Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

Market Archive

Market

Market News (12/30/2011)

 Permanent link
MADISON, Wis. (1/3/12)

  • U.S. consumers' perception about the current buying climate and a weakening of sentiment related to personal finances contributed to a decline in the Bloomberg Consumer Comfort Index for the week ended Dec. 25 (Moody's Economy.com Dec. 28). The overall index fell to -47.5 from the previous week's -45, which had been the highest level in five months. The overall index had been moving upward the past few weeks. The drop in sentiment was uniform among all regions, with the West losing the most--down 3.4 points to -44.1--followed by the Northwest, down 3.3 points to -44.1. The buying climate index fell 5.6 points to -52.5, while perceptions of personal finances were down 2.4 points to -4.9. The only segment that saw an improvement was the state of the economy index, which was -85, compared with the previous week's -85.8 …
  • Ford Motor's vehicle sales in the U.S. exceeded two million this year for the first time since 2007, while U.S. auto sales for December expected to reach 13 million on an annual rate, according to J.D. Power and Associates and LMC Automotive (The New York Times Dec. 30). The gains indicate that Ford's market share in the U.S. market is 15%.  Ford said its sales of small cars, prompted by consumers searching for fuel-efficient cars in the wake of last year's higher gasoline prices, are on pace to increase more than 20% this year. Also, Ford said it expects a 30% increase in its utility vehicle sales. During 2010, Ford sold more than 1.9 million cars in the U.S., which is the second largest auto market in the world …

News of the Competition (12/30/2011)

 Permanent link
MADISON, Wis. (1/3/12)

  • Financial institutions are expected to increase the practice of bundling services together in the coming year to raise revenue lost because of new regulations. Overdraft fee restrictions and the new interchange rule have banks thinking more strategically about maximizing profits and attracting new customers (American Banker Dec. 30).  Financial institutions of all sizes, including credit unions, are looking at tiering and bundling as required strategies, said Campbell Edlund, president of the consulting firm EMI Strategic Marketing Inc. Umpqua Bank, based in Portland Ore., has introduced a line of checking accounts based on customers' ages and life circumstances. The bank currently offers five different checking accounts, with a sixth scheduled for rollout this year …
  • Hawaii, by far, leads the nation with the highest average home loan amount--$677,299, according to data released by LendingTree.com on Friday. Mississippi is the state with the average lowest home loan amount:  $137,182. Washington, D.C., has the second highest mortgage average: $393,453, followed by New Jersey at $344,240 and New York at $340,124. Nebraska is the second lowest at $137,515. The national average for a home loan is $222,261 …
  • King's Town Bank's registered online banking account holders can now send and receive Western Union Money Transfer transactions internationally, Western Union Co. said Thursday. The Western Union Money Transfer service can be accessed through King's Town Bank's online banking portal for the first time in Taiwan …

News of the Competition (12/29/2011)

 Permanent link
MADISON, Wis. (12/30/11)

  • Banks are ramping up to meet deadlines related to the Foreign Account Tax Compliance Act. FACTA will require foreign financial institutions to report funds kept by U.S. taxpayers in foreign accounts. Firms that fail to comply will face a 30% withholding on applicable transfers from U.S. financial institutions (American Banker Dec. 29). By Jan. 1, 2013, financial institutions must agree to supply the reports. By mid-year 2013, firms must have the systems in place to provide the reports. One issue for U.S. banks is their role in FACTA enforcement, said Rick Wilson, a vice president of product strategy for Hare-Hanks Inc.'s Trillium Software, which offers a FACTA compliance data assessment service. If foreign financial institutions don't comply with FACTA, U.S. firms will have to withhold 30% of the applicable payments, making them part of the enforcement process, Wilson said …
  • Virginia Del. Bob Marshall (R) has introduced legislation to study the idea of creating a state-run bank. Marshall introduced a similar bill during the 2010 session, but it was tabled in committee. Marshall's plan is modeled after the Bank of North Dakota (American Banker Dec. 29). Bills to establish state-owned banks have been introduced in California, Massachusetts, Oregon and Hawaii. In presenting the legislation in their respective states, lawmakers said state-owned financial institutions could boost the lending market from traditional banks that have tightened credit standards in the wake of the financial crisis …

Market News (12/29/2011)

 Permanent link
MADISON, Wis. (12/30/11)  

  • Applications for unemployment benefits rose last week for the first time after three weeks of declines (Associated Press via The New York Times Dec. 29). However, the Labor Department said the month's trend still suggests job growth could increase in 2012.  Claims for unemployment benefits increased by 15,000 to a total of 381,000 for the week ended Dec. 24, seasonally adjusted. The four-week average, which economists consider as a more reliable measure because it is less volatile, declined a fourth straight week to 375,000, the lowest since June 2008. Applications must fall consistently below 375,000 to signal that hiring is strong enough to reduce the unemployment rate. Employers have hired an average 143,000 positions a month from September through November, which was nearly double the average for June, July and August. Economists surveyed by Associated Press predicted the economy would generate an average of about 175,000 jobs a month next year …
  • Pending home sales rose 7.3% to 100.1  in November, reaching the highest level in 19 months, according the National Association of Realtors (NAR). That compares with an upwardly revised 93.3 in October and is 5.9% more than the 94.5 index reading in November 2010. The upward revision for October resulted in a 10.4% monthly gain for that month.  The November gains may result from delayed transactions, said NAR Chief Economist Lawrence Yun. "Housing affordability conditions are at a record high and there is a pent-up demand from buyers who've been on the sidelines, but contract failures have been running unusually high," Yun said. He added some of the increase "appears to be from buyers recommitting after an initial contract ran into problems, often with the mortgage."  The November figures indicate closing existing-home sales should continue to improve in the months ahead, Yun said.  NAR noted that the index was not affected by the recent re-benchmarking of existing-home sales because it uses a different methodology based directly on contract signings and is seasonally adjusted …
  • Home values throughout the nation lost more than $681 billion during 2011--35% less than the $1.1 trillion in value that homes lost in 2010, according to Zillow Real Estate Market Reports (PR Newswire Dec. 22). Most of this year's loss--$454 billion--occurred between January and June. Losses from July to December were projected at $227 billion, said Zillow. "While homeowners suffered through another year of steep losses, the good news is that homes are losing value at a substantially slower pace as the market works its way towards the bottom," said Zillow Chief Economist Stan Humphries. Last year the nation saw sharp declines in value after the expiration of homebuyer tax credits, he said, while "this year we saw some organic improvement …in terms of a slowed depreciation rate, which resulted in a smaller total value loss for the year." He cautioned that next year, "the unabsorbed pool of housing supply, dragging levels of consumer confidence, high unemployment and negative equity will continue to put downward pressure on the housing market." That would "push our expectation for a potential recovery into late 2012 or early 2013," Humphries said …
  • Workers--mostly young women--are dropping out of the labor force to get more education, according to The New York Times (Dec. 28).  Originally, economists said the shrinking labor force that drove down November's unemployment rate was caused by discouraged older workers giving up on the job market. However, many are younger workers using the economic lull to boost their skills.  Young women are more likely to seek education while young men are more likely to take whatever job they can find, said the report. The trend could mean that in the long term, the next generation of women could have significant advantages over men  in the job market …

Market News (12/28/2011)

 Permanent link
MADISON, Wis. (12/29/11)

  • Holiday shopping got a boost from last-minute shoppers during the final week before Christmas, according to the International Council of Shopping Centers (ICSC)-Goldman Sachs Weekly Chain Store Sales Index.  Retailers that have been open for at least one year saw a 4.5% increase in revenue during the week ended Dec. 24 from the same week last year  as well as a 0.9% increase from the previous week, compared with a gain of 3.4% a week earlier (The New York Times and Bloomberg Dec. 28).  The National Retail Federation noted that retail sales could rise 3.8% during this holiday season, compared with a 5.2% gain during the season in 2010. ICSC forecast December comparable-store sales to grow 3.5% to 4%, said Bloomberg.  Sales benefited from a full shopping week prior to Sunday's Christmas, which allowed more last-minute shopping, said ICSC (Moody's Economy.com Dec. 28). Stores also are expecting more revenues when consumers return to spend the gift cards they received during the holidays. Gift card sales are recorded only when consumers redeem them, and consumers tend to spend more when they redeem the cards.  ICSC-Goldman Sachs said 18% of holiday spending went toward gift cards, up from 14.6% in 2010 …
  • The commercial mortgage-backed securities market declined in December, according to the Financial Industry Regulatory Authority's Trade Reporting and Compliance Engine. Average daily volume was less than in November, and was expected to remain lower during the next few weeks, said analysts from Credit Suisse. Buying outpaced selling slightly, largely due to a new issue, said the analysts. The securities outperformed the wider-trading markets, with spreads at about five basis points at the top capital securities (American Banker Dec. 28) …

News of the Competition (12/28/2011)

 Permanent link
MADISON, Wis. (12/29/11)

  • Commerce Bancshares Inc. has agreed to pay $18.3 million to settle consumer lawsuits that claim the bank illegally charged excessive overdraft fees. Commerce will resolve customers' claims that the bank improperly charged overdraft fees on certain debit card transactions,  according to a regulatory filing (American Banker Dec. 28).  The bank, while admitting no wrongdoing, agreed said in the filing it would resolve the litigation to avoid further expense. The settlement must be approved by the court …
  • Facing regulatory scrutiny, bond investors' lawsuits, and a dismal housing market, the largest loan originators are conceding market share to regional banks and non-bank mortgage lenders (American Banker Dec. 28). Regional banks and independent lenders such as BB&T Corp., Fifth Third Bancorp, PHH Corp., Provident Funding and U.S. Bancorp have more than doubled their market share since the financial crisis, according to Paul Miller, FBR Capital Markets analyst. The mortgage industry is experiencing systemic and structural changes, with prices for servicing rights and loans declining, according to Bob Walters, Quicken Loans Inc. chief economist …
  • The Federal Home Loan Bank of Chicago has received approval from its regulator, the Federal Housing Finance Agency (FHFA), to proceed with its capital stock repurchase plan. The first repurchase of about $500 million of stock will take place in the first quarter of 2012, following the finalization of financial results for the fourth quarter of 2011 and the conversion of capital stock scheduled on Jan. 1, the bank said in a letter to members last week. The bank plans to assess its capacity to repurchase excess stock of current members within 15 days of the end of each financial quarter, beginning with the results for the fourth quarter of this year. Once the bank announces its intent to purchase a specific amount of the excess stock, members will have 15 days to submit their requests for the amount of stock they wish to be repurchased …

