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Market Archive

Market

News of the Competition (05/31/2012)

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MADISON, Wis. (6/1/12)

  • During the past year running through April, five states were responsible for nearly half the U.S. home foreclosures, according to a national foreclosure report issued by CoreLogic (American Banker May 30). April saw 66,000 foreclosures occur nationwide--a reduction from 78,000 one year ago. As of April, 3.4% of all homes with a mortgage--roughly 1.4 million--were in foreclosure. Nationwide, more than 838,000 foreclosures were finalized, with 409,000 coming from five states. California completed 142,000 foreclosures in the past year, followed by Florida (92,000), Michigan (60,000), Texas (58,000) and Georgia (57,000). The states accounted for 48.8% of all completed foreclosures nationwide ...
  • Massachusetts mutual banks and thrifts will not need to disclose more details about how executives are compensated. The state Senate approved a budget Friday that removes language that would have required it (American Banker May 30). The bill's language was changed after the Massachusetts Bankers Association told lawmakers that the Federal Deposit Insurance Corp. already monitors mutuals' pay regulations. The association also explained the difference between mutual insurance companies and mutual banks, David Floreen, association senior vice president of government affairs, told the Banker

Market News (05/31/2012)

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MADISON, Wis. (6/1/12)

  • Smaller gains in consumption and inventories, as well as bigger government cutbacks, led to slower growth in the U.S economy for the first quarter than previously thought (The Wall Street Journal, Bloomberg.com, The New York Times and Moody's Economy.com May 31). Gross domestic product--the widest gauge of the goods and services an economy produces--rose at a 1.9% annualized rate in the first quarter, down from the 2.2% original estimate a month ago, the Commerce Department said Thursday. The economy continued to grow last quarter because consumer spending at car dealerships and retailers made up for a cooling off in business investment--pointing to the need for the economy to create more jobs to sustain the economic recovery, Bloomberg said  …
  • U.S. consumer confidence hit a four-week high last week because more consumers were optimistic about their personal finances, according to the Bloomberg Consumer Comfort Index (Bloomberg.com and Moody's Economy.com May 31). The index increased to -39.3 for the week ended May 26 from -42 the prior week. The index has been trending upward for two consecutive weeks. All three of the index's components--buying climate, personal finances and views of the economy--improved. A slowing in job cuts and cheaper gasoline prices may be helping solidify sentiment, reducing the chances that spending will diminish, Bloomberg said. However, a European recession could keep some U.S. companies from expanding their work forces and hamper wage gains that could pave the way for larger growth in consumer demand, Bloomberg added …
  • Initial claims for U.S. unemployment benefits unexpectedly increased last week due to seasonal factors and an adjustment for overstated improvement during the mild winter (Moody's Economy.com May 31). Claims rose to 383,000 for the week ended May 26 from a revised 373,000--originally 370,000--the prior week. Most analysts forecast little change in claims volume for last week, Moody's said. Meanwhile, continuing claims for unemployment benefits for the week ended May 19 declined 36,000--to 3.242 million-- from 3.278 million the prior week. In a related matter, U.S. employers announced plans to cut 61,887 jobs in May--the highest number since September when layoffs hit 115,730--according to the Challenger Report issued by Challenger, Gray and Christmas Inc. (Moody's Economy.com May 31). The computer industry accounted for the largest share--45%--of total job cuts …

News of the Competition (05/30/2012)

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MADISON, Wis. (5/31/12)

  • Freddie Mac's residential loan purchases in April fell 38% from March, an indication that mortgage originations are slackening or that the government-sponsored enterprise is losing customers to its rival Fannie Mae (American Banker May 29). Freddie's $26 billion of residential loans last month was the lowest amount since July 2011. More sellers/servicers may be heading to Fannie, spurred by recent reports of better mortgage-backed security pricing there, the Banker said. This spring, overall mortgage origination volumes have been more robust than anticipated and could possibly match last year's $1.45 trillion total, the Banker said. Last month, refinancings were 74% of Freddie's purchased mortgages from lenders, compared with 83% in March  ...
  • JPMorgan Chase's $110 million payment to settle a class action claim alleging the charging of excessive overdraft fees was given preliminary approval by the U.S. District Court for the Southern District of Florida (American Banker May 29). Chase is one  of 30 U.S. banks targeted by a class action claiming the banks attempted to maximize overdraft fees by manipulating the order in which they processed debit card transactions from highest amount to lowest …
  • U.S. banks nationwide already have spent hundreds of millions of dollars in attempts to bring their ATMs into compliance with the Americans with Disabilities Act. However, many have not completed their upgrades, which leave them susceptible to litigation costs that could tally millions more (American Banker May 29). As an example, First Commonwealth Financial Corp. in Indiana, Pa., had upgraded 118 of the bank's 120 ATMs to make them accessible to the blind. However, the two machines that had not been upgraded by the bank resulted in proposed class action lawsuits against it and 16 other banks in Western Pennsylvania and Ohio since March, the Banker said …

Market News (05/30/2012)

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MADISON, Wis. (5/31/12)

  • Writeoffs on credit card loans are trending downward and could be headed for new low levels, said the American Banker (May 39). In April, five of the six biggest card issuers reported the percentage of balances that were one to two months overdue declined. Borrowers are finding it easier to pay their financial obligations because of beneficial seasonal factors such as tax refunds, the Banker said. For the top six issuers, chargeoff rates--or the annualized debt amount written off as a percentage of outstanding receivables--in the third quarter could be 40 to 90 basis points below what they were in the first quarter, the Banker said. Credit card reserve releases have been the major force bolstering earnings throughout the banking industry, the publication said. However, with loss rates already at low levels, it is unlikely that drawdowns will continue to be a force for long, JPMorgan Chase investors were told in April by CEO Jamie Dimon …
  • In a sign the U.S. housing recovery remains checkered, the number of consumers who signed contracts to buy previously owned homes dropped in April by the largest amount in a year, according to the National Association of Realtors (NAR) index of pending home resales (Bloomberg.com May 30). The index fell 5.5% to 95.5 following a 3.8% gain to 101.1 in March, NAR said Wednesday. Although mortgage rates were at record lows, they did not buoy the pace of demand because some buyers likely were expecting home prices to drop more, Bloomberg said. Continuing foreclosures and restricted access to credit still are dampening housing demand and are a weak spot for the U.S. economy, Bloomberg said …
  • Mortgage loan applications in the U.S. decreased by 1.3% for the week ended May 25 from one week earlier, according to the Market Composite Index, part of the Weekly Mortgage Applications Survey released Wednesday by the Mortgage Bankers Association (MBA). On an unadjusted basis, the index declined 1.6%. The Refinance Index dropped 1.5%. The seasonally adjusted Purchase Index fell 0.6%. The unadjusted Purchase Index decreased 1.8% and was 3.9% lower than the same week one year ago. The four-week moving average for the seasonally adjusted Market Index is up 3.23%. The four-week moving average is down 0.67% for the seasonally adjusted Purchase Index, while this average is up 4.36% for the Refinance Index. The refinance share of mortgage activity remained unchanged at 76.6% of total applications from the previous week. The adjustable-rate mortgage share of activity declined to 4.9% from 5% of total applications from the previous week. For the MBA report, use the link …

IFox BusinessI features CUNA analysis of consumer confidence

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NEW YORK (5/30/12)--Credit Union National Association Chief Economist Bill Hampel provided the analysis for Fox Business News about yesterday's consumer confidence report, which unexpectedly dropped in May to its lowest level in four months.

"Consumer confidence rose sharply in February and is holding gains or giving back half its gains, but if one looks at the stresses consumers respond to, such as what's going on internationally, the energy prices and stock market, it's not surprising that they're getting iffy about their confidence," Hampel told Fox News Tuesday. "However, in the next few months, the fundamentals they face are going to continue to improve and we'll see a return in consumer confidence," he said in a segment entitled, "CUNA Economist Expects Consumer Confidence to Rise."

"Consumer confidence is the result of all the other consumer fundamentals. There

is nothing looking fantastic now, but most of the other fundamentals are gradually improving." He noted "the debt ratio that we got hooked on a few years ago is going down nicely for the past few years so consumers are able to borrow, employment gains are seeing substantial job growth-- not fantastic but they are coming back--and consumers have built quite a bit of backlogs in demand.

"Despite all the stresses and strains, the housing sector, which does account for about two-thirds of spending in the U.S. economy, is chugging along nicely," he said.

He noted two factors--lower gas prices, and increasing house prices--are moving in positive directions.

"Lower gas prices tend to improve sentiment especially among the bottom half of income distribution, the folks for which gas purchases are a more significant portion of their income, and they spend an awful lot of their income," he said.

Housing prices are moderately moving in the opposite direction, and their decline looks like it might be ending, he said.  "Seventy percent own their own homes and any improvement in home prices will help," Hampel noted. (Use the link to see the video if his outlook).

For a third consecutive month, the Consumer Board's Consumer Confidence Index declined in May, decreasing to 64.9 from 68.7 in April. The drop was attributed to more citizens turning more negative about job prospects (Bloomberg.com, MarketWatch and Moody's Economy.com May 29). Economists had forecast a May reading of 69.6, according to Bloomberg News survey.\

The lowest payroll gains in six months may engender worries that economic growth is not moving fast enough to lessen the unemployment rate and spark consumer spending, Bloomberg said. Consumers were less confident about the short-term economic outlook and not as upbeat about current labor-market and business conditions, Lynn Franco, director of economic indicators at the Conference Board, told MarketWatch.

