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AmEx: Prepaid Debit Cards Now Backed By FDIC

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NEW YORK (3/28/13)--American Express announced Tuesday that its Wal-Mart Bluebird prepaid debit card will be backed by the Federal Deposit Insurance Corp.

The card, sold at Wal-Mart stores, has the American Express insignia and functions similar to a debit or credit card, with features such as mobile banking and roadside assistance. Customers can load up to $100,000 per year on the card and also write checks with the account (The Washington Post March 26).  

Since Bluebird debuted six months ago, more than 575,000 customers have signed on, collectively putting more than $275 million into their accounts. Many customers did not want a traditional credit or debit card or could not apply for one because of bad credit histories, Dan Schulman, American Express president of enterprise growth, told the Post.

Bluebird could increase American Express's customer base because customers will be able to directly deposit government payments--such as military pay, Social Security and tax refunds--onto their cards, the Post said.

With nearly one million households leaving the banking system between 2009 and 2011, demand for the cards soared, the Post said. This year, the prepaid card industry is forecast to reach nearly $202 billion in revenue, compared with $28.6 billion in 2009, according to consulting group Mercator Advisory group.

American Express is considering implementing deposit insurance for its complete suite of prepaid cards, company officials said.

Most card operators--confronting heightened scrutiny from consumer advocates--have decided in the past few years to carry up to $250,000 in mandatory deposit insurance--offered through the FDIC--per customer, the Post said.  

For credit unions, The Members Group's (TMG) reloadable Visa prepaid cards are already backed by FDIC insurance--up to $250,000 per customer, Konrad Christensen, TMG retail payments product manager, told News Now. "We've always had it," he said. "It gives credit unions peace of mind."

TMG creates customized, technology-driven card processing and payment solutions for credit unions and community-based financial institutions throughout North America.

January Home Prices Record Biggest Increase Since 2006

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MADISON, Wis. (3/27/13)--January U.S. home prices recorded their biggest year-over-year increase since the summer of 2006, according to Standard & Poor's Case-Shiller home-price indexes.

The 20-city index rose 8.1% in January from a year earlier, beating the 7.9% consensus expectations of economists in a Thomson Reuters poll and a Bloomberg poll (The Wall Street Journal and Bloomberg.com March 26).

That increase was the most since the housing bubble burst, David Blitzer, chairman of S&P's index committee, told the Journal.

The 10-city index gained 7.3% year over-year. However, the two indexes, through January, still are roughly 30% below their peaks in June/July 2006.

The shrinking inventory of homes on the market, reduced foreclosures, low mortgage rates and the improving economy bolstered a gradual recovery in the housing market, the Journal said.

In a related matter, sales of new U.S. houses in February resulted in the best back-to-back months in more than four years (Bloomberg.com and Moody's Economy.com March 26).

Purchases of newly constructed homes dropped 4.6% to an annual pace of 411,000--following a 431,000 rate in January, the Commerce Department said Tuesday.

Gov't To Allow Intelligence Agencies More Access To Financial Data

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NEW YORK and WASHINGTON (3/25/13)--A U.S. Treasury document proposes a plan that would give all federal intelligence agencies increased access to a massive database that contains Americans' financial data.

The plan would aid agencies such as the Federal Bureau of Investigation (FBI), Central Intelligence Agency (CIA) and the National Security Agency (NSA) by providing full access to the financial data so they could track down terrorist networks and crime syndicates, according to Reuters (March 13). Reuters said it had a copy of a March 4 document outlining the plan, which is in the early stages of development.

Although the FBI already has full access to the database, the CIA and NSA must make requests case-by-case to obtain information, Reuters said. The agencies would use the data  by bringing together financial databanks, criminal records and military intelligence.

U.S. credit unions and other financial institutions already are required by the Bank Secrecy Act and the USA PATRIOT Act to file suspicious activity reports (SAR) for large money transfers or unusual accounts to the Treasury's Financial Crimes Enforcement Network (FinCEN). They file more than 15 million SARs every year.

The Treasury document proposes linking the FinCEN database with the Joint Worldwide Intelligence Communications System, a computer network used by U.S. defense and law enforcement agencies to share classified information.

