group Shop.org. Also, 38% say they will run limited-time flash sales, and 33% will offer free shipping, the group added …
  • With builders approaching the weakest sales year on record, fewer new U.S. homes were purchased in October than predicted (Bloomberg.com Nov. 28). Sales rose 1.3% to an annualized pace of 307,000, the Commerce Department said Monday. A Bloomberg News survey of 70 economists had forecast a 315,000 rate. Sales demand is on pace to finish at 301,000--below the 323,000 in 2010 that was the lowest since data-keeping started in 1963. On a year-ago basis, sales are up 8.9% (Moody's Economy.com Nov. 28). The months' supply of homes dropped to 6.3 from 6.4 in September.  The median new-home price rose 4% year over year to $212,300  …

News of the Competition (11/23/2011)

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MADISON, Wis. (11/28/11)

  • The U.S.' top credit rating could be in peril if federal lawmakers fail to follow through on their planned $1.2 trillion in deficit cuts during a 10-year period beginning in 2013, Moody's Investors Service Wednesday warned (The New York Times Nov. 23). A U.S. congressional committee's failure to conclude an agreement on reducing the federal deficit did not affect the country's Aaa rating, Moody's said. However, any retreating from the agreed-upon automatic cuts scheduled to take effect in 2013 could cause the ratings agency to take negative action against the U.S. credit rating, Moody's said. The bipartisan 12-member congressional committee, saying it was at an impasse, abandoned its efforts Nov. 21 to reach a deficit-reduction deal …
  • A bank executive has blamed federal regulators in a fraud lawsuit brought against him in the wake of the financial crisis (American Banker Nov. 22). The Securities and Exchange Commission filed the suit against Michael W. Perry, former CEO of IndyMac Bancorp, which collapsed in mid-2008. Perry, who was accused of fraud and misleading investors about the firm's financial condition right before it imploded, created a website this fall in attempts to defend himself. Among the claims that Perry made on the site are that a top official at the Office of Thrift Supervision (OTS) had the final word on maintaining IndyMac's capital levels. Also, he alleged that an OTS regional director "specifically directed" Perry to backdate an IndyMac report to regulators so it would include an $18 million cash infusion--to make the firm appear well capitalized …

Market News (11/23/2011)

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MADISON, Wis. (11/28/11)

  • Although U.S. consumer spending rose in October, it grew more slowly than in September, indicating consumers are restocking their savings and are reluctant to spend because of continuing high unemployment and negative reports about the European debt crisis (The Wall Street Journal and Bloomberg.com Nov. 23). Purchases last month increased 0.1% following a 0.7% gain in September, the Commerce Department said Wednesday. Personal income climbed 0.4% in October--the fastest growth since March (Moody's Economy.com Nov. 23). Real disposable income increased 0.3%--the quickest increase in a year. The holiday shopping season will likely be "lukewarm," with consumers not cutting back on spending in a major way, but also not ramping up their purchases much, Michael Feroli, chief U.S economist at JPMorgan Chase & Co. in New York, told Bloomberg  …
  • U.S. mortgage loan application volume for the week ended Nov. 18 decreased a seasonally adjusted 1.2% from the previous week, according to a gauge--the Market Composite Index--used by the Mortgage Bankers Association (MBA). "Purchase applications increased last week, returning to levels from before the Veteran's Day holiday," said Michael Fratantoni, MBA vice president of research and economics. "However, purchase activity remains almost 5% below last year's level. Overall, refinance activity dropped for the week, but there was an increase in refinance applications for government loan programs," he added. The refinance share of mortgage activity decreased to 75.9% of total applications from 77.3%--the lowest refinance share since Sept. 9. On an unadjusted basis, the index increased 8.6%. The Refinance Index declined 4% to its lowest level since July 29. The seasonally adjusted Purchase Index rose 8.2 % to its highest level since Aug. 12. The unadjusted Purchase Index climbed 15.2% and was 4.8% lower than the same week one year ago. For  the MBA report, use the link …
  • Initial claims for U.S. unemployment benefits edged upward by 2,000--to a seasonally adjusted 393,000--for the week ended Nov. 19 from the previous week, the Labor Department said Wednesday (MarketWatch Nov. 23). Meanwhile, continuing claims for unemployment benefits for the week ended Nov. 12 rose 68,000--to 3.691 million (Moody's Economy.com Nov. 23). The four-week moving average for continuing claims dropped 2,250--to 3.67 million--the lowest level since October 2008, MarketWatch said. For the week ended Nov. 5, 6.73 million people received some form of state or federal unemployment benefit--down 45,000 from the previous week …

FOMC minutes Fed considered formal inflation target

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WASHINGTON (11/23/11)--The Federal Reserve's policymaking body, the Federal Open Market Committee, debated during its Nov. 1-2 meeting whether to make additional monetary policy accommodation and considered a formal inflation target, but decided it would be better to clearly communicate policy goals before taking any action.

According to the FOMC meeting minutes, which were released 30 minutes early Tuesday after a news service broke the embargoed time and reported it early,  some committee members said the Fed should consider  easing policy further.

"A few members expressed interest in using language specifying a period of time during which the federal funds rate was expected to remain exceptionally low, rather than a calendar date, arguing that such language might be better to indicate a constant stance of monetary policy over time," the committee's minutes reported. "However, members generally preferred to retain the existing forward guidance, at least for now."

The minutes noted that a few members "believed the economic outlook might warrant additional policy accommodation. However, it was noted that any such accommodation would likely be more effective if it were provided in the context of a future communications initiative, and most of these members agreed that they could support the retention of the current policy stance at this meeting."

One committee member dissented, indicating that additional monetary policy accommodations was warranted at the time.

As for the inflation goal, "many participants pointed to the merits of specifying an explicit longer-run inflation goal, but it was noted that such a step could be misperceived as placing greater weight on price stability than on maximum employment," said the FOMC minutes.

"Some suggested that a numerical inflation goal would need to be set forth within a context that clearly underscored the committee's commitment to fostering both parts of its dual mandate," the document continued.

Most participants "agreed that it could be beneficial to formulate and publish a statement that would elucidate the committee's policy approach, and participants generally expressed interest in providing additional information to the public about the likely future path of the target federal funds rate."

For the full text of the FOMC minutes, use the link.

News of the Competition (11/22/2011)

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MADISON, Wis. (11/23/11)

  • Imploded trading firm MF Global may be missing more than $1.2 billion in customer money--doubling the previous estimate--a bankruptcy trustee who is taking apart the company's brokerage unit said Monday (The New York Times DealBook Nov. 21). However, that amount may be exaggerated, a source briefed on the investigation told the Times. The trustee may have double-counted $220 million that had been transferred between MF Global units, the source said. However, the higher figure indicates MF Global's records are in disarray and that tens of thousands of customers looking to recoup their money may encounter significant obstacles, the Times said …
  • A Nevada state law implemented Oct. 1 and raising the documentary and procedural standards for foreclosures has prompted Bank of America to stop filing notices of default in the state (American Banker Nov. 21). Other banks also significantly reduced their filings, with overall filings dropping 81% in Nevada month over month, according to data from Foreclosure Radar, a firm that monitors county recorder foreclosure filings. The state law's mandated change in foreclosure practices is likely to be temporary. It will last until financial institutions can rid themselves of foreclosure-proceedings glitches--which have happened in other states, the Banker said  …

Market News (11/22/2011)

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MADISON, Wis. (11/23/11)