Market News (12/27/2011)

 Permanent link
MADISON, Wis. (12/28/11)

  • The Consumer Confidence Index for December rose to 64.5 from November's revised 55.2 reading, exceeding economists' estimates and claiming an eight-month high, according to the Conference Board, a private research group (Bloomberg.com and The Wall Street Journal Dec. 27).  Economists surveyed by Dow Jones Newswires had expected the index to reach 59, but an improving job market helped in the gains.  The index dovetails with the Thomson Reuters/University of Michigan consumer sentiment index that was released last week. Moody's Economy.com (Dec. 27) noted that the index has gained 23.6 points the past two months, with a 10-point jump in the Expectations index and an 8.4 point gain in the Present Situation index.  December's Present Situation Index, which measures how consumers feel about the current economy,  jumped to 46.7 from November's 38.3 index.  The Expectations Index, which measures expectations for the economy over the next six months, also rose--to 76.4, the highest reading since May, from November's revised 66.4 index …
  • U.S. home prices dropped 3.4%--more than forecast--for the year ended in October, according to the Standard& Poor's/ Case-Shiller's index of property values in 20 cities. The decline follows a 3.5% decrease for the year ended in September and indicates that the U.S. housing market continues to be affected by foreclosures, said Bloomberg.com (Dec. 27).  Economists surveyed by Bloomberg  projected a 3.2% decrease.  The index is based on a three-month average. In other words, the October data were influenced by August and September transactions.  Home prices adjusted for seasonal variations fell 0.6% in October from September, which had dropped 0.7% from the previous month.  Unadjusted prices slid 1.2% from September, with 19 of the 20 cities showing decline--11 of them at least 1%. Only Phoenix gained (Moody's Economy.com Dec. 27) …
  • Business confidence around the globe has recovered from the hit it took during last summer's national debt-ceiling debate but remains vulnerable, according to Moody's Economy.com (Dec. 27).  Sentiment among businesses is back to where it was midyear, Moody's said, with businesses upbeat about present business conditions and expectations for the first half of 2012.  The difference between the percentage of positive responses and negative responses to nine questions on Moody's survey was 18% last week and 23% on the moving four-week average. In the U.S., business confidence was at 18% and 18% on the four-week moving average. The gap between confidence of businesses in the U.S. business and those in the rest of the world is the largest it has ever been in the 10 years since the survey began, Moody's said …

CUNAs Hampel offers spending outlook on iBloomberg TVi

 Permanent link
WASHINGTON (12/28/11)--Credit Union National Association (CUNA) Chief Economist Bill Hampel offered a positive look for consumer spending for the holidays and the future in an interview Friday with Sheila Dharmarajan on Bloomberg Television's "Bottom Line."

The segment made reference to CUNA's Holiday Spending Survey and included CUNA statistics as graphics.

In the interview, Hampel noted that holiday spending might not be as bad as most people think. "We're seeing some momentum building [in the economy] that's more positive, especially in the household sector," Hampel said, adding that credit unions are reporting a slightly more positive attitude with more positive loan requests.

However, consumer spending numbers released Friday remained lackluster. Although surprising, "these are just one month's numbers and these do get revised substantially," Hampel said.

"The household sector was really hit hard by the last recession but has come back about half way," he said, noting also that household wealth was destroyed but has returned to about half what it was before the recession.

"We're building a substantial backlog of  [pent-up] demands," he said, giving as an example the  low auto sales the past few years. "A lot of those cars are worn out …There's light at the end of the tunnel for household spending to grow again. It's not a boom, but it's pretty positive growth," Hampel said.

He indicated that holiday spending growth would be similar to last year's spending growth, maybe 3% to 4% better than last year.  Next year's growth in spending should be about 3.5%, as opposed to 2.5% last year.

Consumer spending is slightly higher, he said, "but then we've missed out on three or four years of growth we normally would have had.  In two to three years from now, we'll get back to what   we were in levels of employment and wealth acquisition," he said, "but it will have taken us seven to eight years to get there."

He said this is almost a "lost decade for households" but the economy "is moving in right direction but the hole we were in was so deep it's going to take us a while to get to the end of it."

Consumers have not been borrowing to increase their spending. They have cut way back on borrowing  for the last three to four years with household savings increased substantially,  but that has leveled off the past few months. Hampel said he did not see much increase in debt but did see reductions in what consumers are adding to their savings.

News of the Competition (12/27/2011)

 Permanent link
MADISON, Wis. (12/28/11)

  • Unless a flurry of deals is made between Christmas and New Year's, 2011 will be the slowest year for bank mergers and acquisitions in more than 20 years. There were 163 bank and thrifts deals announced through Dec. 21, the lowest total since 1990, according to data from Guggenheim Securities LLC and SNL Financial (American Banker Dec. 27). Guggenheim analyst Jeff Davis predicted 170 acquisitions by yearend. Recent previously annual lows include 175 in 2009 and 177 in 2008. Among the reasons for the dearth of deals are falling stock prices, declining revenue, thin margins, widening bid/ask spreads, low interest rates, accounting rule changes and higher regulatory fees, according to the Banker
  • Lending by foreign banking has increased almost 15% since midyear to a seasonally adjusted $662 billion on Dec. 7, despite continued European economic turmoil, according to the Federal Reserve (American Banker Dec. 27). The outflow of deposits included a 15% drop in large time deposits, to $776 billion, causing assets to decrease 19% to $1.7 trillion. But most of outflow was due to a rundown in cash, which was likely deployed in arbitrage on interest paid on excess balances booked at the Federal Reserve. The data exclude domestically chartered subsidiaries of foreign companies but includes foreign institutions outside of Europe …

Market News (12/22/2011)

 Permanent link
MADISON, Wis. (12/27/11)

  • Initial U.S. claims for unemployment benefits unexpectedly fell last week to the lowest level since April 2008, indicating the national labor market is gaining momentum heading into next year (Bloomberg.com Dec. 22). Claims decreased by 4,000--to 364,000--for the week ended Dec. 17, the Labor Department said Thursday. Economists in a Bloomberg survey had forecast an increase to 380,000 claims. An ongoing slowdown in job cuts has paved the way for an employment uptick that could boost consumer spending, which constitutes 70% of the U.S. economy--the world's largest, Bloomberg said. Meanwhile, continuing claims for unemployment benefits for the week ended Dec. 10 declined to 3.546 million from 3.625 million the prior week (Moody's economy.com Dec. 22). In a related matter, mass layoffs--involving at least 50 workers from a single establishment--dropped to 1,331 in November from 1,353 in October. The November mass layoffs involved 129,887 employees, compared with 118,689 in October (Moody's economy.com Dec. 22) …
  • Because consumer spending fell short of an earlier estimate, the U.S. economy grew less than originally thought during the third quarter (The Wall Street Journal Dec. 22).  Gross domestic product (GDP)--the widest gauge of all goods and services produced in the economy--grew at a 1.8% inflation-adjusted rate in the quarter, the Commerce Department said Thursday. While the best performance of the year, the department's third GDP estimate is still lower than the prior 2% reading, the Journal said. A downward revision for consumer spending--especially for services such as health care--led to the economy's lower growth level, the Journal said. Also, the Conference Board's Index of Leading Indicators increased 0.5% in November, after rising 0.9% in October (Moody's economy.com Dec. 22). A gain in the interest rate-spread component led the way, said Moody's, which added it expects a continued economic recovery in 2012 …
  • Buoyed by an improvement in views of current conditions and expectations, the University of Michigan Consumer Sentiment Index increased a more-than-expected 5.8 points in December to 69.9 from 64.1 in November (Moody's economy.com Dec. 22). Since hitting its nadir in August, consumer confidence has been on the rise, the index indicates. Also, the Bloomberg Consumer Comfort Index rose for the second consecutive week, moving up 4.9 points to -45 for the week ended Dec. 18 from -49.9 the prior week. Sentiment improved in all U.S. regions …

News of the Competition (12/22/2011)

 Permanent link
MADISON, Wis. (12/27/11)

  • Some U.S. community banks are preparing for the comeback of commercial real estate (CRE) next year (American Banker Dec. 21). More than 13% of respondents to a Federal Reserve Board survey of senior loan officers said they saw stronger CRE demand in the fourth quarter, compared with 1.8% a year earlier. In 2012, commercial real estate lending will improve, according to most economists' expectations, the Banker said. Banks that are in the process of growing their CRE divisions are discovering that talent is plentiful--the opposite of the situation for commercial and industrial lending--in which competition has grown with few experts to be found, the Banker said …
  • Toyota Motor Corp. may no longer be the No. 1 automaker in the world after it revealed estimates Thursday that its worldwide sales will fall 6% in 2011 to 7.9 million vehicles (The Wall Street Journal Dec. 22). Natural disasters in Japan and Thailand contributed to Toyota's sales drop-off, the Journal said. The sales decline is expected to place Toyota behind General Motors Co. and Volkswagen AG this year, ending Toyota's three years in the top spot ...