News of the Competition (05/29/2012)

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MADISON, Wis. (5/30/12)

  • JPMorgan Chase & Co. is the target of a probe for possibly disclosing insider information. The probe is being conducted by Japans' Securities and Exchange Surveillance Commission, according to a source familiar with the matter (The Wall Street Journal May 29). In 2010, when Japanese glassmaker Nippon Sheet Glass Co. issued new shares, JPMorgan was a lead underwriter, and the Japanese company's stock nosedived in the days before the announcement, the Journal said. The commission announced Tuesday it may fine a Japanese asset-management firm for short selling shares, based on illegal information from an underwriter before the stock offering, the Journal said …
  • A new product--Send and Receive Money--may impact the competitive person-to-person payments market, said American Banker (May 25). The product, created by the clearXchange joint venture of Bank of America (BofA), JPMorgan Chase and Wells Fargo, began production last week. It allows BofA and Wells customers to use a mobile phone number or e-mail address to send to and receive funds transfers from other customers. clearExchange delivers the free service, but consumers use it by registering  on their mobile apps or existing online banking account with BofA or Wells, the Banker said …

Market News (05/29/2012)

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MADISON, Wis.  (5/30/12)

  • U.S. home prices in 20 U.S. cities finished the first quarter by dropping at the slowest pace in more than a year, according to the Standard & Poor's Case-Shiller home-price index. A better job market and declining borrowing costs sparked home sales (Bloomberg.com and Moody's Economy.com May 29).  However, home prices ended the quarter at their lowest levels since the start of the housing crisis in mid-2006 (The Wall Street Journal May 29). The index shows property values declined 2.6% in March from a year earlier, after falling 3.5% in February. But during the first quarter, home prices fell 2% and 1.9% year-to-year--and are 35% lower than their peak in the second quarter of 2006. However, because of record-low mortgage-interest rates, employment gains and shrinking inventories, a housing market recovery might be underway way, Bloomberg said …
  • Business confidence worldwide is a robust as it has been in the past year, prior to the debates about increasing the U.S. Treasury debt ceiling and worries about the European debt crisis, according to Moody's Analytics Survey of Business Confidence (Moody's Economy.com May 29).  In recent weeks, sentiment has significantly picked up regarding hiring intentions, software and equipment investment, Moody's said. Hiring is on the upswing and job layoffs are especially low, Moody's added …

News of the Competition (05/25/2012)

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MADISON, Wis. (5/29/12)

  • U.S. lenders are writing off fewer bad consumer loans--excluding mortgages--and they have diminished to nearly pre-recession levels, an Equifax report indicates (American Banker May 24). Writeoffs this year through the end of April for non-mortgage loans such as auto loans and credit cards are $26.2 billion--a 52% decrease from April 2009, according to The Equifax April National Consumer Trends Report. Because consumers have done better with their debt repayments, there are fewer bankruptcies, and therefore, lenders are writing off fewer loans, the Banker said …
  • Bank of America (BofA) announced Wednesday it now has 10 million mobile banking customers (American Banker May 24). BofA said its mobile banking product allows customers to pay bills, locate ATMs, check their account balances, move money between different types of accounts and view their transaction history. Later this year, BofA said it intends to add more products and services--such as remote deposit capture--to its mobile banking capabilities …
  • The world's access to the Internet, as well banks' needs to work together and with technology companies will significantly increase in the future, Paula Galant, head of Citi's Global Enterprise Payments group, told American Banker (May 24). The digital world today is an ecosystem in which everyone has a "symbiotic" need for each another, he added. Technology companies will use apps to create the user experience, and banks such as Citi to provide transaction clearing, protection of the user and risk management, the Banker said. The Global Payments Group was created in 2010 to connect different components of Citi's payment initiatives to create new services in light of mobile commerce, the Banker said  …

Market News (05/25/2012)

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MADISON, Wis. (5/29/12)

  • The Mortgage Bankers Association (MBA) said Thursday it is increasing its mortgage origination forecast for 2012 by almost $200 billion, due entirely to an increase in refinances. MBA now expects that mortgage originations will reach $1.28 trillion in 2012, up from $1.26 trillion in 2011. Refinance originations are now expected to total $870 billion in 2012, an almost identical amount to 2011. MBA is slightly lowering its purchase originations forecast for 2012 from $415 billion to $409 billion. This month's refinance estimate for 2012 reflects an upward revision of $188 billion from MBA's April forecast, driven by an increase in the pace of refinance applications and originations, while purchase origination estimates were revised downwards by $6 billion to reflect lower than previously expected home prices and weaker than previously expected home sales. "Scenarios we have consistently highlighted that could drive rates down and refis up have materialized, primarily due to market turmoil in Europe," said Mike Fratantoni, MBA vice president of research. "Deterioration of the debt situation in Spain and Greece and a new regime in France that is a weaker proponent of European austerity, along with slower economic growth globally, have driven the U.S. 10-Year Treasury yield down. Thus, we are projecting lower U.S. mortgage rates for the rest of the year and raising our refinance forecast as a result."  For  the MBA report, use the link …
  • U.S. consumer confidence in May increased to its highest level since October 2007, according to the Thomson/Reuters University of Michigan Consumer Sentiment Index, partly because gasoline prices became less of a drain on consumers' budgets (Bloomberg.com, The Wall Street Journal and Moody's Economy.com May 25). The index rose to 79.3 from 76.4 in April. In addition to lower-cost gasoline, an improving housing market may help buoy consumer moods amid tepid job creation and slumping stock prices, Bloomberg said. Also, the report indicates one-year-ahead inflation expectations continue to stabilize, declining to 3% in May from 3.2% in April, while five year-expectations dropped to 2.7% from 2.9%, Moody's said …

News of the Competition (05/24/2012)

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MADISON, Wis. (5/25/12)

  • U.S. commercial banks and savings institutions insured by the Federal Deposit Insurance Corporation (FDIC) reported an aggregate profit of $35.3 billion in the first quarter of 2012--a $6.6 billion improvement from the $28.8 billion in net income the industry reported in the first quarter of 2011. This is the 11th consecutive quarter that earnings have registered a year-over-year increase. However, loan balances declined by $56.3 billion--0.8%--after three consecutive quarterly increases. "The condition of the industry continues to gradually improve," said FDIC Acting Chairman Martin J. Gruenberg. "Insured institutions have made steady progress in shedding bad loans, bolstering net worth, and increasing profitability. The overall decline in loan balances is disappointing after we saw three quarters of growth last year. But we should be cautious in drawing conclusions from just one quarter."  For the FDIC release, use the link …
  • Because it did not obtain full appraisals on some properties, Bank of America (BofA) said Wednesday it would buy back $330 million worth of home mortgages from Freddie Mac (American Banker May 23). For specific properties such as manufactured housing and apartment buildings, BofA used automated valuation models, or AVMs--which are less costly than appraisals--in error, necessitating the repurchase, BofA spokesman Dan Frahm told the Banker. The move is causing worries that some newly originated loans are not in line with underwriting guidelines, the Banker said. AVMs are computer-generated reports that use comparable data to determine the value of a property in a few seconds. Fannie Mae and Freddie prohibit using AVMs in the origination of first-lien mortgages, because it is believed that AVMs are not developed enough to perform as well as traditional appraisals and human judgment, the Banker reported …
  • Citigroup is trying to sell a $99 million bundle of troubled residential mortgages, said some investors who have seen the package (American Banker May 23). During the past year, Citigroup--which has frequently sold nonperforming loans (NPLs)--has sold NPLs to publicly traded Real Estate Investment Trust PennyMac. Last week, Wells Fargo & Co. was taking bids on a $200 million NPL package, the Banker said …

Market News (05/24/2012)

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MADISON, Wis. (5/25/12)

  • Initial claims for U.S. unemployment benefits decreased last week, indicating modest, gradual change in the labor market (The New York Times, Bloomberg.com and Moody's Economy.com  May 24). Claims dropped 2,000--to 370,000--for the week ended May 19 from 372,000 the prior week, the Labor Department said Thursday. Claims have fallen off in May after surging in April to a five-month high of 392,000. A less volatile gauge--the four-week claims average--also fell, with 370,000 claims, compared with 376,000 the prior week. Employers have added 160,000 jobs so far in May, according to economists' forecasts--which is above April's level, but less than  the pace set during winter, the Times  said. The government will release its official May job growth report next week. Meanwhile, continuing claims  for unemployment benefits for the week ended May 12 declined 29,000--to 3.260 million from 3.289 million the prior week ...
  • For the first time in a month, U.S consumer confidence rose last week, in part because declining gasoline prices mitigated concerns about household finances, according to the Bloomberg Consumer Comfort Index (Bloomberg.com and Moody's Economy.com May 24). The index rose 1.6 points to -42 for the week ended May 20 from -43.6 the prior week. However, the gauge fell 12.2 points during the previous four weeks, negating nearly the entire gain for 2012. Confidence was bolstered by a more stable housing market, the lowest gasoline prices in three months and a slowing of job cuts that may be softening the effect of declining stock prices, which reflect larger concerns about the European debt problems, Bloomberg said …
  • Manufacturers' new order for U.S. durable goods inched up in April after a sharp decline in March, causing the checkered  recovery of the manufacturing sector to continue (The Wall Street Journal and Moody's Economy.com May 24). The orders for goods designed to last more than three years rose 0.2% last month to a seasonally adjusted $215.53 billion, the Commerce Department said Thursday. The gain follows a 3.7% decline in March. The overall increase was driven by healthy demand for autos and auto parts, which rose 5.6% in April, the Journal said …