Privacy groups reacted to the news by expressing concerns citizens could end up falsely accused if their information was misfiled as a potential terrorist suspect, said Reuters.

Existing Home Sales And Prices Rise In February

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WASHINGTON (3/22/13)--February U.S. existing-home sales and prices indicate a healthy recovery is underway in the housing sector, according to the National Association of Realtors (NAR). February sales were at the highest level since the tax credit period of November 2009.

Sales have been above year-ago levels for 20 consecutive months, while prices show 12 consecutive months of year-over-year price increases.

Total existing home sales--completed transactions that include single-family homes, townhomes, condominiums and co-ops--increased 0.8% to a seasonally adjusted annual rate of 4.98 million in February from an upwardly revised 4.94 million in January. They are 10.2% above the 4.52 million-unit level seen in February 2012.  

Lawrence Yun, NAR chief economist, said conditions for continued housing improvement are at play. "Job growth in the improving economy and pent-up demand are causing both home sales and rental leasing to rise," he said. "Though home prices are rising much faster than rents, historically low mortgage rates are still making home purchases affordable. The only headwinds are limited housing inventory, which varies greatly around the country, and credit conditions that remain too restrictive."

For the NAR Report, use the link.

In a related matter, U.S. house prices rose 0.6% on a seasonally adjusted basis from December to January, according to the Federal Housing Finance Agency's (FHFA) monthly House Price Index. The previously reported 0.6% increase in December was revised downward to a 0.5% gain. For the 12 months ending in January, U.S. prices rose 6.5%.

The U.S. index is 14.4% below its April 2007 peak and is roughly the same as the September 2004 index level. National home prices have not declined on a monthly basis since January 2012.

For the FHFA report, use the link.

Fed's Policy To Maintain Downward Pressure On CU Net Income--CUNA

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WASHINGTON and MADISON, Wis. (3/21/13)--The Federal Open Market Committee's (FOMC) announced it would keep the Federal Reserve's quantitative easing (QE3) bond-buying plan intact, continue its forecast of a 6.5% jobless rate by 2015, and keep the federal funds target rates at 0% to 0.25%. That means continued downward pressure on credit union net interest income in 2013, said a Credit Union National Association economist.

"The FOMC statement reassures credit union managers that the Federal Reserve will keep its foot on the monetary accelerator for the indefinite future," CUNA Senior Economist Steve Rick said after the FOMC--the Fed's monetary policymaking group--issued its statement Wednesday.

"The markets are predicting the Fed will exit its QE-3 asset purchase program in the first quarter of 2014 and begin raising the fed funds interest rate in the first quarter of 2015," Rick told News Now. "The Fed reiterated its commitment for low long-term interest rates by their continued monthly purchases of $40 billion of agency mortgage back securities and $45 billion in Treasury securities.

"This will maintain downward pressure on credit union net interest income in 2013.  We are forecasting credit union assets yields to fall to 3.40% in 2013, down from 3.66% in 2012, the lowest in credit union history," Rick said.

"Credit union cost of funds, which are asymptotically approaching zero, will fall from 0.73% in 2012 to 0.60% this year.  With asset yields falling faster than funding costs, interest margins will fall to 2.8% this year from 2.93% last year, the lowest in credit union history. To put this into historical perspective, 30 years ago credit unions were earning a 5.3% spread," he said.

"Falling margins and the end of the mortgage-refi boom will cause credit union net income-to-average asset ratios to fall from 0.84% in 2012 to 0.75% in 2013, below the long run average of 1%."

Rick added the low interest rates have fostered an increase in demand for housing. "Home prices rose 5%-7% in 2012 and home inventories fell to cyclical lows.  This has increased the supply of mortgage credit by reducing the probability of defaults and foreclosures.  We expect home prices to rise another 3%-4% this year.  This could set in motion a virtuous cycle of rising home prices stimulating faster economic growth which then fosters rising housing demand and home prices," he concluded.

In its statement after its two-day meeting, the FOMC noted  "a return to moderate growth following a pause late last year" and said it "expects that, with appropriate policy accommodation, economic growth will proceed at a moderate pace and the unemployment rate will gradually decline toward levels the committee judges consistent with its dual mandate" of fostering maximum employment and price stability.