News of the Competition (12/21/2011)

 Permanent link
MADISON, Wis. (12/22/11)

  • After several troubled banks were recapitalized by investors in the second half of 2011, some banks shed problem assets and others looked to make acquisitions (American Banker Dec. 19). Most of the reinvigorated banks started their comebacks by improving employee morale, the Banker said. Several banks that recapitalized in 2010 are near the finish of their credit recovery phase, Joseph Fenech, an analyst at Sandler O'Neill & Partners LP, told the Banker. Although it was anticipated that the next phase would see growth fueled mostly through acquisitions, the environment has changed, he said. The pace of bank failures has significantly slowed, and the paucity of organic growth opportunities caused by the ailing economy could prompt new investors to back off, Fenech added …
  • Bank of America Corp. (BofA) has agreed to pay $335 million in a settlement with the U.S. Justice Department concerning an investigation into whether BofA's Countywide Financial Corp.'s unit violated fair-lending practices (ABC News Dec. 21 and Bloomberg.com Dec. 20). The deal, which involves money to compensate Countrywide customers, was announced Wednesday and is subject to the approval of the U.S. Central District Court in California. In 2008, BofA acquired subprime lender Countrywide and its billions of dollars in mortgage liabilities …

Market News (12/21/2011)

 Permanent link
MADISON, Wis. (12/22/11)

  • U.S. existing-home sales rose again in November and remain above a year ago, according to the National Association of Realtors (NAR). The latest monthly data shows total existing-home sales--which are completed transactions that include single-family, townhomes, condominiums and co-ops--increased 4% to a seasonally adjusted annual rate of 4.42 million in November from 4.25 million in October, and are 12.2% above the 3.94 million-unit pace in November 2010. Lawrence Yun, NAR chief economist, said more people are taking advantage of the buyer's market. "Sales reached the highest mark in 10 months and are 34% above the cyclical low point in mid-2010--a genuine sustained sales recovery appears to be developing," he said. "We've seen healthy gains in contract activity, so it looks like more people are realizing the great opportunity that exists in today's market for buyers with long-term plans."  For the NAR report, use the link …  
  • The Mortgage Bankers Association (MBA) Wednesday said mortgage loan application volume decreased 2.6% for the week ended Dec. 16 from one week earlier. The percentage was calculated through MBA's Market Composite Index, part of its Weekly Mortgage Applications Survey. On an unadjusted basis, the index declined 2.8%. The Refinance Index dropped 1.6%. The seasonally adjusted Purchase Index fell 4.9%. The unadjusted Purchase Index decreased 7.5% and was 6.9% lower than the same week one year ago. "Continued anxiety surrounding the fragile economic situation in Europe led interest rates lower last week," said Michael Fratantoni, MBA vice president of research and economics. "However, refinance applications fell slightly, and purchase applications dropped further as we head into the end of the year. Remarkably low rates are not enough, as many homeowners continue to hold back due to lack of equity in their properties, poor credit and a weak job market." For the MBA report, use the link …
  • Home foreclosures in the U.S. surged more than 21% in the third quarter--although 11.8% less than a year ago--because banks acted more aggressively after a lull that began in late 2010, according to a report released by the Office of the Comptroller of the Currency (OCC). Some large lenders, including Bank of America, suspended foreclosures at the end of last year while they reviewed their methods of dealing with troubled borrowers. Now that those reviews are finished, the foreclosure activity is accelerating, the Times said …

News of the Competition (12/20/2011)

 Permanent link
MADISON, Wis. (12/ 21/11)

  • U.S. community banks will be face a tough operating environment heading into 2012, according to four industry analysts on a panel convened by American Banker (Dec. 19) to discuss what next year holds in store for community banks. The panelists included Fred Cannon at KBW Inc., Scott Siefers at Sandler O'Neill & Partners LP, Joe Stilwell at Stilwell Group and Brad Whitman at Barclays Capital. The four said the biggest challenges facing community banks in the next 12 to 18 months are: lack of scale; risk of another recession; the rate environment, especially in regard to deposits; and expense reduction and finding profitability …
  • Mortgage settlement talks between the top five U.S. mortgage servicers and several states' attorneys general are unlikely to be resolved by the holidays as previously hoped (American Banker Dec. 19). The mortgage servicers are: Bank of America Corp., Wells Fargo & Co., Ally Financial Inc., Citigroup Inc. and JPMorgan Chase & Co. The dollar value of the settlement could be as high as $25 billion, but would fall to roughly $19 billion if California does not participate, the Banker said. The proposed settlement dollar-value would cover the costs of principal write-downs and interest-rate reductions for certain borrowers, and would implement new servicing standards, the Banker said …

Market News (12/20/2011)

 Permanent link
MADISON, Wis. (12/21/11)

  • A surge in multifamily housing units in November led U.S. home building to its highest level in 19 months (The Wall Street Journal and Bloomberg.com Dec. 20). U.S. housing starts climbed 9.3% to an annualized rate of 685,000--the most since April 2010--the Commerce Department said Tuesday. The results exceeded expectations of a 0.3% rise to an annual rate of 630,000, according to economists in a Dow Jones Newswires survey. The November increase was propelled by a 25.3% uptick in construction of multi-family homes with at least two units. Single-family home construction--which constitutes 65% of the housing market--increased 2.3%.  The overall report is strong because although there has been strength in multifamily-unit construction for months, single-family housing construction is beginning to show signs of life, Brian Jones, a senior U.S economist at Societe Generale in New York, told Bloomberg …                                 
  • The U.S. has a 40% chance of falling into a double-dip recession next year, warns Doug Duncan, Fannie Mae's chief economist (American Banker Dec. 19). The prediction is fairly positive considering that just a few weeks ago Duncan forecast a 50% chance of a double-dip recession in 2012 because of the continuing housing slump and a stubbornly high national unemployment rate, the Banker said.  Last week, Duncan, who is known for pessimistic forecasts, revised his forecast because of more robust auto and retail sales and an improvement in job growth. However, major problems for the economy include a weak housing market and the fear that the euro will unravel in the European debt crisis, Duncan told the Banker
  • The International Council of Shopping Centers (ICSC) chain-store sales index surged 3.4% for the week ended Dec. 17--the biggest weekly rise since late 2000, according to ICSC (Moody's economy.com Dec. 20). Gains were reportedly broad-based and helped overturn a sales lull in recent weeks, ICSC said. Although sales gains are typical late in the holiday season, year-over-year growth surged, to 4.6%--the largest improvement since early July. Sales overcame warm weather, which usually is a negative factor impacting sales at this time of year, ICSC said ...

News of the Competition (12/19/2011)

 Permanent link
MADISON, Wis. (12/20/11)

  • The Federal Deposit Insurance Corp. (FDIC) announced two banks closed Friday, bringing total bank failures this year to 92. That compares with 157 for the entire year in 2010. The closed banks held about $289 million in assets. The failed banks are: Premier Community Bank of the Emerald Coast, Crestview, Fla., assumed by Summit Bank, N.A., Panama City, Fla.; and Western National Bank, Phoenix, assumed by Washington Federal, Seattle. The FDIC estimated the latest failures will cost its Deposit Insurance Fund roughly $69 million …
  • Government-sponsored enterprise Fannie Mae has acquired the right to service hundreds of billions of dollars of mortgage loans and transferred responsibility for management of them to an exclusive group of large subservicers--all in private, according to analysts and mortgage-servicing insiders (American Banker Dec. 16). The reason for the secrecy: Fannie is the object of intense political pressure and wants to keep the deals quiet, Paul Miller, managing director of FBR Capital Markets, told the Banker. Fannie has admitted to only one such deal--purchasing the servicing rights for a $73 billion pool of Bank of America loans in August.  It is believed that Fannie has been involved in more than a dozen other such deals, industry participants told the Banker
  • For the first time in five years, Goldman Sachs Group Inc. is on the threshold of winning the No. 1 spot among advisers for equity offerings and also global takeovers (mergers and acquisitions)--indicating the bank still has the trust of corporate executives (Bloomberg.com Dec. 18). Lloyd Blankfein, who became Goldman chairman and CEO in 2006, has tried to improve the company's reputation after a U.S. Senate subcommittee and the Securities and Exchange Commission accused Goldman of misleading buyers of investments linked to mortgages, Bloomberg said …

Market News (12/19/2011)

 Permanent link
MADISON, Wis. (12/20/11)

  • The likelihood the U.S. economy will be in recession six months from now dropped to 34% in November from 40% in October, according to a gauge used by Moody's Economy.com (Dec. 19). Lowering the chances of another recession are: a gain in consumer sentiment, an improvement in financial market conditions and a decline in initial claims for unemployment benefits, Moody's said. Despite an improvement in the U.S. economy, several obstacles still are in place, including Europe's uncertain debt situation, and whether and for how long U.S. policymakers will extend the payroll tax holiday. Moody's tracking estimate for fourth-quarter gross domestic product is above 4%, which will help the economy end the year on positive note, Moody's said …
  • The National Association of Home Builders (NAHB) housing market index rose by two points to 21 in December from a revised 19 in November (Moody's Economy.com Dec. 19). Performance varied by region, with the South surging, the West gaining, the Midwest holding steady, and the Northeast dipping. The single-family sales indicator showed the most strength, amid all the component indicators showing an upward trend, Moody's said. Home builder confidence has increased for three consecutive months--the first such streak since mid-2009. The outlook calls for gains, but they will be modest because even though a recovering economy will spark housing demand, sales and construction, gains will be mitigated by still-declining home prices, Moody's said …

News of the Competition (12/16/2011)

 Permanent link
MADISON, Wis. (12/19/11)