News of the Competition (05/23/2012)

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MADISON, Wis. (5/24/12)

  • Although the Federal Housing Finance Agency (FHFA) has previously established a goal for the long-run of merging Fannie Mae and Freddie Mac's securitization platforms, the FHFA should take more timely action to deal with differing pricing between mortgage-backed securities (MBS) issued by both government-sponsored enterprises, Mathew Tomiak, senior vice president at  Bank of America has said (American Banker May 21). Investors are selling more of their loans to Fannie because of a price advantage due to the growing spread between Fannie and Freddie's MBS, the Banker said ...
  • Social engineering attacks--also known as phishing and spear-phishing--are increasing against banks and their corporate customers because there is more money at stake than with consumer retail banking, said American Banker (May 22). Social engineering is perpetrated by hackers when they want to dupe an end user into performing a specific action or to disclose important proprietary information online, the Banker said. Phishing attacks previously came in the form of e-mails that arrive in an inbox, waiting for someone to click to unleash malware on a computer.  With current social engineering, the attacks occur in real time, and often take place after only a few minutes of intensely focused research on the victim, taken from what is easily accessed on the Internet, the Banker said …

Market News (05/23/2012)

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MADISON, Wis. (5/24/12)

  • The Mortgage Bankers Association (MBA) said U.S. mortgage loan applications increased 3.8% for the week ended May 18 from one week earlier, according to its Market Composite Index, part of its Weekly Mortgage Applications Survey released Wednesday. On an unadjusted basis, the index rose 3.3%. The Refinance Index climbed 5.6%. That is the third consecutive weekly increase in the Refinance Index, which is at its highest level since Feb. 10. The seasonally adjusted Purchase Index decreased 3% to its lowest level since April 20. The unadjusted Purchase Index declined 3.6% and was 4.2% lower than the same week one year ago. "Continuing negative developments in the sovereign debt crisis in Europe, particularly in Greece and Spain, as well as the recent French elections, which have shifted political power in a manner that will likely show less support for European austerity, helped push the U.S. 10-year Treasury yield below 1.7% last week," said Michael Fratantoni, MBA vice president of research and economics. "Mortgage rates again dipped to new record lows in the survey, which spurred more borrowers back into the refinance market. As a result, applications for refinance loans have increased for the third straight week and are at the highest level since February of this year."  For the MBA report, use the link …
  • Sales of new U.S. homes rose in April because low mortgage interest rates and home prices attracted buyers--an indication that the troubled housing industry is beginning to stabilize (The Wall Street Journal, Bloomberg.com and Moody's Economy.com May 23). Sales increased 3.3% from March to a seasonally adjusted annual rate of 343,000, the Commerce Department said Wednesday. Record-low interest rates, home affordability and job growth are making single-family homes more accessible for buyers, Bloomberg said. However, banks still are hesitant to lend, while foreclosures continue to make their way through the housing market--indicating a prolonged recovery will need more time to take hold, Bloomberg said …
  • U.S. house prices rose modestly in the first quarter of 2012 according to the Federal Housing Finance Agency's (FHFA) seasonally adjusted purchase-only house price index (HPI). The FHFA HPI was up 0.6% on a seasonally adjusted basis since the fourth quarter of 2011. The HPI is calculated using home sales price information from Fannie Mae and Freddie Mac mortgages. Seasonally adjusted house prices rose 0.5% from the first quarter of 2011 to the first quarter of 2012. FHFA's seasonally adjusted monthly index for March was up 1.8% from February. For the FHFA report, use the link …
  • More homeowners are becoming delinquent on their monthly mortgage payments, according to the "First Look" report issued by Lender Processing Services (American Banker May 22). The month-over-month delinquency rate increased 0.4% in April--the first rise in nine months--the company's report from its database of nearly 40 million mortgage loans indicated. April's gain brings the overall delinquency rate of home loan 30 days or more past due--but not in the foreclosure process--to 7.12 %, down 10.6% from a year earlier …

News of the Competition (05/22/2012)

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MADISON, Wis. (5/23/12)

  • In two actions related to mortgage-backed securities, the Federal Deposit Insurance Corp. (FDIC) has sued several banks, including Bank of America Securities, Citigroup Inc., Deutsche Bank AG and JPMorgan Chase & Co., alleging they misled investors in the registration statements for the securities (Bloomberg.com via San Francisco Chronicle May 21). Acting as a receiver for two failed banks, the FDIC filed the lawsuits Monday in New York federal court looking to recover the $77 million the banks purportedly lost by investing in mortgage-backed securities. The FDIC filed separate claims as receiver--$66 million on behalf of Strategic Capital and Citizens National Bank, and $11 million for Strategic Capital and Citizens National Bank, Champaign, Ill.  …
  • U.S. community banks will have a tougher time remaining independent because a larger-than-anticipated spate of bank mergers is inevitable, two Louisiana bankers told attendees at an American Banker's M&A Symposium in New York (American Banker May 21). Among the reasons the two CEOs gave during separate presentations were: Worries about an increase in the capital gains tax, capital-raising problems, escalating costs, and succession issues …
  • During the past decade, the number of woman who are directors on the boards of banks has not appreciably changed, said American Banker (May 21). One of the major reasons there are so few women in the board room could be due to the recent departures in the banking industry of some top female executives, the Banker said. As of June 2011, roughly 17% of U.S. financial institutions' board seats were filled by women, according to Catalyst data. That percentage is essentially the same as a year earlier, the company said. In 2001, women held 12.4% of board seats  …

Market News (05/22/2012)

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MADISON, Wis. (5/23/12)

  • U.S. existing-home sales rose in April and remain above year-ago levels, while home prices continued to rise, according to the  National Association of Realtors (NAR). The improvements in sales and prices were broad-based across all regions. Total existing-home sales--which are completed transactions that include single-family homes, townhomes, condominiums and co-ops--increased 3.4% to a seasonally adjusted annual rate of 4.62 million in April from a downwardly revised 4.47 million in March, and are 10% higher than the 4.20 million-unit level in April 2011.Lawrence Yun, NAR chief economist, said the housing recovery is underway. "It is no longer just the investors who are taking advantage of high affordability conditions," he explained. "A return of normal home buying for occupancy is helping home sales across all price points, and now the recovery appears to be extending to home prices. The general downtrend in both listed and shadow inventory has shifted from a buyers' market to one that is much more balanced, but in some areas it has become a seller's market." For the NAR report, use the link …
  • The number of U.S. mass layoff events--those involving at least 50 workers from a single establishment--and the number of employees affected in those events rose between March and April, according to the Bureau of Labor Statistics (Moody's Economy.com May 22). The number of mass layoffs increased by 115 last month to 1,388. April's layoffs involved 135,600 employees--14,290 more than in March. The increases are consonant with April's weakened labor mark indicators, which included a smaller net gain in employment and high initial claims for unemployment benefits, Moody's said. Manufacturing was responsible for 19% of all mass layoffs and 23% of initial claims …
  • The International Council of Shopping Centers (ICSC) chain store sales index dropped 1.7% for the week ended May 19 (Moody's Economy.com May 22). The decrease marks the fourth consecutive weekly decline and fifth in the past six weeks. However, year-over-year growth stayed robust at 3.8%, ICSC said. Consumer shopping was negatively impacted by a declining stock market that trumped lower gasoline prices and good weather, ICSC added …

News of the Competition (05/21/2012)

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MADISON, Wis. (5/22/12)

  • The Federal Deposit Insurance Corp. (FDIC) closed a bank Friday for a total of 24 closures so far in 2012. There were 92 bank closures in 2011. Alabama Trust Bank, N.A., Sylacauga, Ala. was assumed by Southern States Bank, Anniston, Ala. The bank had roughly $52 million in assets as of March 31. The FDIC estimates the most recent failure will cost its Deposit Insurance Fund about $9 million …
  • In reaction to a new law--the JumpStart Our Business Start-ups, or JOBS, Act--geared to reducing paperwork for bureaucratic procedures at small companies, a minimum of 25 U.S. consumer banks and thrifts announced in recent weeks that they no longer would write up reports for the Securities and Exchange Commission (American Banker May 18). President Barack Obama signed the act into law in early April. It includes a provision to allow banks and thrifts whose shares are lightly traded to deregister their shares and shed the expenses related to filling out many forms. Banks and thrifts with fewer than 1,200 shareholders are allowed to deregister …
  • Jamie Dimon, chairman and CEO of JPMorgan Chase & Co., is being asked to resign as a board director at the Federal Reserve Bank of New York, in the wake of the firm's $2 billion trading loss (American Banker May 18). Consumer activists and politicians are calling for the move because of a perceived conflict of interest, the Banker said. However, the consensus among industry observers is that the conflict is nothing more than perception because neither Dimon nor financial institution directors have any involvement in the Fed's regulatory activities, the Banker said ...
  • SunTrust Banks in Atlanta launched a retirement planning tool Friday called the Sun Trust Retirement Income Navigator that provides SunTrust Investment Services advisors a way to help clients plan for retirements (American Banker May 18). The tool is designed to optimize retirement income and have users access their assets with as little tax liability as possible, SunTrust said. SunTrust claims it can help clients raise their  retirement income by as much as 33%, compared with a tax/investment neutral approach …