  • The U.S. economy in the third quarter grew less than previously estimated --even though corporate profits rose. However, a decline in inventories portends an increase in growth as the year comes to a close (Bloomberg.com and The Wall Street Journal Nov. 22). Gross domestic product--the widest gauge of all goods and services produced in an economy--increased at a 2% annualized rate for the quarter--less than forecast and down from the 2.5% previous estimate, the Commerce Department said Tuesday. A climb in housing, manufacturing and retail sales this quarter together with spare inventories, increased the chances the world's biggest economy will gain momentum, Bloomberg said. However, stagnant wages and unemployment indicate consumer spending has been driven by savings reductions--which creates doubt that spending increases can be sustained into next year, Bloomberg said. Meanwhile, despite a stodgy economic recovery, corporate profits increased at a 6.5% seasonally adjusted rate compared with profits a year earlier, the Journal said …
  • Mass layoff events--involving at least 50 workers from a single establishment--and the number of affected employees dropped in October from the previous month, according to the Bureau of Labor Statistics (Moody's Economy.com Nov. 22). Mass layoffs in October fell to 1,353 events--involving 188,689 employees from 1,495 layoffs in September involving 153,229 employees. The decline is consonant with recent data indicating a slight decline in unemployment claims during the month, Moody's said. Both declines suggest a recovery in the labor market is picking up steam, Moody's said …

Bank earnings increased--again--in 3Q

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WASHINGTON (11/23/11)--Commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported an aggregate profit of $35.3 billion in the third quarter of 2011, an $11.5 billion improvement from the $23.8 billion in net income the industry reported in the third quarter of 2010. Credit unions are experiencing a similar trend in improved earnings, said a Credit Union National Association (CUNA) economist.

This is the ninth consecutive quarter that banks' earnings registered a year-over-year increase.

"The FDIC numbers show what we believe to be true for credit unions--based on the monthly  credit union estimates, although we don't have the complete numbers yet--financial  institutions are continuing to recover from the economic decline at a slow and steady pace," Mike Schenk, CUNA vice president of economics and statistics, told News Now. "The FDIC numbers clearly indicate that improvement. When we get the credit union numbers, we expect them to indicate improvement in bottom-line results, in asset quality and in other risk parameters."

From the standpoint of earnings results, CUNA expects credit union earnings to continue to show improvement. However, since credit unions are not-for-profit institutions, CUNA does not expect the improvement to be as dramatic as for the for-profit banks, Schenk said.

"U.S. banks have come a long way from the depths of the financial crisis," said Martin J. Gruenberg, FDIC acting chairman. "Bank balance sheets are stronger in a number of ways, and the industry is generally profitable, but the recovery is by no means complete."

"Ongoing distress in real estate markets and slow growth in jobs and incomes continue to pose risks to credit quality," Gruenberg added. "The U.S. economic outlook is also clouded by uncertainties in the global economy and by volatility in financial markets. So even as the banking industry recovers, the FDIC remains vigilant for new economic challenges that could lie ahead."

The banks are reporting declines in the number of problem institutions and--relatively speaking--the percentage of total assets in those problem institutions, Schenk said. "In the credit union sector, we've seen similar improvements," he added.

It's also interesting to note that credit unions' deposit insurance fund reserve ratio went up six basis points to 0.12%, Schenk said. "In contrast, the National Credit Union Share Insurance Fund--the NCUSIF--finished the quarter at 1.31% of insured shares, or 0.81% after adjusting for the midpoint of likely losses on corporate legacy assets," he added.

"The improvement in bottom-line results in both the banking industry and what we can tell of credit unions so far [this quarter] is in large part because loan-loss provisions continued to decline as loan-portfolio performance improves," Schenk concluded.

In banks, lower provisions for loan losses were responsible for most of the year-over-year improvement in earnings--as was the case in each of the previous eight quarters. Third-quarter loss provisions totaled $18.6 billion, almost 50% less than the $35.1 billion that insured institutions set aside for losses in the third quarter of 2010.

Most institutions (63%) reported improvements in quarterly net income from a year ago. Also, the share of institutions reporting net losses for the quarter fell to 14.3%, down from 19.5% a year earlier. The average return on assets, a basic measure of profitability, rose to 1.03% from 0.72% a year ago.

Asset quality indicators continued to improve as noncurrent loans and leases--those 90 days or more past due or in nonaccrual status--fell for a sixth consecutive quarter. Insured banks and thrifts charged off $26.7 billion in uncollectible loans during the quarter, down $17.2 billion (39.2%) from a year earlier.

Financial results for the third quarter and the first nine months of 2011 are in the FDIC's latest Quarterly Banking Profile, released Monday.

To see the complete profile, use the link.

News of the Competition (11/21/2011)

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MADISON, Wis. (11/22/11)

  • The Federal Deposit Insurance Corp. (FDIC) announced two banks closed Friday, bringing total bank failures this year to 90. That compares with 157 for the entire year in 2010. The FDIC estimated the latest failures will cost its Deposit Insurance Fund roughly $70 million. The failed banks are: Central Progressive Bank, Lacombe, La., assumed by First NBC Bank, New Orleans; and Polk County Bank, Johnston, Iowa, assumed by Grinnell (Iowa) State Bank. The closed banks held about $70 million in assets …
  • Because large U.S. banks are exiting the reverse-mortgage industry, specialty lenders are being left with a glut of business (American Banker Nov. 18). Bank of America Corp., Wells Fargo & Co. and other big lenders have long held most of the business in the mortgage industry niche that lends to elderly consumers, in proportion to the equity they have accrued in their homes. Reverse mortgages generally are federally insured loans for people older than 61 who borrow either through monthly payments or a lump sum against their equity. However, this year escalating costs, eroding home prices and increased examination of the loans by federal regulators, have led to big banks departing that lending arena, the Banker said. During the last two quarters in the mortgage industry, there has been "a seismic shift" away from large lenders in the reverse mortgage business, Richard Booth, a mortgage banker with America's First Funding LLC in Neptune, N.J., told the Banker  …
  • Banks should prepare to enter into informal agreements with regulators as a preliminary step toward release from formal enforcement actions, according to industry lawyers. The agreements are probable for banks that have ongoing issues that require additional time to work out during slow economic times (American Banker Nov. 21). Once a bank has resolved its issues, the informal order would expire, said Frank Bonaventure Jr., a partner at Ober, Kaler, Grimes & Shriver and a former lawyer with the Office of the Comptroller of the Currency. The banking division of Royal Bancshares of Pennsylvania Inc. was notified Tuesday by the Federal Deposit Insurance Corp. and the Pennsylvania Department of Banking that a 2009 consent order would soon be lifted and replaced with an informal agreement. James McSwiggan Jr., the company's president and chief operating officer, told the Banker the move was a "natural progression." Royal Bancshares has made progress but still must address nonperforming assets and return to consistent profitability, McSwiggan said ...

Market News (11/21/2011)

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MADISON, Wis. (11/22/11)

  • U.S. existing-home sales improved in October while the number of homes on the  market continued to decline, 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--rose 1.4% to a seasonally adjusted annual rate of 4.97 million in October from a downwardly revised 4.9 million in September, and are 13.5% above the 4.38 million unit level in October 2010. Lawrence Yun, NAR chief economist, said the market has been fairly steady but at a lower-than-desired level. "Home sales have been stuck in a narrow range despite several improving factors that generally lead to higher home sales such as job creation, rising rents and high affordability conditions," he said. "Many people who are attempting to buy homes are thwarted in the process. A higher rate of contract failures has held back a sales recovery. Contract failures reported by NAR members jumped to 33% in October from 18% in September, and were only 8% a year ago, so we should be seeing stronger sales," Yun added. For the NAR Report, use the link ...                                             
  • Businesses worldwide still are cautious about the economy, with their confidence slipping downward slightly last week, according to Moody's Analytics Survey of Business Confidence (Moody's Economy.com Nov. 21). Business confidence fell to 18.3% from 24.7% the previous week. Business sentiment is consonant with a worldwide economy that is just barely expanding in line with its potential, Moody's said. Despite last week's retreat, confidence has significantly grown since late summer. In that same period, businesses' broadest evaluation of current economic conditions improved the most. Future expectations also have picked up somewhat, and businesses are more positive about hiring intentions, Moody's said …