  • The Securities and Exchange Commission (SEC) is suing six former executives of Fannie Mae and Freddie Mac--including their former CEOs--alleging they perpetrated civil fraud by misrepresenting to investors their exposure to subprime mortgage loans during the housing crisis (The New York Times and The Wall Street Journal Dec. 16). Those named in the lawsuit filed in a U.S. District Court in Manhattan include former Freddie Mac CEO Richard F. Syron and former Fannie Mae CEO Daniel H. Mudd …
  • To make the terms and conditions associated with checking accounts more accessible to consumers, JPMorgan Chase & Co. Thursday became the first big bank to incorporate new, simplified disclosure forms developed by the Pew Health Group (mainsteet.com Dec. 16). Chase said it will implement the forms because of the benefits they afford customers. Hidden checking account and debit card fees have caused a backlash among consumers, which resulted in many switching accounts from large banks to credit unions and small banks. North Carolina State Employees' CU in Raleigh, N.C., and Pentagon FCU in Washington, D.C., also will voluntarily adopt the forms …

Market News (12/16/2011)

 Permanent link
MADISON, Wis. (12/ 19/11)

  • U.S. consumer prices held steady in November while a decline in gasoline prices mitigated a small rise in food prices, highlighting weak demand and supporting the Federal Reserve's contention that inflation will not be an issue (The Wall Street Journal and Bloomberg.com Dec. 16). The consumer price index was unchanged in November, following a 0.1% decline in October, the Labor Department said Friday. Overall inflation was 3.4% higher year over year, compared with October's 3.5%. Core prices--which exclude food and energy--rose 0.2%. With prices leveling, retailers will be inclined to do more discounting, Jacob Oubina, a senior U.S economist at RBC Capital Markets LLC in New York, told Bloomberg. In a related matter, U.S. wholesale prices--excluding food and energy, increased less than predicted in November (Bloomberg.com Dec. 15). The so-called core measure increased 0.1%--less than the 0.2% rise predicted by economists in a Bloomberg News survey, according to Labor Department figures released Thursday …
  • The Bloomberg Consumer Comfort Index inched up to just top -50 after a particularly dismal year, Bloomberg said (Moody's Economy.com Dec. 15). The index had a slight uptick to -49.9 for the week ended Dec. 11 from -50.3 the prior week. Gains in the indices for the buying climate and the state of the economy more than compensated for a loss in the personal finances segment of the survey, Bloomberg said. Improvements in the labor market, caused by a drop in the unemployment rate last month, combined with a drop in unemployment claims for the week ended Dec. 9, enhanced consumers' moods, Moody's said …
  • The Economic Cycle Research Institute (ECRI) Weekly Leading Index--a gauge that measures economic growth--dropped to 122.3 for the week ended Dec. 9 from a revised 122.4 the prior week (Moody's Economy.com Dec. 16). The decline is consonant with market fluctuations in the past few weeks and signals the risks that the economic recovery is confronting. The rate of the decline in the smoothed, annualized growth rate slowed to -7.5 from  -7.7 the previous week, indicating the U.S. economic recovery can proceed further, ECRI said. Although improving  employment numbers earlier this month were a positive development, worries remain because of uncertainties about Europe's financial condition and whether the U.S. payroll tax holiday would be extended, Moody's said   …

News of the Competition (12/15/2011)

 Permanent link
MADISON, Wis. (12/16/11)

  • Small U.S. banks have been advised by industry analysts to counter the onslaught of foreclosures by ridding themselves of bank-owned properties, even if that entails incurring a large financial loss (American Banker Dec. 14). However, mandatory appraisals have been problematic because accurate home values are difficult to discern, and potential buyers often are spooked by appraisals that seem too high. And bankers get nervous about homes that are selling at too low a price, the Banker said. That has resulted in hundreds of community banks still having elevated levels of other real estate owned (OREO) on their balance sheets, the Banker said. More than 150 banks with assets of $5 billion or less as of Sept. 30 had OREO levels that exceed their tangible equity, the Banker said. In a related matter, U.S.  foreclosure activity dropped 2.9% in November, according to RealtyTrac Foreclosure filings (Moody's Economy.com Dec. 15) …
  • Morgan Stanley announced Thursday it intends to cut 1,600 jobs early in the first quarter of 2012, as it attempts to deal with poor business conditions. The cuts are similar to what scores of other financial firms are attempting (The Wall Street Journal Dec. 15). The layoffs constitute 2.6% of Morgan Stanley's 62,648 employees it reported at the end of the third quarter. The job cuts will be implemented globally throughout all of the company's job levels …

Market News (12/15/2011)

 Permanent link
MADISON, Wis. (12/16/11)

  • Initial U.S. claims for unemployment benefits last week dropped to the lowest level since May 2008, the most recent sign that the shaky labor market is on the mend (The Wall Street Journal and Bloomberg.com Dec. 15). Claims fell 19,000--to 366,000--for the week ended Dec. 10, the Labor Department said Thursday. The four-week moving average of new claims--which economists closely monitor because it smooths out weekly volatility--declined last week 6,500--to 387,750--the lowest level since July 2008. For five consecutive weeks, the four-week moving average has been below 400,000--which indicates the economy is adding more jobs than it is shedding, economists say. Seeing claims move that much below 400,000 is a good indication that labor market conditions are improving, Julia Coronado, chief economist at BNP Paribas in New York, told Bloomberg. Meanwhile, continuing claims for unemployment benefits for the week ended Dec. 3 rose to 3.606 million from 3.583 million (Moody's Economy.com Dec. 15) …
  • For the first time in seven months, industrial production decreased registering a 0.2% drop in November after advancing 0.7% in October, according to the Federal Reserve. Factory output moved down 0.4% last month. Excluding a drop of 3.4% in the output of motor vehicles and parts, manufacturing production declined 0.2%. Mining production edged up 0.1%, while the output of utilities rose 0.2%. At 94.8% of its 2007 average, total industrial production for November was 3.7% above its year-earlier level. Capacity use for total industry decreased to 77.8%, a rate two percentage points above its level from a year earlier but 2.6 percentage points below its long-run (1972-2010) average. For the Fed release, use the link …
  • U.S. mortgage rates for 30-year, fixed-rate loans declined for the week ended Dec. 15, matching the lowest level on record, Freddie Mac said Thursday (Bloomberg.com Dec. 15). The average rate dropped to 3.94%--the lowest for records dating back to 1971--from 3.99% the prior week. Also, the average 15-year, fixed-rate loan dropped to an all-time low of 3.21% from 3.27% the prior week. Lower borrowing costs have helped spark refinancing, with homeowners looking to reduce their monthly mortgage payments ….

News of the Competition (12/14/2011)

 Permanent link
MADISON, Wis. (12/15/11)

  • Although it's been nearly a month since the last U.S. bank failure has been announced, at least 200 banks remain on the precipice of failure (American Banker Dec. 14). Trepp LLC, a company that tracks bank performance, says 227 banks have an elevated likelihood of failure. Although the pace of 2012 failures will be slower--maybe even slower than 2011--the economy will continue to see failures in 2013, Matthew Anderson, a Trepp managing director, told the Banker. Even with the possibility of a robust economic rebound, there will likely be 100 failures in the next two years, he added ...
  • Google has suspended its mortgage-rate search and lead-generation tool in all U.S. areas, except four states--Alabama, Alaska, California and Pennsylvania--and the District of Columbia (American Banker Dec. 15). However, the suspension, announced Nov. 21, is temporary while the search-engine behemoth prepares a service reboot, sources told the Banker. Google's mortgage-rate search service is a component of Google's Advisor platform, which provides search tools for credit and consumer banking products, including certificates of deposit, checking and saving accounts, and credit cards …
  • Goldman Sachs Group Inc. this year has lost at least 37 partners because the bank is on course to have its worst year since 2008 for profit and share performance (Bloomberg.com Dec. 14). That figure is an estimate because New York-based Goldman doesn't publicize its personnel departures, Bloomberg said. The number is based on company filings, internal memos and news reports. As a result of an initial public offering, the number of Goldman partners ballooned last year to 475 from 221 ...        

Market News (12/14/2011)

 Permanent link
MADISON, Wis. (12/15/11)

  • Driven by a surge in refinance applications, U.S. mortgage loan applications increased 4.1% for the week ended Dec. 9 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 Bankers Association (MBA). The Refinance Index rose 9.3% to its highest level since Nov. 4. The seasonally adjusted Purchase Index decreased 8.2%. The unadjusted Purchase Index declined 11.8% and was 4.3% lower than the same week one year ago. For the month of November, purchase applications dropped in all loan categories except for loan amounts greater than $729,000, which saw a 1.9% increase in applications from October. Loans $150,000 or less had 10.7% fewer applications, while applications for loans between $150,000 and $300,000 fell 8.9%, and applications for loans between $300,000 and $417,000 decreased 8.6%. Of the higher balance loans, the $417,000 to $625,000 loan category had a 6% decline in applications, and the applications for loans between $625,000 and $729,000 fell 5.2%. For the MBA report, use the link …
  • U.S. business inventories increased in October by the most in five months while firms attempted to align their stockpiles with consumer demand (Bloomberg.com Dec. 13). Inventories rose 0.8% following scant change in September, the Commerce Department said Tuesday. Businesses kept sufficient goods available to last 1.27 months at its current sales pace in October--nearly its lowest level of the year. October business sales rose 0.7%--up from September's 0.6% gain (Moody's Economy.com Dec. 13). Fourth-quarter inventories are expected to slightly add to economic growth after subtracting from growth in the third quarter, Sal Guatieri, a senior economist at BMO Capital Markets in Toronto, told Bloomberg. Businesses have reason to expand their inventories because the economic outlook seems to be improving, he added …

Fed policymakers hold steady CUs cost of funds to continue falling

 Permanent link
WASHINGTON (12/14/11)--No changes in rate or policy were made Tuesday by the Federal Reserve Board's key policymaking committee, which means credit unions can expect their cost of funds and yield on assets to continue to fall while outstanding share certificates, loans and investments reprice to the new lower interest rates, said a Credit Union National Association (CUNA) economist.