Market News (05/21/2012)

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MADISON, Wis. (5/22/12)

  • Worldwide business confidence has improved in the past few weeks, according to Moody's Analytics Survey of Business Confidence (Moody's Economy.com May 21). Sentiment is as robust as it has been in nearly a year--before last year's debt ceiling imbroglio and reports of fiscal trouble in Europe, Moody's said. The rise in sentiment is surprising because concern about the possible Greek exit from the euro zone is increasing once again, Moody's said. Also, stock markets worldwide have significantly weakened in recent weeks. Most of the improvement in business confidence has happened in North America with equipment and software investment and hiring, Moody's said …
  • Modest U.S. job growth is expected for the rest of the year with an increased pace anticipated in 2013, according to the National Association for Business Economists most recent survey released Monday (Associated Press May 21). The survey of 54 economists indicates they are more positive about a recovery in housing and labor markets. However, those surveyed believe other areas of the economy will remain weak--with business investment, consumer spending and gross domestic product staying below historic norms …

News of the Competition (05/18/2012)

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MADISON, Wis. (5/21/12)

  • Insurers should be banned from the standard operating procedure of making payments to referring banks in the force-placed insurance market, said Benjamin Lawsky, New York superintendent of financial services, during three days of hearings held by his department about the market (American Banker May 17). Forced-placed insurance is an insurance policy taken out by a lender or creditor when a customer does not carry insurance on an asset. The charges for the insurance are passed on to the customer. Banks often purchase the insurance to cover home costs if borrowers' property insurance lapses, the Banker said. During the past few years, there has been criticism that premiums charged for force-placed insurance are excessive because of surreptitious payments underwriters give to banks that refer business to them, the Banker said. The high premiums are indicative of the costs and risks in providing force-placed coverage, industry officials have said, in denying any wrongdoing, the Banker said …
  • Steep decreases in second-quarter revenue from trading and investment-banking operations will be the norm for eight Wall Street banks because of less client activity, said an analyst in a report issued Friday (The New York Times May 18). Several banks--including Goldman Sachs Group and Morgan Stanley--likely will see challenges with fixed income, currency and commodities trading revenue, which will fall 32% from the first quarter, said Kian Abouhossein, a JPMorgan analyst, in the report. Investment banking revenue will drop 17%, and equities trading revenue will decline 14%, according to Abouhossein's estimates to date …

Market News (05/18/2012)

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MADISON, Wis. (5/21/12)

  • The Conference Board Index of Leading Economic Indicators declined 0.1% in April--the first drop in seven months--after a 0.3% rise in March (Moody's Economy.com May 17). April's decrease comes after six consecutive monthly gains in the index. The consensus forecast was for a small increase in the index. The biggest factors in the decline were escalating unemployment claims and a decline in building permits, Moody's said. Also, the Economic Cycle Research Institute (ECRI) Weekly Leading Index--which measures economic growth--dropped to 124.5 for the week ended May 11 from 135.4 the prior week--negating the previous two weeks' gains (Moody's Economy.com May 18). The smoothed, annualized growth rate climbed to its highest level in three weeks, hitting 0.4 …
  • The  probability that the U.S. will be in recession in six months increased to 28% in April from 25% in March, according to the Risk of Recession gauge issued by Moody's Economy.com (May 18). The increased risk is due to a weaker labor market and financial market conditions that are less supportive to business, Moody's said. Although April constitutes the second consecutive monthly increase in the gauge, it is not of great concern because some of the recession-probability increase is from a reaction to a mild winter that sparked a labor market recovery, Moody's said. Real gross domestic product is expected to increase at roughly a 2% annualized rate this quarter--which is good in light of intensifying economic problems in Europe, Moody's said …

News of the Competition (05/17/2012)

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MADISON, Wis. (5/18/12)

  • Wells Fargo had an opportunity to get a judgment against it overturned for a 2010 district court case in which $203 million in full damages were awarded plaintiffs who alleged the bank reordered their debit transactions so that its customers incurred more overdraft fees (American Banker May 16). Wells appeared Tuesday before the U.S. Ninth Circuit Court of Appeals to argue the prior verdict was not warranted.  Robert Long, attorney for Wells Fargo, told the panel of three appellate judges that the bank's contract disclosure prevents any chance of defrauding its customers. He added that the judgment should be reversed for two major reasons: the plaintiffs' claims fail according to state law, and federal banking law pre-empts the claims of the plaintiffs …
  • Laws that regulate licensing and compensation for mortgage brokers and originators could imperil a nascent partnership among several small U.S. banks and mortgage lenders and warehouse club Costco Wholesale (American Banker May 16). As part of its mortgage referral service, Costco chose five banks and four small mortgage lenders, with Costco's lead partner being First Choice Bank, a $669 million asset institution based in Lawrenceville, N.J. Under California state law, Costco should be licensed as a real estate broker because it is soliciting borrowers in the state, said Herman Thordsen--a California lawyer who represents mortgage companies but none in the Costco partnership. Costco has more than 100 stores in California. Costco also seems to be in violation of a requirement of the Dodd-Frank Act that mortgage originators be registered or licensed, and California regulators could discipline Costco because of that, he added.  Costco could face the same problems with the same requirements in other states including Texas, North Carolina and New Hampshire, Marx Sterbow, a New Orleans lawyer, told the Banker
  • Joining other large U.S. financial institutions, U.S. Bank announced Wednesday it will raise overdraft fees beginning June 29 (huffingtonpost.com May 16). The bank's new $35 fee is similar to other big banks, the publication said. The bank charges a maximum of three overdrafts per day. The higher overdraft charge is a component of the banks overall review of deposit fees in which it will eliminate some other fees, Teri Charest, bank spokeswoman, told the Huffington Post. U.S. Bank said it will lower stop payment fees, and will eliminate the fee to close an account early …

Market News (05/17/2012)

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MADISON, Wis. (5/18/12)

  • Initial U.S. claims for unemployment benefits remained unchanged at 370,000 for the week ended May 12, matching the prior week's claims total--and indicating the labor market is making scant progress, the Labor Department said Thursday (The Wall Street Journal, The New York Times and Bloomberg.com May 17). The claims figures--indicating job cuts--may cause worries that payrolls will not grow since April saw employers add the fewest number of workers in six months, Bloomberg said. Without a consistent bounce-back in hiring, the outlook for consumer spending--which constitutes 70% of the U.S. economy--is diminished, Bloomberg added. At this time, the labor market is displaying very little momentum, Sean Incremona, an economist at New York-based research firm 4Cast, told the Times. Meanwhile, continuing U.S. claims for unemployment benefits for the week ended May 5 rose 18,000--to 3.265 million from 3.247 million the prior week (Moody's Economy.com May 17) …
  • U.S. consumer confidence sagged last week to the lowest level in nearly four months, according to the Bloomberg Consumer Comfort Index, which reflected tepid employment growth that fueled negativity about spending and personal finances (Bloomberg.com and Moody's Economy.com May 17). The index fell to -43.6 for the week ended May 13--a level reflective of recessions or their aftermaths--from -40.4 the prior week. Last week's decrease constitutes the fourth consecutive weekly decline, even though gasoline prices have fallen off from early April's 11-month high, Bloomberg said. More robust wage and job gains are necessary to boost household spending, Bloomberg added ...
  • Mortgage loan application volume increased 9.2% for the week ended May 11 from one week earlier, according to the Market Composite Index, part of the Weekly Mortgage Applications Survey released Wednesday by the Mortgage Bankers Association (MBA). On an unadjusted basis, the index rose 8.7%. The Refinance Index jumped 13%. The seasonally adjusted Purchase Index decreased 2.4%. The unadjusted Purchase Index declined 2.4% and was 1% lower than the same week one year ago. Refinancings climbed to 74.9% of total applications from 72.1%. The adjustable-rate mortgage (ARM) share of activity dropped to 5.4% from 5.7% of total applications. "A flare up of the sovereign debt troubles in Europe once again led investors to flee to the safety of U.S. Treasury securities last week," said Michael Fratantoni, MBA vice president of research and economics. "As a result, mortgage rates have reached new lows in our survey, and refinancing application volumes picked up substantially as a result. Survey participants indicated that this was not due primarily to Home Affordable Refinance Program (HARP) volume--the HARP share of refinances fell to 28% of refinance applications, down relative to last week and last month, when the share was just above 30% in April. The increase in refinance activity last week was concentrated in the conventional sector, which was up around 14% for the week, while government refinance applications were up only 4%."  For  the MBA report, use the link …

Fed officials wary some suggest easing

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WASHINGTON (5/17/12)--Federal Reserve policymakers were concerned about risks to the economic recovery, including the U.S. budget policy and the debt crisis in Europe, with some suggesting that additional easing might be necessary if the economy lost momentum, according to minutes released Wednesday of the Federal Open Market Committee's (FOMC) April 24-25 meeting.

The Fed's policy-making body said the economic outlook was still expanding moderately, and said that "economic growth would remain moderate over coming quarters and then pick up gradually." Most were more confident about the duration of the recovery. "However, others thought it was premature to infer a stronger underlying trend from the recent positive indicators, since those readings may partially reflect the effects of the mild winter weather or other temporary influences," said the FOMC minutes.