News of the Competition (11/18/2011)

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MADISON, Wis. (11/21/11)

  • The U.S. foreclosure crisis has not even reached its halfway point, according to the most recent report from the Center for Responsible Lending, a consumer advocacy group (American Banker Nov. 18). The report indicated 2.7 million U.S. households procuring mortgages between 2004 and 2008 have lost their homes in foreclosure. An additional 3.6 million households from that same group of borrowers are 60-plus days delinquent or are going through the foreclosure process, the report indicated. Foreclosure rates are worse for borrowers who obtained high-risk loan products that were stridently pushed by lenders before the housing crisis, the report said …
  • Small U.S. bank merger and acquisition activity picked up in November, following a late summer drop-off in deals (American Banker Nov. 18). Most of this month's activity has been small, closely held banks sold to significantly larger institutions using surplus cash to expand at bargain prices, the Banker said. Small and midsize banks are having difficulty generating good returns in a no-growth environment. Pressures arising from escalating costs and declining margins are compelling them to overcome their economic misgivings about entering into mergers and acquisitions, dealmakers told the Banker
  • Prepaid card marketer NFinanSe Inc. is suing InComm Inc.--which markets its own gift and prepaid cards--in federal court for allegedly violating its distribution agreement and attempting to fix the prices for reloading prepaid cards (American Banker Nov. 18). NFinanSe's complaint said InComm tried to corner NFinanSe into an agreement that would require cards users under its "Vanilla" Visa system to establish reload fees at $3.95. When NFinanSe refused, InComm allegedly retaliated and rescinded its deal to distribute NFinanSe cards to specific retailers, the complaint said …

Market News (11/18/2011)

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MADISON, Wis. (11/21/11)

  • The index of U.S. leading economic indicators rose more than expected in October, indicating the world's biggest economy is picking up steam and will keep growing into early next year (The Wall Street Journal and Bloomberg.com Nov. 18). The leading index released Friday by private research firm the Conference Board increased 0.9% last month after climbing 0.1% in September. October's gain was the sixth consecutive monthly increase. The economy could end 2011 expanding at the fastest rate in 18 months because forecasts for the fourth quarter have improved, analysts told Bloomberg. Despite continuing negative news from the financial markets, the economy seems to be improving, Joseph La Vorgna, chief U.S. economist at Deutsche Bank Securities Inc. in New York, told Bloomberg. If some negative financial issues can be overcome even for a brief time, the resilient U.S. economy could make a comeback, he added. Also, the Economic Cycle Research Institute (ECRI) Weekly Index--which measures economic growth--dropped to 121.8 for the week ended Nov. 11 from an unrevised 122.3 the prior week (Moody's Economy.com Nov. 18). However, the smoothed annualized growth rate continued to climb and is at its highest level (-7.9%) since mid-September. The climbing growth rate is a positive signal that the U.S. economy can keep from sliding back into recession, Moody's said. In a related matter, the probability that the U.S. economy will be in recession in six months--although still  elevated--dropped to 40% in October from 45% in September (Moody's Economy.com Nov. 18) …                                              
  • The economic outlook as viewed by U.S. consumers reached a four-month high in November, suggesting their concerns about the biggest economy in the world falling into recession are diminishing, according to the Bloomberg Consumer Comfort Index (Bloomberg.com and Moody's Economy.com Nov. 17). The index's monthly expectations gauge rose to -32 this month--the best reading since July--from -45 in October. Also, the index's weekly measure of current conditions for the week ended Nov. 13 climbed to -50 from -51.6 the prior week--the second consecutive weekly gain. The uptick occurred because consumers' perceptions of overall conditions in all three segments of the survey have slightly improved, Moody's said  …

News of the Competition (11/17/2011)

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MADISON, Wis. (11/18/11)

  • While U.S. consumer loan growth has stagnated at 0.7% since second quarter, third-quarter growth rates in credit card purchases--at 8.8% compared with third quarter 2010--has passed overall consumption growth (American Banker Nov. 17). Cardholders have increased purchases without borrowing. A contraction in total credit card loans has slowed down but still is continuing at a year-over-year decline of 2% in September, the most recent data available, according to the Federal Reserve. The data suggest spending is focused in a population segment who pays off their credit card balances each month, has been able to avoid prolonged unemployment, and experienced a partial recovery of their stock investments, the Banker said …
  • Nevada's attorney general Wednesday filed charges in the first U.S. criminal case involving robo-signing of mortgage documents (American Banker Nov. 17). Robo-signers don't read the documents placed in front of them, and the notaries and witnesses that are supposed to watch them as they sign are not present. Robo-signing sometimes involves forgeries or fake titles affixed to signatures. Charges were filed with the Clark County Recorder's office against two people--California residents Gary Trafford and Gerri Sheppard--accused of filing tens of thousands of bogus documents. The defendants are alleged to have permitted their signatures to be forged and submitted to the county recorder, according to the grand jury indictment. More indictments should be forthcoming, John Kelleher, Nevada chief deputy attorney general, told the Banker
  • Bank of America (BofA) began laying off employees in its technology and operations areas this week as a part of its ongoing efficiency initiative (Reuters via American Banker Nov. 17). The cuts affect employees in staff-support functions and are part of the 30,000 jobs BofA said it will cut during the next few years. Launched in April, the first phase of the Project New BAC efficiency program concentrated on BofA's consumer banking and support areas. The bank has roughly 100,000 technology and operations employees in 40 countries. BofA had 288,739 total employees as of the end of the third quarter, Reuters said …

Market News (11/17/2011)

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MADISON, Wis. (11/18/11)

  • Initial U.S. claims for unemployment benefits last week fell to their lowest level since April 2, indicating continuing momentum in the weak U.S. labor market (The Wall Street Journal, Bloomberg.com and The New York Times Nov. 17). Claims fell by 5,000--to a seasonally adjusted 380,000--for the week ended Nov. 12, the Labor Department said Thursday. With job cuts abating, U.S. firms may add to their work forces more quickly as demand accelerates. Sales growth that exceeded expectations in October could pave the way for more output, which would necessitate hiring more employees, Bloomberg said. Although layoffs have diminished, firms still are hesitant to hire, resulting in only gradual labor market improvement, Omair Sharif, an economist at RBS Securities Inc. in Stamford, Conn., told Bloomberg. Meanwhile, continuing claims for unemployment benefits for the week ended Nov. 5 declined to 3.608 million from 3.665 million the prior week (Moody's Economy.com Nov. 17) ...
  • The aggregate U.S. mortgage delinquency rate in the third quarter fell to its lowest level since 2008, according to the Mortgage Bankers Association (MBA) National Delinquency Survey (MarketWatch and Moody's Economy.com Nov. 17). The seasonally adjusted rate dropped to 7.99% from 8.44% in the second quarter--the first quarterly decline in the mortgage delinquency rate in 2011. "While the delinquency picture changed for the better in the third quarter, the foreclosure data indicated that we are not out of the woods yet and that the issues continue to vary by geography," said Michael Fratantoni, MBA vice president of research and economics. "A closer look shows that there are different trends driving these results. The increase in the foreclosure starts rate this quarter was driven by large increases from just a few servicers, concentrated in certain 'hardest hit' states. For most servicers, the foreclosure starts rate was little changed over the quarter. In these 'hardest hit' states, the few large changes reflect the progression of delinquent loans through the foreclosure process. Outside of these states, improvement has continued, although at a slow pace due to the still-weak job market," Fratantoni added.  For the MBA report, use the link …
  • Although U.S. housing starts in October declined from September, builders began construction on more homes than forecast, and construction permits rose to their highest level since March 2010, indicating the housing sector may become less of a drag during the third year of the nation's economic recovery (Bloomberg.com Nov. 17). Housing starts dropped 0.3% to a 628,000 annual rate from a 630,000 pace in September, the Commerce Department said Thursday. Economists had forecast housing starts to drop to 610,000, according to a Bloomberg News survey. Although housing construction still is near the bottom, it is starting to head in an upward direction, said Eric Green, chief market economist at TD Securities Inc. in New York. It could be late next year before housing construction will significantly add to economic growth, he added …