"The committee continues to see downside risks to the economic outlook," said FOMC, which "anticipates that inflation over the medium term likely will run at or below its 2% objective."

In maintaining the federal funds rate at 0% to 0.25%, the committee "expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens."

In particular, " this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6.5%, inflation between one and two years ahead is projected to be no more than a half percentage point above the committee's 2% longer-run goal, and longer-term inflation expectations continue to be well anchored," said the FOMC.

The committee also said that when it "decides to begin to remove policy accommodation, it will take a balanced approach consistent with its longer-run goals of maximum employment and inflation of 2%."

Voting for the monetary policy action: Fed Chairman Ben S. Bernanke; Vice Chairman William C. Dudley; James Bullard; Elizabeth A. Duke; Charles L. Evans; Jerome H. Powell; Sarah Bloom Raskin; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen.

Voting against the action: Esther L. George, who expressed concern that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.

For the full FOMC statement, use the link.

FOMC Meeting Likely Will See Policy Steady, Say Economists

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WASHINGTON (3/20/13)--The Federal Reserve's monetary policymaking body will end its two-day March meeting today but is unlikely to change the Fed's $85 billion-a-month bond buying program or the near-zero targeted federal funds interest rates, according to economists surveyed before the meeting.

However, economists expect some tweaking in the wording of the policy statement because the economy has improved since the Federal Open Market Committee's (FOMC) Jan. 29-30 meeting, according to Business Insider (March 19).

The FOMC will delay the timing of the release of its after-meeting statement so it occurs closer to Fed Chairman Ben Bernanke's post-meeting press conference.  Normally there is a 90-minute lag between the two events. Beginning today, the statement will be released at 2 p.m. EDT, followed by the press conference at 2:30 p.m. That means News Now's update this afternoon will be an hour later than usual.

Since the Jan. 29-30, the last time the FOMC met, the economy has seen improvement in labor market conditions. However, the federal government failed to avert sequestration and events in Europe could pose downside risks. Several economists said they expected some language tweaking in the statement due to the improvements in the labor market.

"The net effect is likely to be no change in either the quantitative easing purchase pace or the forward guidance," said Michael Hanson, Bank of America Merrill Lynch senior U.S. economist (International Business Times March 19).

Currently the policy is for the Fed to buy $85 billion in bonds each month, and that is expected to continue until the labor market improves "substantially."  Interest rates will remain at 0%-0.25% until unemployment drops to 6.5% or inflation increases to 2.5%.

Watch for News Now's updates on today's meeting.

Citigroup To Pay $730M In MBS Lawsuit Settlement

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NEW YORK (3/20/13)--Citigroup Inc. said Monday it has agreed to pay $730 million to settle lawsuits by investors in mortgage-backed securities (MBS) who claim Citi misled them in more than four dozen bond and preferred stock offerings over more than two years.

The National Credit Union Administration has filed similar lawsuits against securities dealers. This Citigroup case does not involve NCUA.  

Investors who purchased Citigroup's debt and preferred stock from 2006 through 2008 alleged in their lawsuit that the bank's disclosures contained omissions and misstatements (The New York Times March 18).

Plaintiffs in the lawsuit include the Arkansas Teacher Retirement Systems and Louisiana Sheriffs' Pension and Relief Fund. The agreement is the most recent to hit the biggest U.S. banks during a period in which investors are concerned about the extent of their potential legal costs (The Wall Street Journal March 18). 

The investors/plaintiffs had accused Citigroup of misleading them about loss-exposure on securities backed by home loans, understating loss reserves for high-risk residential mortgage loans, and claiming that risky assets were of high quality, said the Journal and Times.

Citigroup denied all allegations of wrongdoing and said it was settling to end litigation and to mitigate legal costs as well as minimize time spent in extended legal proceedings, according to the publications.

The proposed settlement would be the culmination of more than four years of litigation, the Times said.

NCUA has filed similar lawsuits against securities banks over MBS investments that contributed to the collapse of U.S Central FCU and Western Corporate FCU. NCUA has recouped more than $170 million for credit unions' share insurance fund by settling claims against Citigroup, Deutsche Bank Securities and HSBC (News Now Feb. 22).