"A number of factors continued to be seen as likely limiting the economic expansion to a moderate pace in the near term," said the minutes. These "included slow growth in some foreign economies, prospective fiscal tightening in the U.S., slow household income growth, and --nothwithstanding some recent signs of improvement--ongoing weakness in the housing market," the document said.

While FOMC members have said they do not plan to take any immediate actions to boost growth in the economy,  several suggested that "additional monetary policy accommodation could be necessary if the economic recovery lost momentum or the downside risks to the forecast became great enough," said the minutes.

Participants in the meeting noted several factors that likely would continue to restrain the pace of economic expansion over the projection period. "In particular, tighter fiscal policy seemed likely to impart a significant drag on economic activity for a time. Moreover, uncertainty about the fiscal environment could hold back both household spending on durable goods and business capital expenditures," the report said.

Most participants viewed the risks to their inflation outlook as being roughly balanced. However, some "saw a risk that inflation pressures could increase as the expansion continued."

In addressing monetary policy for the near future, FOMC members decided it would be "appropriate to maintain the existing highly accommodative stance of monetary policy." Members agreed to keep the target fed funds interest-rate range at 0% to 0.25%, to continue the program of extending the average maturity of the Federal Reserve's holdings of securities as announced last September, and to retain the existing policies regarding the reinvestment of principal payments from the Fed's holdings of securities.

News of the Competition (05/16/2012)

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MADISON, Wis. (5/17/12)

  • JPMorgan Chase's recent $2 billion trading loss accentuates the need for financial reform as laid out under the federal Dodd-Frank Act, Treasury Secretary Tim Geithner told Peterson Foundation's Fiscal Summit in Washington D.C., Tuesday (American Banker May 15). Since the 2008 economic crisis, the JPMorgan loss was one of four major tests of the U.S. financial system, Geithner said. The others were the debt limit imbroglio and consequent credit-rating downgrade, the MF Global implosion, and the financial jolt from Europe's debt problems. Although he has not spoken to JPMorgan CEO Jamie Dimon since the loss was revealed last week, Geithner indicated federal regulators would closely scrutinize the incident and put it in perspective regarding a larger set of financial reforms, including the Volcker Rule. The Volcker Rule is a section of the Dodd-Frank Wall Street Reform and Consumer Protection Act originally proposed by American economist and former U.S. Federal Reserve Chairman Paul Volcker to restrict U.S. banks from making certain kinds of speculative investments that do not benefit their customers …
  • Some U.S. community bank advisers are looking to pooled asset sales to help their clients shed troubled assets (American Banker May 15). Smaller banks mostly have been shut out from that type of distressed sales by bigger community and regional banks that rid themselves of large chunks of problematic loans, the Banker said. A problem for small banks is that the amount of assets they put up for sale is too small to attract sufficient interest from buyers, or else they don't have sufficient capital to endure the removal of their troubled assets, the Banker said ...
  • The Federal Deposit Insurance Corp. (FDIC) will issue its first-quarter Quarterly Banking Profile--an update on the state of the banking industry--May 24 (American Banker May 15). Martin Gruenberg, acting FDIC chairman, will present the report in a morning briefing, followed by senior FDIC staff providing technical details. The fourth-quarter FDIC report indicated the last three months of 2011 saw the largest real growth in loans in four years, with loans reaching $7.46 trillion--a 1.8% gain from the prior quarter …

Market News (05/16/2012)

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MADISON, Wis. (5/17/12)

  • The delinquency rate for U.S. mortgage loans on one-to-four-unit residential properties decreased to a seasonally adjusted rate of 7.4% of all loans outstanding as of the end of the first quarter. That is a decrease of 18 basis points from the fourth quarter of 2011, and a decrease of 92 basis points from one year ago, according to the Mortgage Bankers Association's (MBA) National Delinquency Survey. The percentage of loans three payments or more past due is at the lowest level since 2008, MBA said. The non-seasonally adjusted delinquency rate declined 121 basis points to 6.94% this quarter from 8.15% last quarter. The percentage of loans on which foreclosure actions were started during fourth quarter was 0.96%, down three basis points from last quarter and down 12 basis points from one year ago. The delinquency rate includes loans that are at least one payment past due but does not include loans in the process of foreclosure. The percentage of loans in the foreclosure process at the end of the first quarter was 4.39%, up one basis point from the fourth quarter and 13 basis points lower than one year ago. The serious delinquency rate--the percentage of loans that are 90 days or more past due or in the process of foreclosure--was 7.44%, a decrease of 29 basis points from last quarter, and a decrease of 66 basis points from the first quarter of last year. For  the MBA report, use the link …
  • U.S. housing starts rose more than expected in April, signaling the troubled housing market may be solidifying (The Wall Street Journal, Bloomberg.com and The New York Times May 16). Starts increased 2.6% to a 717,000 annual rate from a 699,000 pace in March, the Commerce Department said Wednesday. Economists had forecast a 680,000 unit rate, according to a Reuters poll. Year-over-year residential construction was up 29.9% last month. The housing industry is getting brighter, and residential construction no longer will be an impediment to the economy but will help add to growth, Michael Gapen, a senior U.S. economist at Barclays Capital in New York, told Bloomberg. Record-low mortgage rates, cheaper homes and rising employment are boosting demand and spurring builders to begin more projects, Bloomberg said …
  • Industrial production in the U.S. increased 1.1% in April, according to the Federal Reserve System, spurred by gains in auto manufacturing and utility use (Bloomberg.com May 10). Output is reported to have fallen 0.6 % in March after it moved up 0.4% in February. Previously, industrial production was estimated to have been unchanged in both months. Manufacturing output increased 0.6% in April after decreasing 0.5% in March. Excluding motor vehicles and parts, which rose nearly 4%, manufacturing output moved up 0.3%, and output for all but a few major industries increased. Production at mines rose 1.6%, and the output of utilities gained 4.5% after unseasonably warm weather in the first quarter held down demand for heating. At 97.4% of its 2007 average, total industrial production for April was 5.2% above its year-earlier level. The rate of capacity use for total industry moved up to 79.2%, 3.1 percentage points above its level from a year earlier but 1.1 percentage points below its long-run (1972--2011) average. For the Fed report, use the link …

News of the Competition (05/15/2012)

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MADISON, Wis. (5/16/12)

  • Community banks in the U.S. are divided in their reactions to JPMorgan Chase's recent $2 billion trading loss (American Banker May 14). Some see it as an opportunity to gain from the public's displeasure with giant banks. Others view the incident as a call to circle the wagons as banks again get dragged through the mud because of bad decisions, the Banker said. U.S. and United Kingdom regulators are investigating the incident, which could allow smaller banks to lure some clients, William Moss, president/CEO of the $685 million asset Community Partners Bancorp, based in Middletown, N.J., told the Banker. The incident also gives community banks another opportunity to show that their business model is more sound and warrants different treatment by regulators, Moss added …
  • Yahoo's payment plans may be in jeopardy with the sudden end of Scott Thompson's tenure as CEO this week (American Banker May 14). Payments are considered paramount to strengthening Yahoo's future, but it is behind major competitors such as Amazon.com and Google in that area, the Banker said. Google, Yahoo's top rival, already has established a well-known payment brand called Google Wallet. Furthermore, Google bought TxVia--a New York-based prepaid card technology firm. Also, Yahoo has to compete--in another area--with prominent e-commerce companies such as Amazon.com and eBay, the Banker said …

Market News (05/15/2012)

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MADISON, Wis. (5/16/12)

  • U.S. consumer prices were unchanged in April from March, aided by a decline in gasoline and natural gas prices (The New York Times and Bloomberg.com May 15). April's consumer price index (CPI) remained flat, following three consecutive monthly gains, including a 0.3% rise in March, the Labor Department said Tuesday. The core CPI--which excludes volatile food and energy costs--increased 0.2% for a second consecutive month. With job growth showing indications of slowing and hampering wage gains, some companies are keeping prices down, Bloomberg said. With substantial slack present in the economy, the recovery is proceeding, but not at a very robust pace, Scott Brown, chief economist at Raymond James & Associates Inc. in St. Petersburg, Fla., told Bloomberg
  • Homebuilder confidence in the U.S. rose more than expected in May--hitting a five-year high that indicates the construction outlook is getting better, according to the National Association of Home Builders/Wells Fargo index of builder confidence (Bloomberg.com May 15). The index climbed to 29--the highest level since May 2007--from 24 in April. Readings below 50 indicate that most survey respondents said conditions were poor. Although record-low mortgage rates and cheaper home prices are helping spark housing demand, foreclosures still are an obstacle for new construction and solid property values, Bloomberg said …
  • After a good start to the year, tepid consumer spending resulted in U.S. retail sales barely inching up in April (The Wall Street Journal and Bloomberg.com May 15). Pre-Easter shopping and unseasonably mild weather may have resulted in more shoppers heading to stores previously in March, Bloomberg said. In April, food service and retail sales rose 0.1% to a seasonally adjusted $408.04 billion, the Commerce Department said Thursday. Year-over-year, sales are up 6.4%. With the weather-induced upticks of the first three months of the year--the warmest on record-- fading, sales in sectors such as department stores, clothing, and building materials declined, Bloomberg said …
  • The U.S. is lagging in its use of mobile payments and online banking, compared with some other countries, according to an Aite Group and ACI Worldwide survey of 4,200 consumers in 14 countries conducted during the first quarter and released Monday (American Banker May 14). The report indicates that less than a third of U.S. consumers have used their phones to make mobile payments, compared with two thirds of Chinese consumers. Extreme mobile users, based on their smartphone use, changed how they shop and pay for goods, and how they interact with their financial accounts and financial institution, the report said. India has the most smartphone users at 60%, while the U.S. only has 20%, the report said …