News of the Competition (11/16/2011)

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MADISON, Wis. (11/17/11)

  • Small community banks in the U.S. claim that larger rival banks are luring their best clients away in renewed attempts to expand lending (American Banker Nov. 15). At a time when smaller banks are being impacted by higher regulatory costs, ongoing credit issues and reduced fees, encroachment from big banks--via low loan interest rates--will hurt them, industry observers say. Although some larger banks cut back on lending in 2008 and 2009, they now are trying to reassert themselves this year amid improving markets and increased liquidity in the financial system, Jeff Davis, an analyst at Guggenheim Securities, told the Banker. Banks with more than $1 billion in assets increased their loans by 1.4% in the second quarter, over first quarter, according to the Federal Deposit Insurance Corp. ...
  • If the U.S. housing market erodes any more, there is nearly a 50% chance that the Federal Housing Administration (FHA) will need to be bailed out next year by the government, according to a report issued Tuesday by the agency's independent auditor (The New York Times Nov. 15). The FHA has $2.6 billion in reserves--down from $4.7 billion in 2010, the report said. The agency provides private lenders with guarantees against homeowner default. Because of the national foreclosure crisis, FHA has had to pay out $37 billion in insurance claims during the past three years and has depleted its cash buffer, the Times said …
  • American Express Co. has teamed with Target Corp. to launch a prepaid card at the discount retailer's U.S. stores. The move, announced Tuesday, marks AmEx's most recent attempt to grow its prepaid operations (American Banker Nov. 15). The deal enhances the Minneapolis retailer's financial offerings without Target needing to recommit to its existing banking operations, the Banker said. AmEx is attempting to enlarge its customer base and add more revenue in response to the weak economy, the emergence of mobile banking, and new federal regulations on credit and debit cards, the Banker said … 

Market News (11/16/2011)

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MADISON, Wis. (11/17/11)

  • For the first time in four months, the cost of living in the U.S. unexpectedly declined in October, indicating that inflationary pressure may be starting to abate (Bloomberg.com Nov. 16). The consumer price index (CPI) fell 0.1% after rising 0.3% in September, the Labor Department said Wednesday. The core rate--which excludes volatile food and energy costs--increased 0.1%, equaling September as the smallest rise this year. Economists had forecast no change in the CPI, according to a Bloomberg News survey. Some retailers may be able to keep prices lower than earlier this year because of declining raw-material costs. Lower retail prices will help merchants' customers with stalled incomes during the holiday shopping season, Bloomberg said. With inflation expected to ease through the rest of 2011 and into 2102, the Federal Reserve should have more leeway in providing additional monetary stimulus, said Moody's Economy.com (Nov. 16) …
  • The Market Composite Index indicated that mortgage loan applications decreased 10% for the week ended Nov. 1, from one week earlier. The index is part of the Weekly Mortgage Applications Survey released Wednesday by the Mortgage Bankers Association (MBA). On an unadjusted basis, the index declined 19.6%. The refinance share of mortgage activity decreased to 77.3% of total applications from 78.6% the previous week. The adjustable-rate mortgage (ARM) share of activity increased to 6.1% from 5.8% of total applications from the previous week. The four-week moving average for the seasonally adjusted Market Index is up 1.02%. The four-week moving average increased 2.53% for the seasonally adjusted Purchase Index, while this average rose 0.61% for the Refinance Index. The Refinance Index dropped 12.2%. The seasonally adjusted Purchase Index fell 2.3%. The unadjusted Purchase Index decreased 14.8% and was 9.5% lower than the same week one year ago. For the MBA Report, use the link …
  • U.S. industrial production expanded 0.7% in October after falling 0.1% September, according to the Federal Reserve. Previously, industrial production was reported to have gained 0.2% in September. Most of this revision resulted from lower estimated output for mining. Factory output increased 0.5% in October after rising 0.3% in September. Production at mines climbed 2.3% in October, while the output of utilities edged down 0.1%. At 94.7% of its 2007 average, total industrial production for October was 3.9% above its year-earlier level. Capacity use for total industry went up to 77.8%, a rate 2.1 percentage points above its level from a year earlier, but 2.6 percentage points below its long-run (1972-2010) average. For the Fed's release, use the link …

News of the Competition (11/15/2011)

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MADISON, Wis. (11/16/11)

  • The Federal Housing Administration (FHA) expects fiscal year 2012 to be as robust as fiscal year 2011, in which it sold more than 102,000 government-owned homes (American Banker Nov. 14). FHA sold a record 102,905 units in fiscal year 20l1 and consequently returned more than $7 billion to the Treasury Department, Tom Rose, of FHA's Santa Ana, Calif., home ownership center and director of real estate owned for FHA, told the Banker. FHA is in the 100,000 range this year again, Rose added  …
  • More U.S. banks have ramped up efforts to sell nonperforming assets this year, and the volume of those deals is going to rise, say industry experts. In the meantime, a new government deal structure asks sellers to keep the troubled assets and work them out on their own (American Banker Nov. 14). Holders of nonperforming assets can become more creative in solving their problems in both scenarios, the Banker said. Taken together, the deals should contribute to a larger economic recovery, industry observers said …

Market News (11/15/2011)

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MADISON, Wis. (11/16/11)

  • For a fifth consecutive month, U.S. retail sales rose in October because consumers increased spending on autos, building supplies, electronics and on the Internet (The New York Times, The Wall Street Journal and Bloomberg.com Nov. 15). Retail sales increased 0.5% from September to an adjusted $397.67 billion--following a 1.1% gain in September, the Commerce Department said Tuesday. Sales climbed despite a decrease in department store and clothing sales last month, the Times said. Retail sales usually are a key indicator of consumer spending, which is a main force pushing economic growth, the Journal said. In a related matter, the International Council of Shopping Centers (ICSC) chain store sales index recorded its third consecutive weekly gain for the week ended Nov. 12. The 0.3% increased pushed the  index to its highest level in nine weeks and drove year-over-year growth up to 3.1% (Moody's Economy.com Nov. 15) …
  • U.S. business inventories remained unchanged in September from August, falling short of the consensus expectation of a 0.1% increase, according to the Census Bureau (Moody's Economy.com Nov. 15). Retail inventories declined by 0.1%--a significant rise from the 0.7% rise in August, Moody's said. September business sales climbed 0.6%--up from a 0.4% gain August. The inventory-to-sales ratio remained steady at 1.27. Because that ratio has not changed much during the past year, it suggests that businesses have managed inventories successfully, Moody's said …

News of the Competition (11/14/2011)

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MADISON, Wis. (11/15/11)

  • The Federal Deposit Insurance Corp. (FDIC) announced a bank closing Friday, bringing total bank failures this year to 88. That compares with 157 for the entire year in 2010. The failed bank is Community Bank of Rockmart, Rockmart, Ga., assumed by Century Bank of Georgia, Cartersville, Ga. The closed bank held about $62 million in assets. The FDIC estimated the latest failure will cost its Deposit Insurance Fund roughly $15 million …                                    
  • Many U.S. banks are quietly implementing new fees to recoup costs, even while they are backing off of charging customers monthly fees to use their debit cards (The New York Times Nov. 13). Some examples are U.S Bancorp charging 50 cents a check for deposits using a mobile phone;  Bank of America charging $5--$20 for a rush delivery--to replace a lost debit card; and TD Bank starting a $15 fee in December for customers who want to wire-transfer cash to their account. Banks are increasing existing fees or making them more difficult to avoid and also adding new charges that are more discreet than the upfront monthly debit card fees that were attempted and failed because of consumer backlash, Alex Matjanec, a co-founder of My BankTracker.com, told the Times
  • Bank of America (BofA) is selling roughly $10.4 billion of its remaining shares in China Construction Bank Corp. to a group of investors in a deal that is anticipated to net BofA an after-tax gain of $1.8 billion (The Wall Street Journal and Bloomberg.com Nov. 14). BofA has been trying to bolster its balance sheet in advance of new international capital standards by ridding itself of non-core assets, the Journal said …