The Federal Open Market Committee (FOMC) Tuesday continued to hold steady its policy of keeping the fed target funds rate in the 0% to 0.25% range, consistent with economists' expectations, and, as expected, made no changes to its monetary policies.

"For the last meeting of the year, the Federal Reserve [committee] decided to pursue a wait-and-see posture with regards to its current accommodative monetary policy," said Steve Rick, CUNA senior economist. The committee's statement "was cautiously optimistic about the future state of the economy, even though the economy is exposed to significant downside risks, such as the euro-zone sovereign debt crisis," he told News Now.

"The Fed will keep in place its $400 billion "Operation Twist," whereby it will sell $400 billion of short-term Treasury notes (of less-than-three-year maturity) and buy $400 billion of six- to 30-year notes and bonds through June 2012," he added.

"This is an attempt to 'twist' the yield curve by lowering long-term market interest rates," Rick said. "The Fed hopes the lower interest rates will increase investment and consumer spending and therefore accelerate economic growth into 2012." The money supply, as measured by the monetary aggregate M2, grew 10% during the past year, raising concerns by some of future inflation, he said, adding,  "With low rates of resource utilization today,  inflation is not a major concern in the short run.

"The committee reiterated that the state of the economy will 'likely warrant exceptionally low levels for the federal funds rate at least through mid-2013.' Therefore, credit unions can expect their cost of funds and yield on assets to continue to fall as outstanding share certificates, loans and investments reprice to the new lower interest rates," Rick concluded.

In its statement after the meeting, the FOMC indicated the target fed fund interest rate, which has stayed within the near-zero range for the past three years, would likely stay in that range through mid-2013.

The committee noted that "economy has been expanding moderately, notwithstanding some apparent slowing in global growth. While indicators point to some improvement in overall labor market conditions, the unemployment rate remains elevated. Household spending has continued to advance, but business fixed investment appears to be increasing less rapidly and the housing sector remains depressed. Inflation has moderated since earlier in the year, and longer-term inflation expectations have remained stable."

It "continues to expect 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."

Also, the committee noted, "strains in global financial markets continue to pose significant downside risks to the economic outlook. The committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the committee's dual mandate. However, the committee will continue to pay close attention to the evolution of inflation and inflation expectations."

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," the statement said.

Voting for the FOMC monetary 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. Voting against the action was Charles L. Evans, who supported additional policy accommodation at this time.

News of the Competition (12/13/2011)

 Permanent link
MADISON, Wis. (12/14/11)

  • The Federal Reserve likely will not buy enough mortgage-backed securities to prevent mortgage rates from rising to 4.7% by fourth quarter 2012, according to a new Keefe, Bruyette & Woods (KBW) forecast, KBW Director of Research Frederick Canon predicted Friday (American Banker Dec. 12). Canon said he expects the note on the 10-year Treasury to rise next year to 2.5% and to 3% by the end of 2013. That would result in mortgage originations falling 7.7% from 2011 to $1.2 trillion in 2012, and decreasing to $1 trillion in 2013 …
  • Three former executives of Washington Mutual Inc. (WaMu) have agreed to settle a lawsuit filed by the Federal Deposit Insurance Corp. (FDIC)--after WaMu's largest-ever U.S. bank failure. The settlement is for less than 10% of the $900 million sought by FDIC, according to sources familiar with the matter (The Wall Street Journal Dec. 13). Most of the payout--expected to be less than $75 million--would come from the bank's estate and insurers--not from the former executives, the Journal said. Although that is only a fraction of the amount FDIC sought, the payout would be among the biggest since the financial crisis ...
  • Morgan Stanley will absorb a $1.8 billion fourth-quarter charge after agreeing to a settlement with MBIA Inc. that removes some risky derivative contracts from the bank's books and ends lawsuits that the two companies filed against each other (The New York Times Dec. 13). After a tax credit is implemented, Morgan Stanley will lose $1.2 billion on the agreement. Declines in the value of mortgage-backed securities owned by Morgan Stanley caused the loss. MBIA has covered losses on the bonds because of purchases by Morgan Stanley of credit-default swaps from the bond insurer, the Times said …

Market News (12/13/2011)

 Permanent link
MADISON, Wis. (12/14/11)

  • U.S. retail sales expanded less than anticipated in November--at the slowest pace in five months--a sign that quicker job growth may be required to jumpstart the largest part of the U.S. economy (The Wall Street Journal and Bloomberg.com  Dec. 13). The 0.2% climb in sales to a seasonally adjusted $399.95 billion followed a 0.6% rise in October and 1.3% in September, the Commerce Department said Tuesday. Economists had forecast a 0.5% gain in November, according to a Dow Jones Newswires survey. Although sales have been improving, they haven't taken off, Ryan Wang, an economist at HSBC Securities USA Inc. in New York, told Bloomberg. Likewise, there have been moderate improvements in the labor market, but until there is continuing income growth for consumers, spending will be restrained, he added. In a related matter, the International Council of Shopping Centers (ICSC) chain store sales index fell 0.1% for the week ended Dec. 10, following the prior week's 2.3% decline (Moody's Economy.com Dec. 13) ...
  • The National Federation of Independent Business Index climbed to 92 in November from 90.2 in October because improved U.S. consumer spending and credit conditions prevailed (Moody's Economy.com Dec. 13). November's increase constitutes the third consecutive monthly gain--placing the index at its highest point since February. However encouraging as the recent improvement is, it still is two points below its starting point this year, Moody's said. Also, worldwide business confidence remains cautious, but it has significantly improved since the summer, according to Moody's Analytics Survey of Business Confidence (Moody's Economy.com Dec. 12). The highlight of the survey is a noticeable upgrade in hiring intentions in recent weeks, Moody's said …
  • The U.S. labor market remained flat in October with scant change from September, according to the Job Openings and Labor Turnover Survey (JOLTS) survey (Moody's Economy.com Dec. 13). There were 3.3 million job openings at the end of October--slightly fewer than the 3.37 million in September. October's hiring  and separations also dipped: 4 million people were hired compared with 4.15 million in September; and 3.9 million people left their jobs compared with slightly more than four million in September, JOLTS data said …   

NEW Fed makes no policy changes

 Permanent link
WASHINGTON (Filed 2:45 p.m. ET 12/13/11)--The key policymaking committee of the Federal Reserve Board today continued to hold steady its policy of keeping the fed target funds rate in the 0% to 0.25% range, consistent with economists' expectations, and, as expected, made no changes to its monetary policies.

In its last meeting of the year, the Federal Open Market Committee (FOMC) indicated the rate, which has stayed within the near-zero range for the past three years, would likely stay in that range through mid-2013. In a statement after the meeting, the FOMC said it "currently anticipates that economic conditions--including low rates of resource utilization and a subdued outlook for inflation over the medium run--are likely to warrant exceptionally low levels for the federal funds rate at least through mid-2013."

The committee also decided to "continue its program to extend the average maturity of its holdings of securities as announced in September. The committee is maintaining its existing policies 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." It will "regularly review the size and composition of its securities holdings and is prepared to adjust those holdings as appropriate," the statement said.

The committee noted that "economy has been expanding moderately, notwithstanding some apparent slowing in global growth. While indicators point to some improvement in overall labor market conditions, the unemployment rate remains elevated. Household spending has continued to advance, but business fixed investment appears to be increasing less rapidly and the housing sector remains depressed. Inflation has moderated since earlier in the year, and longer-term inflation expectations have remained stable."

It "continues to expect 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" [of fostering maximum employment and price stability. Also, the committee noted, "strains in global financial markets continue to pose significant downside risks to the economic outlook. The committee also anticipates that inflation will settle, over coming quarters, at levels at or below those consistent with the committee's dual mandate. However, the committee will continue to pay close attention to the evolution of inflation and inflation expectations."

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," the statement said.

Voting for the FOMC monetary 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. Voting against the action was Charles L. Evans, who supported additional policy accommodation at this time.

FOMC Statement

http://www.federalreserve.gov/newsevents/press/monetary/20111213a.htm

News of the Competition (12/12/2011)

 Permanent link
MADISON, Wis. (12/13/11)

  • Wholesale lenders (loan brokers) in the third quarter table funded nearly $33 billion of loans, garnering a 9.2% market share--up from 6.8% in the first quarter and 7.9% in the second quarter, according to the Quarterly Data Report and National Mortgage News (American Banker  Dec. 12). The first quarter's 6.8% was an all-time low for the industry. Three years ago, brokers achieved a 19% market share. By using table funding, brokers facilitate the closing of loans. Table funding is a lending method employed when a loan originator does not have access to the money necessary to make loans and holds them until it has enough to sell on the secondary market. As a result, the originator forms a relationship with a lender who provides the funds for closing and immediately takes an assignment of the loan ...
  • Stocks at Big U.S. banks should be avoided by investors in 2012 because the eight bank-holding companies labeled "systemically important" have a surfeit of  capital and not enough options for deploying it to raise meaningful returns for shareholders, said Keefe, Bruyette & Woods Inc. (KBW) (American Banker Dec. 12). The eight companies are Bank of America Corp., Bank of New York Mellon Corp., Citigroup Inc., Goldman Sachs Group Inc., JPMorgan Chase & Co., Morgan Stanley, State Street Corp. and Wells Fargo & Co. Instead, investors should look to smaller-cap regional banks, credit card companies and life insurers, KBW said. Nonbank financial institutions and smaller banks will be more capable of putting capital to use through share repurchases, increased dividends and acquisitions, the KBW report said  …
  • Occupy Wall Street demonstrators intend to blockade ports from Anchorage, Alaska, to San Diego in southern California to cut profits of Goldman Sachs Group Inc.--the fifth-biggest U.S. bank by assets. The protestors blame Goldman Sachs for helping to start the financial crisis (Bloomberg.com Dec. 12). Monday demonstrators looked to disrupt the biggest Canadian and U.S. container ports, including: Los Angeles; Long Beach, Calif.; Vancouver, Canada; Seattle; Tacoma, Wash.; Portland, Ore.; San Diego; and Oakland, Calif.  The value of containerized cargo at West Coast ports is estimated to be roughly $705 million per day, according to Lancaster, Pa.-based  Martin Associates …