NEW: Fed Holds Steady On Monetary Policy

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WASHINGTON (Filed 2:45 p.m. ET 3/20/13)--The Federal Reserve's policymakers today kept their quantitative easing  bond-buying plan intact and continued its forecast of a 6.5% jobless rate by 2015, which means the federal funds target interest rates remain steady, at 0% to 0.25%.

The Credit Union National Association's economists will provide insight on the impact on credit unions in Thursday's News Now.

The Federal Open Market Committee, which is the key monetary policymaking body at the Fed, noted "a return to moderate growth following a pause late last year." The labor market has "shown  signs of improvement in recent months but the unemployment rate remains elevated."

The FOMC noted advances in household spending and business fixed investment, a stronger housing sector, but added "fiscal policy has become somewhat more restrictive." It also said inflation is running "somewhat below the committee's longer-run objective, apart from temporary variations" due to energy price fluctations. "Longer-term inflation expectations have remained stable."

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

"The committee continues to see downside risks to the economic outlook," said FOMC, which "anticipates that inflation over the medium term likely will run at or below its 2% objective."

The committee will continue purchasing additional agency mortgage-backed securities (MBS)  at a pace of $40 billion per month and longer-term Treasury securities at a pace of $45 billion per month--known as its $85 billion per month quantitative easing plan.  It "is maintaining its existing policy of reinvesting principal payments from its holdings of agency debt and agency MBS in agency MBS and of rolling over maturing Treasury securities at auction." Together the actions "should maintain downward pressure on longer-term interest rates, support mortgage markets, and help to make broader financial conditions more accommodative."

FOMC will continue the bond-buying "and employ its other policy tools as appropriate, until the outlook for the labor market has improved substantially in a context of price stability."  It also will "take appropriate account of the likely efficacy and costs of such purchases as well as the extent of progress toward its economic objectives."

As for maintaining the federal funds rate at 0% to 0.25%, the committee "expects that a highly accommodative stance of monetary policy will remain appropriate for a considerable time after the asset purchase program ends and the economic recovery strengthens."

In particular, the committee "currently anticipates that this exceptionally low range for the federal funds rate will be appropriate at least as long as the unemployment rate remains above 6.5%, inflation between one and two years ahead is projected to be no more than a half percentage point above the committee's 2% longer-run goal, and longer-term inflation expectations continue to be well anchored."

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

Voting for the FOMC monetary policy action were: Fed Chairman Ben S. Bernanke; Vice Chairman William C. Dudley; James Bullard; Elizabeth A. Duke; Charles L. Evans; Jerome H. Powell; Sarah Bloom Raskin; Eric S. Rosengren; Jeremy C. Stein; Daniel K. Tarullo; and Janet L. Yellen.

Voting against the action was Esther L. George, who expressed concern that the continued high level of monetary accommodation increased the risks of future economic and financial imbalances and, over time, could cause an increase in long-term inflation expectations.

Consumer Sentiment Falls To Yearly Low, Treasuries Gain

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NEW YORK (3/18/13)--U.S. consumer confidence in March has fallen to its lowest level in more than a year, prompting investors to seek safety in Treasuries, resulting in higher prices and lower yields (Bloomberg.com and MarketWatch.com March 15).

Treasury yields move inversely to prices, MarketWatch explained. Yields on the benchmark 10-year Treasury note dropped three basis points to 2%, the Treasury Department said Friday.

The Thomson/Reuters University of Michigan preliminary sentiment index for March dropped to 71.8--the lowest level since December 2011--from 77.6 in February. The drop was a surprise to economists who had forecast the index to rise to 78 this month, according to a median estimate of economists in a Bloomberg survey.

Automatically triggered across-the-board federal spending cuts may be causing worries about the economy, eroding consumer sentiment, Bloomberg said.

Financial Statements For Fed Reserve Banks Released

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WASHINGTON (3/18/13)--The U.S. Federal Reserve System Friday released its 2012 combined annual financial statements for the Federal Reserve Banks and for the 12 individual Federal Reserve Banks.

The Federal Reserve Banks' 2012 net income before providing remittances to the U.S. Treasury was $90.6 billion. They provided $88.4 billion in remittances to the U.S. Treasury.