Market News (11/14/2011)

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MADISON, Wis.  (11/15/11)

  • The U.S. economic growth outlook for the next two years was lowered by economists who were polled by the Philadelphia Federal Reserve (The New York Times Nov. 14).  The poll, released Monday, indicated a weaker than anticipated labor market caused the change. Gross domestic product was forecast to expand at a 2.4% average annual rate in 2012--down from a 2.6% estimate in the third-quarter survey. For 2013, the growth estimate was reduced to 2.7% from 2.9%. The job market outlook also eroded, with the unemployment rate projected to average 8.8% in 2012--an increase from an earlier 8.6% forecast, suggesting monthly job gains at a rate of 123,200 next year …

News of the Competition (11/10/2011)

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MADISON, Wis. (11/14/11)

  • Ginnie Mae (the Government National Mortgage Association), which channels global capital into U.S. housing markets to finance government-insured mortgages, nearly doubled its profits in fiscal year 2011, compared with the previous year, because of lower loss provisioning (American Banker Nov 10). It posted a $1.2 billion profit from its secondary market operations--an 84% rise from fiscal year 2010. When fiscal year 2011 ended on Sept. 30, Ginnie Mae had $16 billion in retained earnings and $800 billion loss reserves …
  • For the seventh consecutive quarter, General Motors (GM) reported a profit, but the largest U.S. automaker said it needs to implement more cost cuts to ensure its long-term profitability (The New York Times Nov. 9). In the third quarter, GM earned $1.73 billion, or $1.03 per share--12% less than a year ago--because higher marketing and engineering costs trumped a rise in worldwide sales. Although revenue climbed 8% to $36.7 billion, it was down roughly $200 per vehicle, GM said …

Market News (11/10/2011)

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MADISON, Wis. (11/14/11)

  • The U.S. trade deficit unexpectedly lessened in September because exports jumped to a record high (Bloomberg.com and The Wall Street Journal Nov. 10). The trade gap shrank 4% to $43.1 billion from a revised $44.9 billion in August, the Commerce Department said Thursday. The September improvement indicates a decrease in the nonpetroleum trade deficit, with the petroleum deficit widening for the second consecutive month (Moody's Economy.com Nov. 10). A smaller U.S. trade deficit in September may result in a larger contribution to growth in the third quarter, Bloomberg said. In recent months, U.S. exports have been solid and it will take a while for a slowdown of activity abroad to negatively impact exports, Paul Dales, a senior U.S. economist at Capital Economics in Toronto, told Bloomberg
  • Initial claims for U.S. unemployment benefits for the week ended Nov. 5 dropped to the lowest level in seven months, an indication the economic recovery may be prompting firms to lessen job cuts (Bloomberg.com Nov. 10). Claims for the week declined by 10,000--to 390,000, the Labor Department said Thursday. The declining claims are a harbinger for fourth-quarter labor market improvement, said John Herrmann, a senior fixed-income strategist at State Street Global Markets LLC in Boston. Job retention is good, the economy is growing at a decent pace, and businesses have been cautiously managing their work forces, he added. Meanwhile, continuing claims for unemployment benefits for the week ended Oct. 29 fell to 3.615 million from 3.707 million the prior week (Moody's Economy.com Nov. 10) …
  • U.S. foreclosure filings increased 7.3% in October, according to data from market researcher RealtyTrac's foreclosure filings (USA Today and Moody's Economy.com Nov. 10). October's foreclosures are up 7% from September, but are down nearly 31% from October 2010. In the coming months, total foreclosure activity will increase as mortgage servicers correct processing problems and paperwork to work through the backlog of foreclosures at various stages in the foreclosure process …

News of the Competition (11/09/2011)

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MADISON, Wis. (11/10/11)

  • Insurance units owned by U.S. bank holding companies produced a record $7.9 billion in fees during the first half of 2011--a 14% increase from the same period last year (American Banker Nov. 8). Organic growth at the insurance units of the biggest U.S. banks' holding companies engendered the increase in fees, Michael White, president of Michael White Associates in Radnor, Pa., told the Banker. Of the bank holding companies with more than $10 billion in assets, nearly nine out of 10 operate insurance subsidiaries, and that group in the first half of the year collectively generated 95% of the brokerage fees in the industry …
  • PayPal Inc. has activated an app for android handsets that allows customers to exchange money by tapping their phones against each other (American Banker Nov. 8). The eBay Inc. subsidiary said Tuesday that it is using near-field communications in its most recent update to activate the contactless payments for its mobile wallet. PayPal also said it revised some features of the app's interface …
  • Raj Rajartnam, a former hedge fund manager found guilty of insider trading and who was sentenced to more than 11 years in prison, was ordered by U.S. District Judge Jed Rakoff in Manhattan to pay a record $92.8 million financial penalty in a related civil case filed by the Securities and Exchange Commission (SEC). Rakoff's ruling constitutes the biggest civil penalty levied against an individual in an SEC insider trading case, the agency said …

Market News (11/09/2011)

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MADISON, Wis. (11/10/11)

  • U.S. mortgage loan application volume increased 10.3% for the week ended Nov. 4 from one week earlier, according to the Market Composite index, part of the Weekly Mortgage Applications Survey released Wednesday by Mortgage Bankers Association (MBA). On an unadjusted basis, the index rose 9.9%. The Refinance Index jumped 12.1%. The seasonally adjusted Purchase Index climbed 4.8% to the highest level since August. The unadjusted Purchase Index grew 2.7% and was 2.5% lower than the same week one year ago. "Treasury rates dropped last week, as renewed turmoil in Europe once again led to a flight to quality, and 30-year mortgage rates dropped to their second lowest level of the year," said Mike Fratantoni, MBA vice president of research and economics. "Refinance applications jumped more than 12% to their highest level in a month and some lenders experienced even larger increases. As has been the case all year, many refinance applicants are opting to deleverage by choosing 15-year mortgages." For the MBA report, use the link …                     
  • Wholesale inventories in the U.S. unexpectedly dropped in September for the first time since 2009, with a sales uptick helping wholesalers maintain stockpiles in step with demand (Bloomberg.com and Moody's Economy.com Nov. 9). Inventories decreased 0.1%, following a revised 0.1%--previously 0.4%--rise in August, the Commerce Department said Wednesday. Analysts had forecast a 0.5% gain for September in a Bloomberg News Survey. Wholesalers maintained enough goods in stock to last 1.15 months--close to the record low hit earlier this year--at September's sales pace. Manufacturers may decide to bolster production if strong demand and leaner inventories persist, Bloomberg said …

Consumer credit up overall down at CUs

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WASHINGTON (11/9/11)--Consumers borrowed more than $2.452 trillion during September, an increase of $7.39 billion after dropping a revised $9.68 billion in August and more than the $5.2 billion projected by economists, said the Federal Reserve in its Consumer Credit report released Monday.  However, at credit unions, members borrowed less than in August.

The overall figure for September was more than the median $5.2 billion increase expected by economists surveyed by Bloomberg News (Bloomberg Businessweek Nov. 8).