News of the Competition (05/14/2012)

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MADISON, Wis. (5/15/12)

  • Moody's Investors Service will delay ratings downgrades on more than 100 banks because of recent market developments (Bloomberg.com May 14). A greater possibility of a euro breakup and trading losses at JPMorgan Chase & Co. are spurring the delay, an unidentified Moody's official told Bloomberg. On April 13, Moody's said it would start downgrading banks by early May. The banks include New York-based JPMorgan and Morgan Stanley, BNP Paribas SA--France's largest lender, and Germany's Deutsche Bank AG. Moody's anticipates it will conclude its bank ratings reviews by the end of June, Kirsten Knight, Moody's spokeswoman, told Bloomberg
  • Ina Drew, JPMorgan Chase & Co.'s chief investment officer, is retiring from the company in the aftermath of JPMorgan's $2.3 billion trading loss announced last week (The Wall Street Journal and The New York Times DealBook May 14). She was blamed for not stopping a complicated market bet before it nosedived into a giant loss, the Times said. Matthew E. Zames, a co-head of JPMorgan's global fixed-income group, will succeed Drew. Zames will continue his work in the mortgage unit and also join the bank's operating committee …
  • While some credit card executives and bankers fear that mobile payments could hurt their future profits, one CitiGroup executive is worried about the payments' effect on retailers (American Banker May 11). Bill Johnson is head of Citi's unit that issues credit cards on behalf of merchants, and his biggest customers include Home Depot, Macys and Sears. In a banking industry that has often fought with retailers about issues including fraud liability, interchange fees and how to process customer payments, Johnson's concerns are atypical, the Banker said. Retailers are worried about who owns the data and the relationship with their customers, while becoming embroiled in data breaches, Johnson said. Also, the tension in the working relationship between banks and retailers is being heightened by new competitors such as mobile phone and technology companies attempting to provide customers with alternative avenues to pay online or with their phones, Johnson added …

Market News (05/14/2012)

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MADISON, Wis. (5/15/12)

  • Many U.S. families have little or no savings and substantial debt in the wake of the recession, even though the economy may be improving (USA Today May 14). A new University of Michigan report indicates one out of five families surveyed owe more on student loans, medical bills, credit cards and other unsecured debt than they have in savings. At the end of 2011, the number of families surveyed with no savings rose to 23.4% from 18.5 % in 2009.  However, not all the news is bleak, according to the survey. U.S. households that have more than $50,000 in savings accounts and other liquid assets such as bonds and certificates of deposit rose to 14.6% from 11.8% in 2009, the survey showed …
  • In recent weeks, business confidence worldwide did not significantly change, and sentiment still is firmly rooted with a worldwide economy that is growing near its potential, according to Moody's Analytics Survey of Business Confidence (Moody's Economy.com May 14). Since the beginning of the year, there has been a bounce-back in equipment and software investment. However, the inventory investment declined. Businesses remain mostly upbeat in their assessment of current business conditions despite some moderation, buoyed by healthy views of their sale strength, Moody's said. Also, recent decreases in oil prices helped moderate prices pressures, Moody's said …
  • Ally Financial Inc.--the former in-house financing arm for General Motors Co.--filed for Chapter 11 bankruptcy Monday (The Wall Street Journal May 14). The development could allow Ally to remove itself from significant litigation that has hurt its other operations and kept it from repaying the rest of its government bailout money, the Journal said. Also, Ally, in a surprise move, said it would attempt to sell its international operations, which include its insurance and auto-finance units, to enhance its potential to remove itself from government ownership, the Journal said …

News of the Competition (05/11/2012)

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MADISON, Wis. (5/14/12)

  • JPMorgan Chase & Co. was dealt a $2 billion trading loss after a huge failure in its unit managing risks resulted in a soured trading bet, said CEO Jamie Dimon (The Wall Street Journal, The New York Times Deal Book and Bloomberg.com May 11). The loss could hurt efforts of Wall Street banks to free up a federal ban on bets with their own money, Bloomberg said. The loss was a result of flawed wagers on volatile synthetic securities in the bank's chief investment office, which manages risk for JPMorgan. The bet could cost the bank an additional $1 billion in the second or third quarter, Dimon told analysts Thursday. Dimon referred to the mistakes as "egregious" and "self-inflicted" …
  • MasterCard is morphing into a more holistic payments company, from being primarily a credit card company, Timothy Murphy, MasterCard  chief product officer, told American Banker (May 10). By focusing on areas such as remittance services, prepaid, and person-to-person services, MasterCard is transforming itself, Murphy said. The company's No. 1 priority will be the fairly new prepaid market, although credit and debit remain essential, he added …

Market News (05/11/2012)

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MADISON, Wis. (5/14/12)

  • U.S. consumer confidence increased in May to the highest level in four years, a sign that decreasing energy costs are mitigating consumer concerns about poor employment growth, according to the Thomson Reuters/University of Michigan Consumer Sentiment Index (Bloomberg.com and Moody's Economy.com May 11). The index rose to 77.8--the highest mark since January 2008--from 76.4 in April. Although job growth in April fell to the slowest pace in five months, gasoline prices have dropped 21 cents per gallon from a near one-year high, which may boost household finances, Bloomberg said. In a related matter, for a third consecutive week, the Bloomberg consumer comfort index declined, dipping 2.8 points to -40.4 from -37.6 (Moody's Economy.com May 10). Consumer moods worsened in two of the three survey segments--personal finances and views of the buying climate.  Perceptions of the state of the economy inched up 0.1 point to -64.2 …
  • For the first time in four months, U.S. producer (wholesale) prices decreased in April, pushed by the biggest drop in fuel costs in six months (The New York Times, The Wall Street Journal and Bloomberg.com May 11). The producer price index--a gauge of how much wholesalers and manufacturers pay for finished goods--fell 0.2% after no change in March, the Labor Department said Friday. During the past 12 months, the 1.9% increase was the smallest since October 2009. The underlying rate--or core price index--which excludes volatile energy and food costs--rose 0.2% in April. Declining raw-material costs indicate companies will have less reason to charge customers more, Bloomberg said ...

News of the Competition (05/10/2012)

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MADISON, Wis. (5/11/12)

  • At least four people were arrested when an estimated 500 to 750 protestors marched to Bank of America Corp. (BofA) headquarters in Charlotte, N.C., Wednesday. The event coincided with BofA's annual shareholder meeting Wednesday morning (Charlotte Observer May 9). Protestors rallied against BofA's policies on foreclosures and its support of the coal industry, the Observer said. The protest was organized by Unity Alliance and 99% Power. There were no injuries and no property damage, Charlotte-Mecklenburg Police Major Jeff Estes told the paper, adding that the department was happy with the outcome. Protestors said they were demanding that BofA pay its fair share of taxes, provide principal reductions to all low-income, minority and underwater borrowers (who owe more than their homes are worth) and institute a moratorium on foreclosures (American Banker May 8) ...
  • Bank of America (BofA) approved its executive pay plan and entire group of directors at its annual meeting Wednesday in Charlotte, N.C. (American Banker May 9). Of the votes cast, 92% renominated all 12 board members and approved the plan. The investor/voters denied six other proposals, including one to require an independent review of practices for mortgage servicing and another to ban political spending …
  • Some bank customers who don't qualify for traditional checking accounts are not being offered prepaid cards by some banks, which closes the door on some customers' opportunities, said American Banker (May 9). Of the people who walk into banks to open checking accounts, roughly 15% get rejected, according to John Barbella, senior vice president at Bancorp. More and more, some banks are offering those potential customers a "turn-down" option to traditional checking accounts with prepaid cards, the Banker said. For example, JPMorgan Chase Tuesday unveiled a new reloadable prepaid card for $4.95 per month--which is less than its student checking account fee--that allows customers to use it in lieu of--or in addition to--one of its checking  accounts ...
  • Long Beach, Calif.-based Farmers & Merchants Bank, a relatively small $2 billion-asset bank, is unveiling an image cash letter service that will provide automated bulk processing services to business clients. The services usually aren't offered by small banks (American Banker May 9). In doing so, Farmers & Merchants is presenting an up-and-coming alternative for smaller banks to speed check-processing and have more or control of check-image quality before checks are prepared for deposit, the Banker said …

Market News (05/10/2012)

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MADISON, Wis. (5/11/12)