Market News (12/12/2011)

 Permanent link
MADISON, Wis. (12/13/11)

  • In the third quarter, the value of U.S. households' interests in mutual funds, pension and stocks nosedived 12% during financial turbulence triggered by the U.S. debt ceiling impasse and the European debt crisis (American Banker Dec. 12). The ratio of debt to households' net worth was pushed up to 23% with home prices still declining. Because stock prices have bounced back in the two months since the end of the third quarter, household balance sheets are likely in better shape now, the Banker said.  However, households' drop-off in net worth is likely to create a slight decline in consumption because of consumers' tendency to adjust spending in line with their wealth, Barclays Capital analysts wrote Thursday …
  • Moody's Investors Service said Monday it might downgrade some European Union countries' sovereign ratings in the next few months, adding the European financial crisis is still at a "critical and volatile stage" (The New York Times  Dec. 12). That warning is seen as an indication that a deal by European leaders to reinforce the Euro zone has not resolved Europe's underlying problems, the Times said. Moody's warning follows a similar announcement by Standard & Poor's ratings agency last week. Any credit rating downgrade of European governments could exacerbate the financial crisis by making the countries' servicing of their debts more expensive, the Times said ... 

Fed policymakers consider regular forecasts on rates

 Permanent link
WASHINGTON (12/13/11)--When the Federal Open Market Committee--the Federal Reserve's policymaking body--meets today in its last meeting for 2011, it will consider whether to publish a regular forecast of its future decisions on interest rates, said The New York Times Sunday. However, most analysts say they do not expect major changes in policy at today's meeting.

If that is the case, according to Market News International (Dec. 12), then the committee likely would:

  • Continue to keep the federal funds target rate in the 0 to 25 basis point range, where it has stayed for the past three years and where the Fed recently said it would likely stay through mid-2013;
  • Continue Operation Twist, the program under which the Fed buys Treasury bonds and sells an equal amount of short-term Treasury securities to try to cut the low long-term rates; and
  • Continue to reinvest proceeds of maturing agency and mortgage backed securities (MBS) into more MBS to keep mortgage rates low and battle housing depression.
The publication  also reported that the Fed rarely makes major policy moves during the last meeting of the year.

The Fed's decision three years ago to cut short-term interest rates  "for some time" was one of the first instances in which the Fed actually predicted its actions for the future, something it has done several times since, said the Times.  "Now the technique looks increasingly likely to become a permanent method for influencing economic growth," said the publication.

In its last meeting the FOMC signaled that improved communications about its methods and goals could boost the economy without creating risk.  That contrasts with its action in 2007, when the Fed decided against publishing policy forecasts because of concerns that the public would mistake the predictions as commitments.

Today's meeting is amid uncertainty about the plans of other economic policy makers, and although the U.S. economy has improved , Fed Chairman Ben Bernanke and others have warned that the U.S. could slip back into a recession if the euro collapsed.

Watch News Now for an update this afternoon after the FOMC meeting.

News of the Competition (12/09/2011)

 Permanent link
MADISON, Wis. (12/12/11)

  • The California and Nevada attorneys general are joining to fight fraud and misconduct that they say have been perpetrated against their states' borrowers by the mortgage industry (American Banker Dec. 8). The two states' civil and criminal enforcement offices are pooling resources to create better investigations into several wrongdoings into the states' foreclosure and mortgage fraud problems. When pursuing independent prosecutions against fraudsters, the two attorneys general offices will collaborate to share investigative information and evidence, and litigation strategies, the Banker said  …
  • More than 20 banking and financial institutions received perfect scores on the Human Rights Campaign Foundation's corporate-equality index (CEI), the group said Thursday (American Banker Dec. 8). Based on 40 specific policies and practices, the CEI measures workplace advances for lesbian, gay, bisexual and transgender equality. An example of a desired practice is whether a company offers comprehensive healthcare to a transgender employee, the Banker said. Perfect scores were received by American Express Co., Bank of America Corp., Capital One Financial Corp., JPMorgan Chase & Co., TD Bank N.A., Citigroup Inc., U.S Bancorp, Wells Fargo & Co. and Freddie Mac, among others ... 

Market News (12/09/2011)

 Permanent link
MADISON, Wis. (12/12/11)

  • For the fourth consecutive month, the U.S. trade deficit narrowed in October--down to its lowest point of the year because America imported less oil and purchased fewer foreign-made cars (The New York Times and The Wall Street Journal Dec. 9). Exports of U.S-made autos also declined. Robust exports of capital goods and petroleum products offset a decline in imports. The trade gap shrank 1.6% to $43.5 billion--down from a revised $44.2 in September, the Commerce Department said Friday. Exports to China, Central America and South America reached record levels--a sign that demand from developing nations is helping some U.S. companies (Bloomberg.com Dec. 9). Imports of capital goods such as aircraft and computers and consumer goods rose, indicating spending by U.S. companies and households is helping the economy to expand, Bloomberg said …
  • Sparked by the unemployment rate falling to its lowest level last month in two-and a-half years, U.S. consumer sentiment in December climbed to its highest level in six months (The New York Times and Moody's Economy.com Dec. 9). The Thomson Reuters/University of Michigan consumer sentiment index increased by 3.6 points in December to 67.7 from a 64.1 reading in November, propelled by continued improvement in views related to the economic outlook, Moody's said. Positive economic developments reported in early December, including net job  growth and better assessments of the state of the economy, have helped sentiment, survey director Richard Curtin said in statement  …
  • The Economic Cycle Research Institute (ECRI) Weekly Leading Index--which measures economic growth--increased to 122.5 for the week ended Dec. 2, from 120.8 the prior week (Moody's Economy.com Dec. 9). Reversing the last week in November's first decline since October, the smoothed, annualized growth rate climbed to -7.6, from -7.8. The most recent increase in the index resumes a trend of improvement and adds to evidence of a continued economic recovery, Moody's said …

News of the Competition (12/08/2011)

 Permanent link
MADISON, Wis. (12/9/11)

  • Massachusetts Attorney General Martha Coakley is asking Congress to investigate Ally Financial's conduct. Last week, Coakley filed a lawsuit against the company alleging it pursued foreclosures illegally (American Banker Dec.7). U.S. taxpayers own 74% of Ally Financial--formerly known as GMAC--after a government bailout of the company in 2008, she noted in a letter to the chairmen of the Senate Banking Committee and the House Financial Services Committee. Coakley is asking the committees to look into allegations of wrongdoing by Ally Financial and to determine if the committees should hold hearings. Coakley filed suit last week in state court against Ally, Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co. and Wells Fargo & Co., alleging their foreclosure practices were unlawful and deceptive …
  • Wells Fargo Bank, N.A., is the subject of a $20 million civil-money penalty assessed by the Office of the Comptroller of the Currency (OCC), according to an agency announcement Thursday. The action also requires the bank to pay more than $14.5 million in restitution, the OCC said, for the involvement of the bank's predecessor institutions, Wachovia Bank N.A. and First Union National Bank, in "a bid-rigging scheme involving the marketing and sale of certain derivative financial products to various municipalities and Section 501(c)(3) organizations harmed by the predecessor banks' misconduct during the period 1997-2006." The restitution amount was said to include "improper gains and prejudgment interest calculated thereon from 42 rigged transactions." Wells Fargo also is required to design and execute a plan to bolster policies, procedures and internal controls related to competitive-bid transactions conducted within the bank's Municipal Derivatives Marketing and Trading groups, and to take steps to ensure that adequate policies, procedures and controls are in place for transactions involving competitive bidding bank-wide …
  • Citibank is using technology in three ways to better provide value to its customers, Paul Kadin, Citi's executive president of North American consumer banking customer strategy, told attendees at the Financial Services Marketing Symposium in New York Tuesday (American Banker Dec. 7). The three initiatives are: combining reward points, mobile coupons and mobile payments; providing content and free wifi to "be in customers' lives"; and monitoring customer comments on social media sites--known as "social listening" ...
  • Jon S. Corzine, former CEO of MF Global Holdings, a brokerage that collapsed Oct. 31 amid revelations that about $1 billion in customer money was missing from the company, was expected to defend his decision to heavily invest in European sovereign debt, when he was slated to appear Thursday before the House Committee on Agriculture (The New York Times DealBook Dec. 8). Corzine, who also is a former Democratic senator from New Jersey and former head of Goldman Sachs, was said to be ready to discuss his tenure at MF Global, his lobbying activities with regulators, and his final days at the troubled brokerage before it filed for bankruptcy …

Market News (12/08/2011)

 Permanent link
MADISON, Wis. (12/9/11)

  • Initial U.S. claims for unemployment benefits last week dropped to the lowest level in nine months, indicating the labor market recovery may be picking up steam (The Wall Street Journal, The New York Times and Bloomberg.com Dec. 8). Claims fell 23,000--to a seasonally adjusted 381,000--in the week ended Dec. 3, the Labor Department said Thursday. The four-week moving average of new claims declined last week by 3,000--to 393,250. Economists closely monitor that figure because it smooths out weekly volatility, the Journal said.  Economists are encouraged that the four-week average has remained below 400,000 for four consecutive weeks because they believe that claims must consistently remain below that level for a real economic turnaround to occur, the Journal said.  Although companies are cutting fewer jobs, they still are hesitant to add employees to their payrolls until consumer demand increases and there is more certainty about tax breaks slated to expire at the end of this year, Bloomberg said. Meanwhile, continuing claims for unemployment for the week ended Nov. 26 decreased to 3.583 million from 3.757 million (Moody's Economy.com Dec. 8) …
  • U.S. consumer sentiment remained in a rut last week, according to the Bloomberg Consumer Comfort Index (Moody's Economy.com Dec. 8). The index dipped downward to -50.3 for the week ended Dec. 4. from -50.2 the previous week. A drop-off in the buying climate and in economic indices was a factor in the slight decline in confidence--which more than mitigated gains in the survey's personal finances segment, Bloomberg said. Despite the unemployment rate's unexpected drop last month, continuing uncertainty regarding Europe's financial condition and about stock prices have kept overall sentiment negative, Moody's said. This year marks the index's worse performance since its inception in 1985 ...