Credit union members overall borrowed $223.1 billion in September, less than the $224.6 billion they borrowed in August and lower than the $224.9 billion they borrowed in third quarter 2010 from credit unions, said the Fed's report.

Overall consumer revolving credit, which  measures credit card use and does not cover mortgages or home equity lines of credit secured by real estate, dropped $627.1 million to $789.6 billion during September from August's $790.2 billion, said the Fed.

At credit unions, revolving credit dropped to $36.3 million from $36.4 million in August. That compares with third quarter 2010 debt of $35.3 million by credit union members.

The overall revolving credit numbers, down the past three months, reflect consumers' hesitancy to add to their debt during continued high unemployment, reported Bloomberg.

Nonrevolving credit, which includes consumer loans such as student loans, and loans for automobiles and mobile homes, climbed by $8 billion to $1.662.4 trillion from August's $1.654.4 trillion, thanks largely to higher auto sales, said  Bloomberg.

Nonrevolving credit borrowed from credit unions totaled $186.8 billion, down from $188.2 billion in august and $189.6 billion in third quarter of 2010.

According to analysts, the increased nonrevolving debt reflected an accounting change seen since mid-2010 that stemmed from health-care reform and that moved student lending away from banks and toward direct lending by the federal government, (Reuters Nov. 7)

News of the Competition (11/08/2011)

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MADISON, Wis. (11/9/11)

  • While financial institution branches traditionally have been where consumers make their deposits, ATMs are catching up as the desired place to deposit cash (American Banker Nov. 7).  ATMs are viewed as a primary banking channel by 37% of ATMs users surveyed in a Synergistics Research survey, CEO William McCracken last week told a Source Media ATM, Debit & Prepaid Forum in Las Vegas.  That percentage compares with 22% who view ATMs in that light in 2007.  When asked what they would like to be able to do at an ATM that they can't do today, 59% of 1,000 Internet-using households surveyed replied "cash checks."  The survey also indicated that 75% of consumers use their financial institution's ATMs, while 23% use the most convenient ATM …
  • In the third quarter, nearly half of U.S. banks surveyed by the Federal Reserve made loans or else extended lines of credit to European banks or their affiliates (American Banker Nov. 8). Most of the banks were larger institutions and had relatively modest exposure to risk, according to the Fed's Senior Loan Officer Opinion Survey. About 60% of U.S. firms also made loans or extended credit to nonfinancial firms with U.S. operations that had substantial exposure to Europe. However, those loans only made up a small amount--less than 5%--of outstanding commercial and industrial loans at most U.S. banks ...

Market News (11/08/2011)

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MADISON, Wis. (11/9/11)

  • U.S. small-business confidence increased in October for a second consecutive month, indicating pessimism is waning about the economy and sales outlook, according to the National Federation of Independent Business' (NFIB) index (Bloomberg.com and Moody's Economy.com Nov. 8). The index rose to 90.2 last month--the highest level since June--from 88.9 in September. Firms still are reluctant to hire and increase spending amid 9% unemployment, tight credit and declining home prices, Bloomberg said. With unemployment remaining at levels nearly as high as seen during the nadir of the recession, future prospects have not improved, William Dunkelberg, NFIB chief economist, told Bloomberg. In a related matter, global business confidence is starting to improve, according to Moody's Analytics Survey of Business Confidence. Moody's business confidence index was 21.9 for the week ended Nov. 4--up from 18.8 the prior week (Moody's Economy.com Nov. 7) …                            
  • The number of U.S. jobs available climbed to 300,000 in September--the highest level in more than three years--an indication that slow improvement in the weak labor market is continuing (The Wall Street Journal and Bloomberg.com Nov. 8). At the end of September there were 3.4 million job openings--up from 3.1 million in August, according to the Labor Department's Job Openings and Labor Turnover Survey. Meanwhile, hires and separations both rose. In September, 4.2 million workers were hired, while 4.1 million left their jobs (Moody's Economy.com Nov. 8) …

News of the Competition (11/07/2011)

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MADISON, Wis. (11/8/11)

  • The Federal Deposit Insurance Corp. (FDIC) announced two banks were closed Friday, bringing total bank failures this year to 87. That compares with 157 for the entire year in 2010. The FDIC estimated the latest failures will cost the Deposit Insurance Fund roughly $62 million. The failed banks are: Mid City Bank Inc., Omaha, Neb., assumed by Purdum State Bank, Purdum, Neb.; and SunFirst Bank, Saint George, Utah, assumed by Cache Valley, Bank, Logan, Utah. The closed banks held about $304 million in assets …
  • Executives at several U.S. megabanks say debit-card programs will continue to propel most big banks' profit strategies soon, even though price controls instituted by the federal government have cut a big chunk out of interchange revenues (American Banker Nov. 4).  SunTrust Banks Inc. has customers who are "fanatical debit users" and will remain so because the value proposition of debit cards remains high for them, Whitney Stewart, SunTrust senior vice president, told a Prepaid Forum last week. Debit cards still propel profits despite reduced revenue, Scott Qualls, senior vice president with BB&T Corp., told the forum. Customers who use debit cards have a completely different profile than those who write checks, and debit-card users are significantly more profitable to the bank, Qualls added ...
  • More than 1,100 bankers, card executives, consultants, regulators and vendors met last week in Las Vegas at an annual conference about debit cards and related products (American Banker Nov. 6). Although new federal debit regulations have reduced banks' profits, debit cards remain popular with many customers. With monthly debit card fees being rescinded by large U.S. banks as a result of widespread customer protests, many bankers at the conference were uncertain about what steps they should take next, the Banker said. About 650,000 consumers closed their bank accounts and transferred their deposits to credit unions in advance of Bank Transfer Day Saturday--because of dissatisfaction with banks and their originally announced monthly debit card fees--the Credit Union National Association estimated. Banks need to focus on customer relationships, Robert DeAngelis, an execute vice president of KeyCorp's community banking operations, told the conference  ...
  • A fairness hearing scheduled Wednesday about Citigroup Inc.'s $285 million securities settlement with the Securities and Exchange Commission (SEC) could be contentious (American Banker Nov. 4). U.S. District Judge Jed Rakoff for the Southern District of New York will hear the case. He is said to be uncomfortable with getting rid of major securities cases with settlements that don't resolve the legal issues at hand, the Banker said. At issue is an SEC allegation that a low-level Citi employee "neglected" to include wording that describes Citi's role in collateralized debt obligations (CDO) into disclosure documents describing CDO deals  …

Market News (11/07/2011)

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MADISON, Wis.  (11/8/11)

  • A refined gauge of the U.S. poverty rate placed it at 16% in 2010--up from the 15.2% official rate issued earlier, the Census Bureau said (Bloomberg.com Nov. 7). The new gauge--dubbed the Supplemental Poverty Measure--is predicated on how much families spend on clothing, food, shelter and utilities. It is a departure from the bureau's traditional method employed since the 1960s in which it tripled a household's annual food budget to determine the official poverty threshold. With the supplemental measure calculations, a family of two adults and two children earning an annual income of $24,343--compared with the official figure of $22,113--is deemed living in poverty in 2010 …

News of the Competition (11/04/2011)

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MADISON, Wis. (11/7/11)