  • The U.S. trade deficit grew more than expected in March because imports rose to a record level as demand increased for automobiles, computers, crude oil, televisions and Chinese goods, trumping record-high exports (The Wall Street Journal and Bloomberg.com May 10). The trade gap widened 14% to $51.8 billion, the Commerce Department said Thursday. Economists had forecast a gap of $50 billion, according to a Bloomberg News survey. The 5.2% surge in imports--the largest in more than a year--overwhelmed the 2.9% record climb in exports. The rise in imports suggests U.S. consumer demand is robust, and strong exports indicate the European slowdown likely is not having a significant effect on U.S. growth, Dean Maki, chief U.S. economist at Barclays Capital Inc. in New York, told Bloomberg
  • Initial claims for U.S unemployment benefits declined last week to a one-month low, helping to mitigate concerns about an eroding labor market after poor jobs growth in April (Bloomberg.com and The New York Times May 10). Claims fell 1,000--to 367,000--for the week ended May 5--the lowest level since the end of March, the Labor Department said Thursday. Also, the number of people receiving unemployment benefits was the least since July 2008. Although job growth has been consistent, it is not as much as the economy needs, given the number of jobs cut during the recession, Stephen Stanley, chief economist at Pierpont Securities LLC in Stamford, Conn., told Bloomberg. Meanwhile, continuing claims for unemployment benefits for the week ended April 26 decreased 61,000--to 3.229 million from 3.290 million the prior week (Moody's Economy.com May 10) ...
  • Auto sales in the U.S. are on pace to hit a third consecutive year of at least 10% gains and could see their best performance since 2007 because consumers have more optimism and are returning to auto dealerships (Bloomberg.com May 10). Sales of cars and light trucks could hit 14.3 million, matching the pace of the first quarter, according to 14 analysts' estimates compiled by Bloomberg. That would constitute the best year since 2007, when there were 16.1 million sales. An improving economy, easier credit and pent-up demand is sparking auto sales and helping Chrysler Group, Ford Motor Co. and General Motors Co. bolster first-quarter profits, even though deliveries dropped in Europe, Bloomberg said …

Small-business loan drop in April signals need for MBLs

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WASHINGTON (5/10/12)--Small business loans approved by lenders fell 5.4% in April from March loans--the first month-to-month drop in a year, according to an analysis of lending trends released Thursday.

Credit unions continued to be a bright spot for those seeking small business loans, with the statistics underscoring that there is a demand not being met by big banks for more business loans. Credit unions approved more than five times the loans small businesses sought from them than big banks did in similar applications.

New York-based firm Biz2credit, which matches borrowers with lenders, said the economic recovery's slow pace is translating into more cautious lending, with lenders approving fewer loans and businesses shying away from taking on more debt in an uncertain economy. April's disappointing jobs report was a factor in the lower approval rate, said the company (American Banker May 8).

Big banks with $10 billion or more in assets approved only 10.6% of loan requests, the second consecutive month their lending to small businesses declined. In March, they approved 10.9% of applications, compared with 11.7% in January and February, said Biz2credit. Small banks approved 45.9% of small business loan applications, compared with 47.6%.

Small businesses' chances for loan approvals were best at credit unions, which had a 57.4% approval rate in April, and alternative lenders at 63%, said the report. These approval rates are slightly less than the month before.

Biz2Credit said the April jobs report indicating that only 115,000 new jobs were created, coupled with higher expectations, high oil prices and Europe's financial crisis have created uncertainty in the market. Other factors include the expiration in March of a temporary 90% guarantee on Small Business Administration (SBA) loans, which is now back at 75% and the end to a temporary waiver by Congress of SBA loan fees.

Since big banks are lending less to small businesses, the opportunity to help small businesses with their lending needs is being sought by credit unions, who are urging Congress to pass S. 2231, which would raise their limit for making member business loans to 27.5% of assets from 12.25%. The Credit Union National Association estimates that raising the cap would mean $13 billion more infused into the economy for small businesses seeking loans. That would translate to 140,000 new jobs.

News of the Competition (05/09/2012)

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MADISON, Wis. (5/10/12)
  • More banks are receiving lower Community Reinvestment Act (CRA) ratings as they undergo scrutiny for unfair and deceptive acts or practices (UDAP). With the Consumer Financial Protection Bureau (CFPB) using its mandate to uncover  fair lending violations,  the trend likely will increase, said several experts (American Banker May 8). The agency said it plans to work closely with prudential regulators to ensure its findings are reflected in CRA ratings.  Last month, when the  Office of the Comptroller of the Currency (OCC) released ratings for 28 banks, it had lowered five banks' ratings to "needs to improve" and downgraded three for illegal credit practices or discrimination  related to UDAP and fair lending violations. The percentage of banks receiving failing CRA ratings increased to 4.3% as of March 31, from 1.7% in 2007, said the Banker, citing CRAHandbook.com. All the violations were uncovered during CRA compliance examinations. The examinations are usually conducted every three years. Now, the CFPB is likely to be performing examinations that would disclose the illegal practices. Patrice Ficklin, CFPB's assistant director for the Office of Fair Lending and Equal Opportunity, noted the need for cooperation among agencies during a panel discussion last month at a housing advocates conference, the Banker said …
  • Remittances to Latin America from the U.S. in 2011 increased to $69.3 billion--8% greater than in 2010 and exceeding pre-recession levels, according to a report released Monday from Inter-American Dialogue. Financial institutions remitted the bulk of the funds, outpacing money transfer operators and the Internet, said the report (American Banker May 8).  Three countries--Mexico, Colombia and Central America--received the most transfers. In 2007, a total of $68.6 billion was transferred through remittances; in 2008, the total was $69.2 billion. The report indicated that a 2% decline among foreign-born workers may have led to the 2011 increase.  On average, remittances averaged $258 per transaction and $3,592 a year through financial institutions, while remittances through the Internet sent an average $269 per transaction and $2,685 a year. Wells Fargo outperformed other banks in volume, transferring $1.8 billion in 2011, up 28% from 2010 in total dollars remitted, said the Banker

Market News (05/09/2012)

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MADISON, Wis. (5/10/12)

  • Mortgage applications rose 1.7%  seasonally adjusted  and 2% unadjusted during the week ending May 4 from the previous week, according to the Mortgage Bankers Association's (MBA) Weekly Mortgage Applications Survey. The Refinance Index rose 1.3% from the previous week, while the Purchase Index rose 3.4% for the period. Both figures are seasonally adjusted. The four-week moving average for the seasonally adjusted Market Index is up 1.13%.  The four week moving average is down 0.82% for the adjusted Purchase Index, while this average is up 1.81% for the Refinance Index. Refinances accounted for 72.1% of mortgage activity, a decline from 72.6% a week earlier and the lowest refinance share since April 6. The government purchase share decreased to 35.8% from 37% of all purchase applications, the lowest government purchase share since March 27, 2009, said the MBA.  The average contract interest rate for 30-year fixed-rate mortgages with conforming loan balances ($417,500 or less) decreased to 4.01%  from 4.05%, making it the lowest recorded in the history of the survey.  Use the link to access the full MBA report
  • Median existing single-family home prices are stabilizing, with improving sales and declining inventory creating more balanced conditions, according to the National Association of Realtors'  (NAR) latest quarterly report. During first quarter, prices for these homes rose in 74 out of 146 metropolitan statistical areas (MSAs) based on first-quarter closings and compared with those for the same period a year earlier. A new breakout of income requirements on a metro basis indicated most buyers have the income to purchase a home in their area if their credit rating is favorable.  However, there is some volatility in price performance because of sudden upswings in buyer activity in some areas and the prevalence of distressed sales, according to Lawrence Yun, NAR chief economist. "Home prices lag sales activity because transitions were negotiated mostly in the previous quarter. Given the steadily dwindling supply of inventory and notably higher listing prices that are being negotiated today, prices are expected to show further improvements in the near future," Yun said. Housing inventory is a big part of the story, he added. "We now have broad shortages of lower priced homes in much of the country, with very tight supply in Western states for homes through the middle price ranges. This is good news for many sellers who wish to list now, or for those waiting for prices to improve."  At the end of first quarter, 2.37 million existing homes were available for sale--21.8% below the close of first quarter 2011 …

News of the Competition (05/08/2012)

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MADISON, Wis. (5/9/12)

  • Bank of America (BofA) is using a new Web portal to try to reduce its number of distressed mortgages (American Banker May 7). BofA developed the portal with real estate document software firm Equator Financial Solutions. The portal is accessible to all the entities that get involved with a short sale--where borrowers who are delinquent on their mortgages sell their properties for an amount less than the outstanding balance of the mortgage. Short sales are often used during recessions. By automating several steps in the short-sale process, the Web-based portal allows BofA to smoothly interact with customers and vendors in real time, Lancia Herzog, a BofA senior vice president who provides technical support for the short-sale program at the bank, told the Banker
  • Demonstrators and communities will protest against Bank of America's financial practices and foreclosures today in Vienna, Va., while Bank of America's CEO and shareholders meet in Charlotte, N.C. BofA made millions in profits by avoiding taxes and foreclosing on homes, which hit certain communities especially hard, according to event sponsor, MoveOn.org. Thousands of people plan to protest, march, and raise their voices in solidarity to draw the media's attention to BofA's practices, said organizers. Nearly 200 communities are standing up to BofA this week, said MoveOn.org …

Market News (05/08/2012)

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MADISON, Wis. (5/9/12)

  • Small-business confidence in the U.S. rose in April by two points to 94.5 from 92.5 in March, according to the National Federation of Independent Business (NFIB) index (Moody's Economy.com May 8). April's gain constitutes the seventh increase in the past eight months and places the index just above its first-quarter average of 93.6. Components of the index that increased were: current job openings, expected credit conditions, earnings trends, plans to raise prices, plans to increase employment, plans to make capital expenditures, plans to increase inventories and expectations for the economy to improve. Components that decreased included: expectations that real sales will be higher, current inventory, and belief that credit is harder to obtain.  Plans to raise compensation and the belief that now is a good time to expand stayed the same …
  • In its first monthly increase since July, the CoreLogic Home Price Index for the U.S. rose 0.6% in March from February (Moody's Economy.com May 8). A drop-off in distressed home sales in March was partially responsible for the improvement, CoreLogic said. The excluding-distressed-sales house price index rose 2% in March and is 0.9% higher than in March 2011. However, for both indexes to solidly go on an upward trend, a few more months such as April will be needed, CoreLogic said …
  • U.S. job openings increased to 3.737 million in March--up from 3.565 million in February, according to the Job Openings and Labor Turnover Survey (JOLTS) released by the Bureau of Labor Statistics (Moody's Economy.com May 8). During March, job openings inched up to 2.7% from 2.6%. Hires and separations remained relatively steady during the month at 3.3% and 3.1%, respectively. Although hires declined during the month, more people left their jobs. A big slowdown in the rate of net job growth during March is consistent with a smaller number of hires during the month, JOLTS said …

Consumer credit rises most in decade but not at CUs

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WASHINGTON (5/8/12)--Consumer credit rose by $21.4 billion--a 7.8%  annual rate--to nearly $2.54 trillion in March, according to the Federal Reserve's Consumer Credit Report released Monday. The increase was the most in more than a decade. Credit unions saw decreases in all forms of borrowing from the previous month; however, March's debt was greater than a year ago.