The Reserve Banks' net income was primarily derived from $80.5 billion in interest income on securities acquired through open-market operations--U.S. Treasury securities, government-sponsored enterprise (GSE) debt securities, and federal agency and GSE mortgage-backed securities.

Total Reserve Bank assets as of Dec. 31 were $2.9 trillion, which is roughly the same as at the end of 2011.

Loans outstanding under the Term Asset-Backed Securities Lending Facility decreased to $0.6 billion from $9.1 billion in 2012 as a result of principal payments and loan prepayments.

To read the Fed release, use the link.

ID Theft, Debt Collectors, Banks And Lenders Top FTC Complaints For 2012

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WASHINGTON (3/15/13)--Identity theft was the No. 1 consumer complaint during 2012, with 18% of the more than two million consumer complaints made to Federal Trade Commission (FTC) related to ID theft.

2012 is the first year the complaints have reached more than two million, said FTC.

Identity theft complaints totaled 369,132. Of those more than 43% were related to tax or wage fraud.

Debt collection was the No. 2 complaint area, with 199,721 complaints or 10% of total complaints. Banks and lenders were No. 3, with complaints totaling 132,340 or 6%.

Complaints about credit unions were miniscule--less than 0.05% and they were lumped in with lending banks in a category that collected 781 complaints. That is a mere drop in the bucket when compared with the 19,738 complaints (1.35%) related to mortgage loans; 6,849 complaints (0.47%) against  national commercial banks; 6,076 complaints (0.41%) at other institutions; and 3,580 complaints (0.24%) generated against finance companies.

Other  complaints within the "Banks and Lenders" category were also counted: They included:

  • State Charter Banks (Non-Fed member): 591 or 0.04%;
  • Savings and Loans/Thrift Banks: 440 complaints, 0.03%;
  • State Charter Banks (Fed member): 400  or 0.03%
  • Student loans:  101 complaints or 0.01%. 
  • ATM/e-banking procedures:  95 or 0.01% of complaints;
  • Payday lenders, none, or 0%.
The FTC did not explain why the payday lenders category had no complaints filed or whether they are included in another category.

In other categories, shop-at-home and catalog sales generated 115,184 complaints (6%); prizes, sweepstakes and lotteries collected 98,479 complaints (5%); impostor scams totaled 82,896 (4%); Internet services, 81,438 (4%); auto-related complaints, 78,062 (4%); telephone and mobile services, 76,783 (4%); and credit cards, 51,500 (3%).

FTC entered complaints into a Consumer Sentinel Network, a secure online database available to more than 2,000 civil and criminal law enforcement agencies across the nation.

Bloomberg: Americans Spending Despite Higher Payroll Taxes and Fed Cuts

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NEW YORK (3/12/13)--The U.S. economy is set to gain momentum later his year because consumers and businesses are not being sidetracked by higher payroll taxes and cuts in federal spending, Bloomberg said Monday.

U.S. consumers are spending more on new automobile purchases and saving less, while rising home values are increasing household net worth, and stock indexes rise to record highs, Bloomberg said.

In February, companies added 246,000 workers to private payrolls, expanded investment and restocked inventories--putting profits garnered during the recovery to use, Bloomberg said.

A lot of factors are flowing in the right direction, Brian Jones, a senior U.S., economist at Societe Generale in New York, told the publication.

To some extent, the effects of higher taxes are being neutralized by higher demand at businesses, which is putting more people to work, who are then spending more money, Jones explained.

In the second half of the year, as effects from federal budget cuts fade, growth will pick up steam and lead to even more robust spending by consumers and businesses, according to projections from financial firms such as Barclays and JPMorgan Chase & Co, Bloomberg said.

Consumer Credit Jumps Most In Five Months, Up At CUs

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WASHINGTON (3/8/13)--The nation's consumers borrowed more than expected during January, increasing their debt by a 7% annual rate, or $16.15 billion, to more than $2.795 trillion, said the Federal Reserve in its Consumer Credit report released Thursday. Credit unions also saw borrowing increase--by $2.1 billion--to $245.7 billion.

Economists surveyed by Bloomberg had forecast a median $14.7 billion gain in January (Bloomberg via MoneyNews.com March 7). That hike in borrowing means consumers took out more auto and student loans, and increased their credit card debt. The report does not cover mortgage loans or home equity lines of credit.