  • Last week, the Federal Reserve issued a consent order to Capital Funding Bancorp Inc., of Baltimore, and its subsidiary CFG Community Bank, requiring the company to improve the composition and business practices of its board. A  February examination unearthed safety and soundness deficiencies at the bank and violations of laws and regulations, according to the Fed (American Banker Nov. 4). Under the consent order, the $517.2 million asset bank must hire an independent consultant to evaluate corporate governance and board and management structure. It also must hire an outside consultant to study the bank's reimbursement policies. CFG Community's board also was instructed that it must have a majority of its board members be outside directors and must use only outside directors to build a compensation committee …
  • Some U.S. bankers and community advocates would like to see the federal government do even more to keep consumers who are facing foreclosure in their homes (American Banker Nov. 3). Although the Barack Obama administration just revised the Home Affordable Refinance Program (HARP), it can help only about 14% to 15% of customers who qualify at Wells Fargo & Co.'s home mortgage divisions, A. Marie Day, the bank's senior vice president and regional servicing director, told the Banker. HARP should be adjusted to ensure it benefits the maximum number of people who need help, Day said.  HARP and the Home Affordable Modification Program (HAMP) were unveiled in 2009 by the Obama administration to keep people in their homes by either refinancing a mortgage if a homeowner owes more than the home is worth (known as being underwater), or by modifying conditions of the home loan, respectively …
  • JPMorgan Chase & Co. is offering customers of three of its top credit card programs--Freedom, Chase Sapphire and Chase's annual Ultimate Rewards holiday program--more options to redeem points and buy gifts for the holiday season (American Banker Nov. 3). Chase said it hopes the move will engender more excitement for the products and prompt customers to go back to using credit cards more for holiday shopping, analysts said. The company ran a promotion last year similar to its current Ultimate Rewards holiday program--which will provide deals to Chase Freedom cash-back cardholders--and it saw a 300% rise in the number of items redeemed, compared with its regular redemption rates, Chase said …

Market News (11/04/2011)

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MADISON, Wis. (11/7/11)

  • The U.S. economy added a scant 80,000 jobs in October, which is less than economists expected, the Labor Department said Friday (The Wall Street Journal and The New York Times Nov. 4). The October gain compares with 158,000 jobs added in September. Overall, the private sector added 104,000 jobs, but that was somewhat mitigated by government's continued job cuts at all levels, the Journal said. Unemployment fell slightly to 9% from 9.1% in September. The stodgy economic recovery is hurting many people unable to find work, including those who became unemployed for the first time, the Journal said.  Even though the U.S. economy is not performing at a high level, it has gained some momentum compared with few months ago, and lowering the chance of a double-dip recession, Augustine Faucher, Moody's Analytics director of macroeconomics, told the Times
  • The Economic Cycle Research Institute (ECRI) Weekly Leading Index--which measures economic growth--rose to 122.1 for the week ended Oct. 28 from a revised 121.2 the previous week (Moody's Economy.com Nov. 4). That constitutes the third consecutive gain following weeks of declines. The smoothed annualized rate climbed for the second consecutive week, moving above the -10% level--the benchmark for a coming recession--to -9.4%. In a related matter, the ECRI future inflation gauge declined in October to 99.2 from a revised 99.7 in September. The gauge has been trending downward since reaching a peak in March. The latest decrease is consonant with a consensus that U.S. inflation pressures are lessening, ECRI said …

News of the Competition (11/03/2011)

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MADISON, Wis. (11/4//11)

  • Admitting it had again overestimated the U.S. economic recovery from the 2008 financial crisis, the Federal Reserve substantially lessened its forecast for economic growth through 2013 (The New York Times Nov. 2). The Fed said Wednesday the economy will grow 2.5% to 2.9% in 2012--significantly below its June prediction of 3.3% to 3.7%. For 2013, the Fed forecast growth of 3% to 3.5%--down from its previous estimates of 3.5% to 4.2%. The unemployment rate will average between 8.5% and 8.7% for the fourth quarter of 2011, at least 7.8% by the end of 2013, and at least 6.8% at the end of 2014. The Fed predicted growth in 2012 gross domestic product to be 2.5% to 2.9%--measured from year-end 2011 to year-end 2012 …
  • Several U.S. community banks have resumed building their reserves, following several quarters of easing (American Banker Nov. 2). More than 200 community banks--nearly 40% of banks with $20 billion or less in assets--have reported a surge in third-quarter loan-loss provisions after reducing them in the second quarter, the Banker said. Although banks normally don't raise their reserves once credit quality stabilizes, several banks are elevating them because of more general concerns that include ongoing economic uncertainty and worries about the manner in which legislators will handle fiscal issues such as the national deficit, the Banker said …
  • MasterCard Inc.'s third-quarter net income jumped 38.4% to $717 million from $518 million a year earlier, due to higher purchase volumes for credit and debit cards nationwide, the card company said Wednesday (Bloomberg.com and American Banker Nov. 2). Net revenue for the world's second-largest payment network increased 38.4% to $1.8 billion from $1.4 billion. MasterCard's operating expenses climbed 23.3% to $816 million. In a related matter, MasterCard said it intends to increase its debit card activity, but did not disclose specifics on its plans to maximize advantages presented by new regulations forbidding exclusive debit networking routing deals, the Banker said. The new rules may provide MasterCard and other debit-card companies a chance to wrest market share from Visa, the No. 1 debit-card player, the Banker said …

Market News (11/03/2011)

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MADISON, Wis. (11/4/11)

  • For the first time this year, U.S. worker productivity increased in the third quarter, with companies attempting to trim costs after a growth slowdown (Bloomberg.com Nov. 3). The gauge of employee output per hour rose at a 3.1% annual rate following decreases in each of the previous two quarters, the Labor Department said Thursday. Third-quarter expenses per employee (unit labor costs) dropped 2.4%, with scant inflationary pressure coming from the labor market (Moody's Economy.com Nov. 3). Soon, productivity will slow. That, along with lower labor costs, should cause companies to hire as demand rises, Moody's said …
  • Initial claims for U.S. unemployment benefits declined last week, indicating some improvement for the still-depressed labor market (The Wall Street Journal and Bloomberg.com Nov. 3). Claims dropped 9,000--to 397,000--for the week ended Oct. 29, the fewest in a month, the Labor Department said Thursday. The total number of people receiving unemployment benefits fell to a six-month low. Since fewer job cuts are an antecedent to larger payroll gains, that may help sustain consumer spending, which constitutes roughly 70% of the U.S. economy, Bloomberg said. Meanwhile, continuing claims for unemployment benefits for the week ended Oct. 22 declined to 3.683 million from 3.698 million the prior week (Moody's Economy.com  Nov. 3) …

Market News (11/02/2011)

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MADISON,  Wis. (11/3/11)

  • The number of planned job cuts in the U.S. decreased 63% in October from September, which recorded the most job cuts since April of 2009. However job cuts  rose 13%--to 42,759--since October 2010, according to Challenger, Gray & Christmas, based in Chicago (Bloomberg.com  Nov. 2) .  Challenger's report was released Wednesday. September's firings were driven by a few companies that announced  significant cuts and were not considered a weakening of the labor market, said  Moody's Economy.com  (Nov. 2). In September the firings were mostly due to budgetary cutbacks at federal agencies and financial companies.  In October, these two sectors saw significant declines in layoffs--to 2,785  from 54,182 in September  for government and  to 497 from 31,167 in September for financial services. Year-to-date announced job cuts have totaled 521,823, compared with 449, 258 for the same period in 2010 …
  • Mortgage applications in the U.S. for the week ending Oct. 28 inched up 0.2% from the previous week to 665.6, according to the composite index of the Mortgage Bankers Assoc iation's  Mortgage Applications Survey, which was released Wednesday. The overall market  index was down 9.4% from four weeks ago, and down 15.5% from one year ago.  Applications to purchase homes rose 1.8% to 174.8 from the previous week, but the week's applications were down 0.2% from four weeks ago and down 2.3% from the same period last year.  Refinance applications dropped  0.2%--to 3,539.3. Refinances were  11.9% less than four weeks ago and  18.2% less than  the same period in 2010.  According to Moody's Economy.com, the refinance index's upward trend of the past few months is unchanged because mortgage rates are more attractive to buyers …

News of the Competition (11/02/2011)

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MADISON, Wis. (11/3/11)