News of the Competition (12/07/2011)

 Permanent link
MADISON, Wis. (12/8/11)

  • Although Bank of America (BofA) agreed Monday to pay $315 million to settle a class action lawsuit against it, BofA must still obtain approval from a federal judge with the moniker "Judge Dread"--Jed S. Rakoff of U.S. District Court for the Southern District of New York (American Banker Dec. 6). The suit alleges that BofA's Merrill Lynch unit made false and misleading statements about the quality of mortgage-backed securities (MBS) it sold to investors. Rakoff has made known his disdain for securities-related settlements that provide financial payments without any admissions of wrongdoing. Last week, Rakoff nixed a proposal that included a $285 million agreement between Citigroup and the Securities and Exchange Commission.  Similar to Citi's case, BofA's involves fraud accusations regarding MBSs and proposes to pay a big fine to resolve the situation, with no admission of wrongdoing  ...
  • Citigroup Inc. will lay off roughly 4,500 workers in the coming quarters as the bank looks to cut costs amid declining revenue and poor market conditions, announced Citi CEO Vikram Pandit  (Bloomberg.com Dec. 7 and The New York Times  Dec. 6). To cover severance pay and other costs related to the downsizing, Citi also will take a fourth-quarter pretax charge of about $400 million. The job cuts will reduce Citi's work force by about 2% to 262,500 employees from roughly 267,000--as of Sept. 30. The majority of the bank's job reductions will be in its back-office and investment banking operations  …

Market News (12/07/2011)

 Permanent link
MADISON, Wis. (12/8/11)

  • U.S. mortgage loan applications increased 12.8% for the week ended Dec. 12 from one week earlier, which included the Thanksgiving holiday, according to the Market Composite Index. The index is part of the Weekly Mortgage Applications Survey released Wednesday by the Mortgage Bankers Association (MBA). On an unadjusted basis, the index rose 60.2%. The four-week moving average for the seasonally adjusted Market Index is down 3.2%. The four-week moving average for the seasonally adjusted Purchase Index is up 3.33%, while the average is down 5.13% for the Refinance Index. "Coming out of the Thanksgiving holiday, applications increased significantly as mortgage rates dropped to their lowest levels in about two months," said Michael Fratantoni, MBA vice president of research and economics. "In particular, refinance applications increased sharply, with some lenders seeing refinance volume double. Despite this surge, aggregate refinance activity is still below levels reported two weeks ago. Some lenders indicated they are beginning to see an increase in Home Affordable Refinance Program loans, but that increase is still a small portion of the move this week." For the MBA report, use the link …                                  
  • Worldwide business confidence bounced back last week after slipping downward during Thanksgiving week because of a low response rate to Moody's Analytics Survey of Business Confidence (Moody's Economy.com Dec. 5). Since the summer, business sentiment has improved meaningfully. The most positive responses to the survey come from businesses' wide-ranging evaluation of current economic conditions, Moody's said. In recent weeks, there also has been a clear improvement in hiring intentions. Despite the upturn in sentiment, it remains fragile and is consonant with an economy that is expanding at the low end of its potential, Moody's said. For the global economy to gain its footing, confidence will need to noticeably improve, Moody's concluded …

Consumers borrowing up 3.75 CUs see increase

 Permanent link
WASHINGTON (12/8/11)--The nation's consumers increased their debt during October by 3.75%--roughly $7.65 billion--to $2.457 trillion, according to the Federal Reserve's Consumer Credit report released Wednesday afternoon. Credit union members' debt also rose--to $224.6 billion from $222.8 billion in September.

October was the second consecutive month that overall consumer borrowing grew sharply and was the most since October 2009, said the Fed (Bloomberg.com Dec. 7).

Economists surveyed by Dow Jones Newswires had forecast a $6.5 billion increase for the month (The Wall Street Journal Dec. 7), while those in a Reuters survey had forecast a $7 billion gain (Reuters.com Dec. 7).  The Journal  and  Bloomberg noted that the report signals that Americans are going into debt to pay for goods and services while prices increase faster than their wages.

Nonrevolving credit, which includes student loans and auto loans but not mortgages, drove the increase. Non-revolving credit rose to $1.665 trillion, an increase of 5.25% on an annual rate from September's nearly $1,657.9 trillion, according to the Fed.

Credit union members using nonrevolving credit borrowed $188.2 billion from credit unions in October. That is up from $186.6 billion in September but the same as August's debt, the Fed report said.

Revolving credit, which consists of primarily credit card debt, rose 0.5% to $792.3 billion in October  from $792 billion in September.

Revolving credit loaned by credit unions totaled $36.4 billion, up slightly from $36.3 billion in September but the same as August.

News of the Competition (12/06/2011)

 Permanent link
MADISON, Wis. (12/7/11)

  • Bank of America Corp. (BofA) has agreed to pay $315 million to settle a lawsuit by investors who claim they were misled by the marketing of mortgage securities backed by pools of mortgage loans in BofA's Merrill Lynch unit (The New York Times and The Wall Street Journal Dec. 6). The proposed class-action agreement is one of the biggest settlements of investor claims against banks regarding mortgage-backed securities--which initially seemed safe but later turned toxic when credit and housing conditions became worse, the Times said. The settlement would cover a class of investors who bought specific mortgage-backed securities in 2006 and 2007, the Journal said …
  • Because several U.S. airlines have gone through mergers or bankruptcies during the past 10 years, their frequent-flier rewards points have been devalued (American Banker Dec. 5). During the past decade, troubled airlines began issuing more rewards points in attempts to gain more customers. However, that practice eventually raised the number of points needed to redeem rewards--which then lessened the value of frequent-flier miles, the Banker said. That could lead to alienating the card issuers' most valuable credit card customers. If customers notice the value of their frequent-flier rewards points significantly decreasing, they could switch to a different type of rewards card and different card issuer, the Banker said …

Market News (12/06/2011)

 Permanent link
MADISON, Wis. (12/7/11)

  • For the third consecutive month, the CoreLogic U.S. home-price index fell--most recently 1.3% in October. The index also is down 3.9% from its level in October 2010 (Moody's Economy.com Dec. 6). The index, excluding distressed sales, climbed slightly in October from September. Given the persistent glut of foreclosed homes and slow national job growth, the October figures suggest a further decrease in the CoreLogic home-price index for the coming year, Moody's said. One significantly positive sign from the index is the trend toward stabilization in nondistress sales--in which prices now are beginning to rise and where another month or two of price gains will lead the distressed sales index to a year-over-year increase for the first time in nearly five years, Moody's said …
  • Last month's drop in the national unemployment rate to 8.6% may foreshadow what is to come. A decrease in the share of the working-age population--called the participation rate--will hit the economy, which will need to create fewer jobs to lower the unemployment rate (Bloomberg.com Dec. 6). Although some of the decline in the participation rate is the result of discouraged workers leaving the labor force, the single biggest factor in pushing the rate down is that the baby boomer generation is beginning to move into retirement age, Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York, told Bloomberg. Although that factor is slow moving now, it will become more important in the years to come, he added …
  • The International Council of Shopping Centers (ICSC) chain store sales index steeply fell 2.3% for the week ended Dec. 3 (Moody's Economy.com Dec. 6). However, that post-Black Friday decrease is seasonally typical because year-over-year growth barely diminished, increasing  3.8%, ICSC said. A key negative for the sales outlook is that the ICSC survey indicated more shopping was completed this year than at the same point last year, Moody's said …  

CUNA to ICNBCI Expect boost in spending

 Permanent link
WASHINGTON (12/7/11)--With consumer confidence rising and the unemployment rate falling, U.S. consumer and business spending should increase in the next few months--barring any extremely negative news from Europe, a Credit Union National Association (CUNA) economist told CNBC Monday.

Even though last month saw goods manufactured in U.S. factories decline 0.4% for the second consecutive month, and the pace of growth in the U.S. service sector declined in November to the slowest rate since January 2010, the markets seemed unfazed, CNBC said.

"The markets will grab onto any information even when there's not much information, so I think we're still riding the economic news from last week on the employment numbers and consumer confidence," Bill Hampel, CUNA chief economist, told CNBC.

"We now appear to have dodged the bullet of a double-dip recession … [the economic trend] seems to be moving in the right direction so it appears that numbers are likely to surprise on the upside than the downside," Hampel added.

To read the article, use the link.