The report indicates that many consumers continued to replace cars that are aging or that were damaged during October's Hurricane Sandy, even as paychecks were hit by the end in January of the payroll tax break, said Dow Jones Newswires (FOXBusiness.com March 7).

The $2,795.3 trillion borrowed compares with $2,779.2 trillion borrowed in December and $2.665 trillion in first quarter 2012.  Credit unions saw members borrow $245.7 billion in January, a $2.1 billion increase from $243.6 billion in December. Members took out $223 billion in loans from credit unions during first quarter 2012, said the Fed's report.

Revolving credit, or credit card debt, for January totaled $850.9 billion, or an increase of $1 billion from December. A year earlier, consumers borrowed $849 billion. Credit union members charged or borrowed $39.4 billion, roughly $5 million more than in December from their credit unions. In first quarter last year, they had borrowed $36.4 billion.

Nonrevolving credit, which centers on auto lending and student loans, increased 10% annually, to  more than $1.944 trillion in January. That is up from $1.928 trillion in December and $1.816 trillion in first quarter 2012. January was the third consecutive month that nonrevolving credit has risen by at least 9%, according to Dow Jones.

Auto loans and student loans taken out at credit unions totaled $206.3 billion, a $1.5 billion increase from December's $204.8 billion. That compares with $186.6 billion they borrowed from credit unions during first quarter 2012.

Bankruptcies Decline In February

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ALEXANDRIA, Va. (3/7/13)--Total U.S. bankruptcy filings decreased 21% in February from February 2012, according to data provided by Epiq Systems Inc., in a report issued by the American  Bankruptcy Institute (ABI).

"The post-recession trends of reduced consumer spending, low interest rates and tighter lending standards continue to be reflected in fewer bankruptcy filings," said ABI Executive Director Samuel J. Gerdano. "As these trends persist, expect bankruptcy filings to continue to decline in 2013."

Bankruptcy filings totaled 82,285, down from the February 2012 total of 104,537. Consumer filings declined 21% to 78,611 from February 2012's total of 99,378.

During fourth quarter, slightly more than 44,000 credit union members filed for bankruptcy, a 10.4% decrease from the total reported in the third quarter 2012, the National Credit Union Administration reported this month. Loan charge-offs due to bankruptcy and credit unions' net charge-off ratio both held steady from quarter-to-quarter, totaling 21.5% and 0.73%, respectively. The delinquency ratio reported by credit unions fell by two basis points to 1.16% (News Now March 4).

Total commercial filings decreased to 3,674--a 29% decline from the 5,159 business filings recorded a year earlier, ABI said. Total commercial Chapter 11 filings also dropped 21%, to 609 filings from the 756 commercial Chapter 11 filings recorded in February 2012.

While bankruptcies were down from a year ago, bankruptcy filings trended upward from January. Total bankruptcy filings were a 5% increase over the 78,565 total filings registered in January. Total noncommercial filings also saw a 5% rise from January's noncommercial filing total of 74,831.

Although the February commercial filing total was a 2% decline from the January's total of 3,734, February commercial chapter 11 filings saw a 27% increase, compared with the 481 filings the previous month.

The average nationwide per capita bankruptcy filing rate in February increased to 3.11 filings per 1,000 per population, a 2% increase from the 3.04 rate registered in January. With fewer days to file in the month, February's average total filings per day were 2,939--a 21% decrease from the 3,734 total daily filings in February 2012.

States with the highest per capita filing rate (total filings per 1,000 population) in February were:

1. Tennessee--6.43;

2. Alabama--5.38;

3. Georgia--5.36;

4. Illinois--4.86; and

5. Nevada--4.53.

Fed's Beige Book: Economy Expansion 'Modest To Moderate'

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WASHINGTON (3/7/13)--Economic activity in the U.S. generally expanded "at a modest to moderate pace" in 10 of the 12 Federal Reserve Districts, said the Fed's Beige Book, a summary of current economic conditions in each district Wednesday.

Two districts--Boston and Chicago--reported slower expansion.