  • A federal judge on Tuesday dismissed lawsuits filed by a court-appointed trustee pursuing damages from big banks and other third parties to compensate victims of Bernard L. Madoff's giant Ponzi scheme (The New York Times Nov. 2). U.S. District Court Judge Colleen McMahon tossed out lawsuits totaling more than $20 billion filed by the trustee, Irving H. Picard, against JPMorgan Chase and UBS, which are accused of profiting from Madoff's scheme. McMahon said that Picard lacked legal authority to pursue the cases. JPMorgan Chase served as Madoff's banker and created and sold derivatives tied to his investment performance. UBS provided banking and administrative services to European investment funds that directed funds to Madoff …
  • Point-of-sale (POS) terminals are undergoing a technological transformation as they evolve to accept contactless and chip-and-PIN payments. New POS terminals from Verifone and Ingenico allow merchants to add near-field communications acceptance to accommodate contactless payments (American Banker Nov. 2). Merchants also can offer the Europay, Mastercard and Visa (EMV) card payment security standard, which is widely accepted overseas but is just gaining a foothold in the U.S. Visa and Wal-Mart are pressuring other U.S. merchants to adopt EMV, said the article. Future generations of smartphones are expected to be equipped with near-field communication technology …

CUNA on Fed action More pressure on CU net interest margins

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WASHINGTON (11/3/11)--Federal Reserve policymakers' action yesterday holding steady the target rate for federal funds at 0% to 0.25% and indicating it would hold rates at "exceptionally low levels" at least through mid-2013 will mean increased pressure over time for credit unions' net interest margins, said a Credit Union National Association (CUNA) economist.

The target rate has been near 0% to 0.25% since December 2008.

The Federal Open Market Committee (FOMC), which sets the Fed's monetary policy, said the third quarter growth is strong and reflects "in part a reversal of the temporary that had weighed on growth earlier in the year. Nonetheless, recent indicators point to continuing weakness in overall labor market conditions, and the unemployment rate remains elevated."

"Wednesday's FOMC statement acknowledged the recent pickup in consumer spending and overall economic activity in the third quarter," said Steve Rick, senior economist at CUNA. "But the increased activity was not enough for the Federal Reserve to alter its current policy of reinvesting principal payments from its holdings of agency debt  and agency mortgage-backed securities in agency mortgage-backed securities and of rolling over maturing Treasury securities at auction," he added.

The FOMC's policy goal "is to keep long-term interest rates exceptionally low by pushing down real interest rates close to zero without increasing inflation expectations," Rick told News Now after the committee's statement was released Wednesday afternoon.

"Currently, inflation expectations are running at around 1.7% annually over the next 10 years," Rick said. "The combination of low real interest rates and low expected inflation rates means the nominal interest rate is expected to stay low for many years to come.  Therefore the yield curve will remain flat putting downward pressure on credit union net interest margins."

Rick noted that the Fed "also reiterated that low rates of resource utilization and subdued outlook for inflation will warrant exceptionally low levels for the federal funds interest rate at least through mid-2013.  We can therefore assume credit unions' cost of funds--which recently fell below 1%, a record low--will continue to fall as maturing CDs [certificates of deposit] either reprice into today's record-low interest rates or are moved into even lower-yielding share draft or money market accounts."

In its statement, the FOMC said that household spending "has increased at a somewhat faster pace in recent months" and  business investment continued to expand,  "but investment in nonresidential structures is still weak, and the housing sector remains depressed. Inflation appears to have moderated since earlier in the year as prices of energy and some commodities have declined from their peaks. Longer-term inflation expectations have remained stable."

The committee is mandated to seek to foster maximum employment and price stability, and its statement after its two-day meeting said it expects "a moderate pace of economic growth over coming quarters and consequently anticipates that the unemployment rate will decline only gradually toward levels that the Committee judges to be consistent with its dual mandate."

It recognized "significant downside risks to the economic outlook, including strains in global financial markets." The FOMC said it anticipates that inflation will settle during the coming quarters "at levels at or below those consistent with" its dual mandate as the effects of past energy and other commodity price increases dissipate further. However it will monitor inflation and inflation expectations closely, it said.

The Fed's "Operation Twist" program will continue to extend the average maturity of its holdings of securities, as announced in September. The committee's statement indicated it will "continue to assess the economic outlook in light of incoming information and is prepared to employ its tools to promote a stronger economic recovery in a context of price stability.'

Voting in favor of the policy action were: Ben S. Bernanke, chairman; William C. Dudley, vice chairman; Elizabeth A. Duke; Richard W. Fisher; Narayana Kocherlakota; Charles I. Plosser; Sarah Bloom Raskin; Daniel K. Tarullo; and Janet L. Yellen. Charles L. Evans, who supported further easing at this time, was the lone dissenter.

News of the Competition (11/01/2011)

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MADISON, Wis. (11/2/11)

  • Although many are uncertain about the economy, October may become the best sales month for the nation's auto industry in more than two years, analysts and automakers said Tuesday (The New York Times Nov. 1). Chrysler Group LLC's October sales jumped 27%, and General Motors Co. (GM) inched up 1.7% amid a mixed bag for the biggest U.S. automakers (The Wall Street Journal Nov. 1). GM said Tuesday it saw decreases in all its brands with the exception of Chevrolet. Its dealer inventory increased 15% from a year ago and 6.1% from September. By upgrading many of its vehicles last year, Chrysler--aided by a broader auto industry recovery--has posted more robust monthly results for the past 18 months, the Journal said …
  • Bank of America (BofA) has decided to scrap its plans to charge customers a $5 monthly debit card fee (The Washington Post Nov. 1). BofA's insistence in maintaining its monthly debit-card fee for customers had left it isolated in the banking world (American Banker Nov. 1). Regions Financial Corp. and SunTrust Banks Inc. were among the last remaining banks to tell customers they would stop assessing monthly fees and provide refunds to those who already paid monthly fees for debit card use …
  • When it comes to fraud prevention, financial institutions see behavior analytics and out-of-band authentication as effective and controllable measures to use, said Julie Conroy, senior analyst with Aite Group and author of "Online Fraud Mitigation: Tools of the Trade" (American Banker  Nov. 1). Her report examines not only behavior analytics and out-of-band authentication, but also one-time password tokens, and complex device printing as important online fraud-prevention methods. Generally, banks favor behavior analytics because it is effective and doesn't intrude on the customer, she told the Banker. Behavior analytics monitor what a customer prefers to do during an online banking session and then creates guidelines for the anticipated behavior. The report also found that most mid-sized financial institutions are fighting to keep up with fraud-technology costs …

Market News (11/01/2011)

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MADISON, Wis. (11/2/11)

  • For a second consecutive month, U.S. construction spending increased in September as private building outgained a decline in government disbursements (Bloomberg.com Nov. 1). Construction spending inched up 0.2% after surging 1.6% in August, the Commerce Department said Tuesday. The surge was attributed to more families deciding to rent rather than buy a new home. Spending on multifamily housing is helping to bolster activity from decade lows, Bloomberg said. Lower interest rates may create more investment in commercial projects. However, a weak housing market and reduced government spending will be a drag on the construction industry, Bloomberg said. Although total construction spending is trending upward--based on August and September data--it still is being dragged down by reductions in public spending (Moody's Economy.com Nov. 1) ...
  • Manufacturing in U.S. factories declined in October, as the Institute for Supply Management's factory index (purchasing managers' index) dropped to 50.8 from 51.6 in September (The Wall Street Journal and Bloomberg.com Nov. 1). Readings above 50 indicate growth. Because businesses are struggling with slowing demand,  purchasing  managers' reports worldwide mostly indicate a weak global manufacturing sector, the Journal said.  Although overall U.S. manufacturing isn't booming, it should add to positive growth in the fourth quarter (Moody's Economy.com Nov. 1) …