News of the Competition (12/05/2011)

 Permanent link
MADISON, Wis. (12/6/11)

  • Next year should see continuing international merger and acquisition activity for U.S. banks--a trend that was responsible for most of 2011's largest stateside bank deals (American Banker Dec. 2). Several large European banks, reeling from debt and financial turmoil, need to reduce risk and bolster capital. On the other side of the equation, the healthiest large U.S. banks are flush with cash and capital, but are reluctant to build branches or purchase other publicly traded U.S. companies, the Banker said. Therefore, foreign banks' sales of loans, branches, businesses and other assets are among the few options for U.S. banks looking to buy, the Banker said  ...
  • In the wake of action taken by the Massachusetts attorney general, GMAC Mortgage--the mortgage origination and servicing unit of Ally Financial Inc.--said Friday it will stop buying new mortgage loans in the state (American Banker Dec. 2). GMAC announced the action a day after state Attorney General Martha Coakley filed suit in state court against Ally, Bank of America Corp., Citigroup Inc., JPMorgan Chase & Co., and Wells Fargo &Co., alleging their foreclosure practices were unlawful and deceptive ...
  • The bankruptcy estate for Lehman Brothers Holdings Inc. soon could name a new board of directors to assist the defunct financial firm in finishing its liquidation, said sources familiar with the matter (The Wall Street Journal Dec. 5). The new board will comprise seven experts--without Lehman ties--in restructuring, real estate and derivatives, who will overlook the liquidation of tens of billions of dollars in assets to assist Lehman's creditors, the sources said …

Market News (12/05/2011)

 Permanent link
MADISON, Wis. (12/6/11)

  • For a second consecutive month, U.S. factory orders declined in October, indicating manufacturers might be having a hard time picking up steam in a weak economy (The Wall Street Journal Dec. 5). Orders fell 0.4% from September to $450.03 billion, the Commerce Department said  Monday. Factory inventories in October rose 0.9%--the biggest increase since April (Moody's Economy.com Dec. 5). Nondurable goods' orders and shipments dropped 0.3% in October while nondurable inventories jumped 1.7%.  Also, for a third consecutive month, U.S. services weakened in November as the Institute for Supply Management's (ISM) nonmanufacturing index dropped to 52 in November from a 52.9 in October (Bloomberg.com and Moody's Economy.com Dec. 5). Economists had expected the index to rise to 53.9. Any readings above 50 signal expansion and below 50 indicate contraction. The ISM index includes industries ranging from retailing and utilities to finance and health care …                     
  • Because demand for vehicles is recovering faster than expected, the U.S. auto industry is pushing toward its best annual performance in three years, with projected sales of 12.8 million vehicles (Bloomberg.com Dec. 5). Entering the final month of 2011, consumers are buying a wide range of models that vary from luxury sedans to large pickup trucks to fuel-efficient hybrids. November's sales constituted the fastest monthly sales pace since August 2009 when the federal government's "cash for clunkers" trade-in program was in force, Bloomberg said. After delaying new-vehicle purchases as long as possible because of the economy, U.S. buyers are replacing their cars and trucks. Two years removed from bankruptcy, General Motors and Chrysler Group LLC are taking market share from Honda Motor Co. and Toyota Motor Corp., Bloomberg said …  

News of the Competition (12/02/2011)

 Permanent link
MADISON, Wis. (12/5/11)

  • Town North Bank NA (TNB) filed a complaint Nov. 11 in the U.S. District court for the Northern District of Texas against five companies, alleging they misrepresented that the mortgage loans it purchased with underlying residential mortgage-backed securities (RMBS) complied with underwriting standards (lexology.com Nov. 21). The complaint also alleges the companies overstated borrowers' capacity to repay their mortgage loans, and failed to disclose the quality of loans underlying the securities and their risk of loss. The companies named in the complaint include: Merrill Lynch & Co., Morgan Stanley & Co., UBS Financial Services Inc., J.P. Morgan Securities LLC as successor to Bear Stearns & Co. Inc., and Shay Financial Services (TNB's investment adviser). The National Credit Union Administration has filed several lawsuits against other financial-services companies regarding RMBSs that caused losses to corporate credit unions …
  • Despite shakeups at the company's broader retail bank, Bank of America's (BofA) wealth-management unit for mass-affluent consumers--Merrill Edge--is on track to reach its growth goals (American Banker Dec. 1). The unit's revenue surged 75%, assets increased 31%, and accounts rose 21% since BofA launched Merrill Edge in June 2010. BofA defines mass affluent as customers who have $50,000 to $250,000 in investable assets …

Market News (12/02/2011)

 Permanent link
MADISON, Wis. (12/5/11)

  • The U.S. unemployment rate dipped to 8.6% in November--its lowest rate in two-and-a-half years, despite worldwide crises that have hampered the economy, the Labor Department said Friday (The New York Times Dec. 2). The decline was accentuated by some 315,000 Americans leaving the labor force (Bloomberg.com and The NewYork Times Dec. 2). The unemployment rate had been mired at 9% for most of 2011. Nonfarm payrolls increased 120,000 last month, following a revised 100,000 gain in October, with more than half the hiring done by temporary-help agencies and retailers, said the Labor Department. The U.S. economy seems to be moving along at the moment despite concerns about the worldwide economy and euro zone turmoil, Paul Ashworth, senior U.S. economist at Capital Economics, told the Times. However, worries still abound about the U.S. economy's ability to weather international economic threats, the Times added. In a related matter, the U.S. Monster Employment Index--which monitors online help-wanted ads--dropped four points in November to a 147 level, after increasing for three consecutive months (Moody's Economy.com Dec. 2) …
  • Sales discounts still are crucial in attracting customers and will likely remain a key for the holiday season, according to Thursday's chain-store sales report (The Wall Street Journal Dec. 1). In November, overall same-store sales increased 3.1%, said Thomson Reuters, despite less than anticipated results from large retailers such as J.C. Penney Co., Kohl's Corp. and Target Corp. Warmer-than-usual temperatures and shoppers anticipating post-Thanksgiving deals helped create a weak start to November sales, the Journal said ...
  • The Economic Cycle Research Institute (ECRI) Weekly Leading Index--which measures economic growth--dropped to 120.9 for the week ended Nov. 25 from a revised 122.2 (Moody's Economy.com Dec. 2). The smooth annualized rate fell to -7.8 from -7.4 the prior week--the first decline in the past six weeks. The decrease goes against the index's recent improvement trend and indicates there are substantial risks for the slow-moving economic recovery, Moody's said. The decline in both figures suggests that the economy is confronting many obstacles on the road to recovery, Moody's added  …

News of the Competition (12/01/2011)

 Permanent link
MADISON, Wis. (12/2/11)

  • Massachusetts Thursday sued five major banks--Bank of America Corp., Citigroup Inc., GMAC,  JPMorgan Chase & Co. and  Wells Fargo & Co.--alleging deceptive foreclosure practices, including robo-signing of documents (Bloomberg Business via The Washington Post Dec. 1). 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. The suit, filed by Massachusetts Attorney General Martha Coakley, alleges the banks exhibited "unlawful and deceptive" conduct in the foreclosure process that included false documentation, unlawful disclosures, robo-signing and deceptive practices in regard to loan modifications. The suit could potentially harm negotiations between lenders and state prosecutors nationwide over foreclosure practices, Bloomberg said ...
  • The chapter 11 bankruptcy of American Airlines' parent company AMR Corp. could hurt Citigroup Inc. because the bank runs the airline's substantial rewards credit-card program (American Banker Dec. 1). For a long time, Citi has relied on the rewards partnership to help it attract wealthy customers who have significant money to spend and are willing to use their  credit cards often and pay annual fees to obtain frequent flier miles, the Banker said …

Market News (12/01/2011)

 Permanent link
MADISON, Wis. (12/2/11)

  • Initial claims for U.S. unemployment benefits unexpectedly increased last week, a sign the job market remains weak in the midst of a slow economic recovery (The Wall Street Journal and Bloomberg.com Dec. 1). Claims climbed 6,000--to 402,000--for the week ended Nov. 26. A survey of 43 economists in a Bloomberg News survey forecast a decline to 390,000. Also, the number of people receiving extended payments and those on unemployment benefit rolls rose. Until consumer demand picks up and there is more clarity on tax breaks, companies continue to shed staff and are hesitant to add new workers, Bloomberg said. A quicker pace of hiring and reduction in the 9% national unemployment rate is needed to spark consumer spending, which constitutes 70% of the U.S. economy, Bloomberg said. Meanwhile, continuing claims for unemployment benefits for the week ended Nov. 19 rose to 3.74 million from 3.705 million the prior week (Moody's Economy.com Dec. 1) ...
  • Interest rates for 30-year, fixed-rate mortgage loans in the U.S. increased because markets became more positive about the prospects of Europe's debt crisis being contained and that, in turn, bolstered Treasuries' yields that guide home loans (Bloomberg.com Dec. 1). The average 30-year, fixed-rate loan rose to 4% in the week ended Dec.1 from 3.98% the prior week, Freddie Mac said. The average 15-year fixed-rate remained unchanged at 3.3%. For five consecutive weeks, the 30-year, fixed-rate has been below 4%. In October, the rate hit 3.94%, the lowest for Freddie Mac records dating back to 1971 …
  • U.S. manufacturing in November expanded at the fastest pace in five months, indicating factories will continue to help the economic recovery through the end of 2011, according to the Institute for Supply Management's (ISM) factory index (Bloomberg.com and The Wall Street Journal Dec. 1). The index climbed to 52.7 last month from 50.8 in October. Readings above 50 mean there is economic expansion. Manufacturing orders expanded at the fastest pace since April. The auto sector is helping manufacturing grow at a moderate pace, Paul Bellow, chief economist at Nationwide Mutual Insurance Co. in Columbus, Ohio, told Bloomberg. The economy should continue to soldier on unless something "tumultuous" happens in Europe, he added …
  • For a third consecutive month, U.S. construction spending increased in October, buoyed by gains in housing and commercial projects such as power plants and office buildings (Bloomberg.com and Moody's Economy.com Dec. 1). Spending on construction rose 0.8%, the Commerce Department said Wednesday. Propelled by low interest rates and home improvement projects, new activity in the housing market is beginning to pull the industry up from decades-long lows, Bloomberg said. However, the construction industry will take a long time to significantly strengthen because of decreases in government spending and overall weakness in residential construction,  Bloomberg said ...