Consumer spending expanded in most districts, with mixed or lower activity among non-auto retailers. "Many district contacts commented on the expired payroll tax holiday and the Affordable Care Act as having restrained growth," said the report. "Many districts noted rising gasoline prices and fiscal policy as having a negative effects on consumer sales," it said. Weather was a factor in Boston, New York and Minneapolis districts.

Those reporting on auto sales noted "solid or strong increases in sales" with "mixed activity" in St. Louis and "a seasonal slowdown" in Dallas.  Mild weather and pent up demand were credited as factors in some districts.

Residential real estate activity strengthened in most districts,  but the pace varied. Some said home sales growth was strong, with the Richmond District indicating low interest rates as motivating home buyers. Philadelphia reported more confidence among potential buyers. Home prices edged higher in most districts, due to lower inventories.  Commercial real estate loans were mixed or slightly improved in most districts.

In the banking and finance areas, "loan demand was steady or increased across all the districts that reported," said the Fed.  "Residential real estate loan demand was strong in the Philadelphia, Cleveland, Richmond, Atlanta and Chicago districts, mainly driven by refinances due to continued low interest rates."  Also noted: strong demand for commercial real estate loans in Cleveland, Richmond and Kansas City. Auto lending rose in Cleveland and Atlanta; energy-related loan demand increased in Philadelphia and Dallas.

Asset quality improved at financial institutions in Philadelphia, Kansas City and San Francisco districts. Philadelphia, Richmond, Atlanta and San Francisco lenders reported high competition for qualified borrowers.  Some said borrowing standards were looser. Atlanta reported more loan capacity but stayed cautious with loan activity.

Cleveland banks considered cost-cutting measures, including layoffs, due to shrinking net margins, said the Fed. New York indicated a decrease in loan spreads for all loan categories, particularly residential mortgages. Chicago said "very few mortgage originations were being kept on their balance sheets and that interest rate swaps were being utilized to hedge against a potential rise in interest rates."

Financial institutions were "generally optimistic about future activity in the Philadelphia and Dallas districts for the near term, but Atlanta bankers expected activity to ease toward the middle of the year."

Manufacturing conditions improved in nearly all districts, but increases were "generally modest," said the Beige Book.  It also noted improved labor conditions, with restrained hiring in some districts. Unknown effects of the Affordable Care Act were cited as reasons for planned layoffs or not hiring.

For the full report, use the link.

Economy Getting Stronger, CUNA's Hampel Tells Bloomberg

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WASHINGTON (3/6/13)--The U.S. economy has been getting stronger during the past half year, a Credit Union National Association economist told Bloomberg on Monday.

"It's starting to happen," said Bill Hampel, CUNA chief economist. "There are people who want to lend, and people who want to borrow. It's been getting stronger in the past six months or so. It just takes time to get away from the level of fear we saw during the crisis."

Because consumers are finding it easier to borrow from financial institutions, they are boosting consumer spending and business investment, which in turn helps stoke employment at a time when federal government budget cuts take effect, Bloomberg said.  

More access to low-cost financing will buoy auto and home sales--bolstering manufacturing and construction employment, Bloomberg added.

To read the article, use the link. 

To see a related News Now article about how from nearly every vantage point 2012 was the best year for U.S. credit unions since before the start of the Great Recession in 2007, use the link.

Weekly Mortgage Applications Decline For Third Week

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MADISON, Wis. (3/1/13)--U.S. mortgage applications for the week ending Feb. 22 decreased 3.8% from one week earlier--the third consecutive week of declines--according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey.

The Market Composite Index, a measure of mortgage loan application volume, dropped 3.8% on a seasonally adjusted basis from one week earlier. On an unadjusted basis, the index fell 3%, compared with the previous week. The Refinance Index declined 3% from the previous week.

The seasonally adjusted Purchase Index decreased 5% from one week earlier and is at its lowest level since the week ending Dec. 28. The unadjusted Purchase Index dropped 2%, compared with the previous week and was 14% higher than the same week one year ago.

The refinance share of mortgage activity was unchanged from the previous week at 77% of total applications and remains at its lowest level since early July 2012. The adjustable-rate mortgage share of activity was unchanged at 4% of total applications. The Home Affordable Refinance Program share of refinance applications increased to 30% from 29% the prior week.

For the MBA survey, use the link.