The surge far surpassed the $9.8 billion median increase predicted by economists surveyed by Bloomberg News and also exceeded the highest estimates in the range of forecasts (Bloomberg.com May 7). The $2.54 trillion borrowed in March compares with $2.52 trillion in debt during February and $2.42 trillion during first quarter a year ago.

The increase was led largely by a  $16.2 billion surge in non-revolving debt comprising student loans and auto loans. Bloomberg noted that some applied for student loans to beat the interest rate increase on student loans that took out student loans before the interest rates rise on July 1, and that auto sales were strong.

Nonrevolving debt  totaled  $1.739 trillion--an 11.5% increase at an annual rate over February, when debt totaled $1,723 trillion. The March figure is also higher than the $1.629 trillion of first quarter a year ago.

Revolving debt, made up mostly of credit card debt, rose by $5.1 billion in March to $803.6 billion, up from $798.5 billion in February and $792.8 billion in first quarter 2011. March's increase is the first time this year that credit card balances have grown, but some experts said that the shrinking card balances of the previous two months were likely due to seasonal factors such as paying off holiday debt (creditcards.com May 7). The last four months of 2011 reflected steady increases in revolving debt.

Consumer debt borrowed from credit unions in March totaled $223 billion--down from $223.8 billion in February, but up from $218.1 billion in first quarter of 2011, according to the Fed's report.

For credit unions, revolving debt in March totaled $36.4 billion, down from $36.7 billion in February but greater than the $35 billion borrowed during first quarter 2011.

Nonrevolving debt at credit unions in March totaled $186.6 billion, down from $187.1 billion in the previous month, but more than the $183.1 billion borrowed from credit unions during first quarter of 2011.

News of the Competition (05/07/2012)

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MADISON, Wis. (5/8/12)

  • The Federal Deposit Insurance Corp. (FDIC) closed a bank Friday for a total of 23 closures so far in 2012. There were 92 bank closures in 2011. Security Bank, N.A., North Lauderdale, Fla., was assumed by Banesco USA, Coral Gables, Fla. The bank had roughly $101 million in assets as of March 31. The FDIC estimates the most recent failure will cost its Deposit Insurance Fund about $10.8 million …
  • The U.S. government is continuing to shed its stake in the American International Group (AIG), with the Treasury announcing Sunday it would sell nearly 17 million shares of AIG at $30.50 per share (The New York Times DealBook May 7). The government's stake in the company is expected to be reduced to 63% from 70% through the $5 billion stock sale. AIG intends to buy back roughly $2 billion of the stock, the Times said …
  • British bank Barclays PLC--in its first attempt to bring in U.S. deposits--is launching an online savings bank in the U.S. (The Wall Street Journal May 8). The move aims to upgrade the bank's capability to finance its U.S. credit card business without wholly depending on volatile wholesale markets, the Times said. Barclays intends to entice depositors by offering interest rates of roughly 1% on deposits  …

Market News (05/07/2012)

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MADISON, Wis. (5/8/12)

  • The Conference Board's Employment Trends Index rose in April--an indication the U.S. labor market is on the mend as the largest global economy grows (Bloomberg.com May 7). The index climbed 0.8% to 108.04--the highest level since July 2008--from June's reading of 107.18, the private research group said Monday. The gauge has increased 7.1% from year-ago levels. The index totals eight labor-market indicators to predict short-term hiring trends. Generally, it can forecast job declines six to nine months before the fact and can indicate a hiring rebound as soon as three months before the occurrence, the Conference Board said. The index is suggesting moderate employment gains, Gad Levanon, the Conference Board's director of macroeconomic research, said in a statement. April's lackluster job gain is likely lower than the current trend and should improve, he added …
  • Sallie Mae, a publicly traded U.S. corporation whose operations are originating, servicing and collecting on student loans, will offer fixed-rate private loans for students and families looking for additional funds for college (The New York Times May 7). Although banks such as Wells Fargo, Citizens Bank and SunTrust have been offering fixed-rate private loans for a while, Sallie Mae just entered the market, even though it is the largest student lender, the Times said. Sallie Mae's interest rates range from 5.75% up to 12.875%, based on factors such as credit history, the Times said. Also, Fynanz Inc. is a technology provider of custom private student lending programs and a CUNA Strategic Services provider. The company's technology puts credit unions in the private student lending business without the need to purchase or install any software ...
  • Business confidence worldwide in recent weeks has not significantly changed, according to Moody's Analytics Survey of Business Confidence (Moody's Economy.com May 7). Sentiment still is solidly consonant with a worldwide economy that is growing at its potential, with no signs that economic growth is lessening or gaining. Moody's said. Since the beginning of 2012, there has been a heartening bounce-back in equipment and software investment,  Moody's said. However, investment in inventory has weakened. Businesses still are mostly upbeat in assessing their strength of sales and current business conditions. The recent drop in oil prices has moderated price pressures, Moody's said …

News of the Competition (05/04/2012)

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MADISON, Wis. (5/7/12)

  • The U.S. Justice Department said Wednesday it is investigating Visa's new pricing system  (American Banker May 3). Last year, the world's biggest payment network altered its method for charging merchant acquirers in attempts to buffer itself from the consequences of new regulations regarding debit card swipe fees. Nearly two years ago, an amendment to the Dodd-Frank Act placed restrictions on how financial institutions and networks charge merchants for accepting debit cards for purchases at their businesses. On March 13, the Justice Department issued Visa a civil investigative demand. Visa met twice in March with the Justice Department, said Visa CEO Joseph Saunders. The Credit Union National Association (CUNA) has maintained that capping interchange fees would harm consumers by driving up costs of debit cards, limiting their options, and harming competition and technological innovation. Consumers have not seen any pricing benefits for products and services promised by merchants when they argued for the government-set cap, said CUNA …
  • The federal government should concentrate on fixing its own fiscal issues rather than overhauling a financial system that is mending itself, Jamie Dimon, CEO of JPMorgan Chase, told Federal Reserve policy officials Thursday (American Banker May 3). Dimon and other large-bank executives gathered to discuss the Volcker Rule, capital stress tests and counterparty exposure limits with the Fed. The Volcker Rule is a section of the Dodd-Frank Wall Street Reform and Consumer Protection Act originally proposed by American economist and former U.S. Federal Reserve Chairman Paul Volcker to restrict U.S. banks from making certain kinds of speculative investments that do not benefit their customers. Dimon said Washington policymakers are hampering the economic recovery because of their actions, not because that's the way the financial markets had to be …
  • BofI Holding of San Diego, parent company of BofI Federal Bank, which is mainly an online bank that conducts business under brand names such as Apartmentbank, Bank of Internet USA and  UFB Direct, posted record fiscal third-quarter earnings of $7.3 million--a 41% gain from a year earlier (American Banker May 3). Net income for the first nine months of the bank's fiscal year increased 35%, to $20 million, said the $2.3 billion asset parent company …

Market News (05/04/2012)

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MADISON, Wis. (5/7/12)

  • U.S. employers added fewer jobs than expected in April, and the unemployment rate unexpectedly declined because more people left the work force, fueling further worries that the economic recovery is stalling (Bloomberg.com, The New York Times and The Wall Street Journal May 4). Employers added 115,000 positions to payrolls--the smallest gain in six months--after adding 154,000 jobs in March, the Labor Department said Friday. The unemployment rate slid to 8.1% in April from 8.2% in March. However, that dip was because workers dropped out of the work force, not because more unemployed workers got jobs, the Times said. The slowdown may be due to unusually warm weather earlier this year allowing more firms to boost hiring sooner than is the norm, or because of higher gasoline prices, Ian Shepherdson, chief U.S. economist at High Frequency Economics, told the Times. If gas prices are the cause, the effect should be reversed because of a steep drop in wholesale prices the past few weeks, he added. In a related matter, the U.S. Monster Employment Index--which measures help-wanted ads placed online by U.S. employers--increased three points from March to April to hit a level of 146 (Moody's Economy.com May 4) ...
  • The U.S. future inflation gauge registered 101.2 in April, dipping from March's revised 101.5--originally 101.2, according to the Economic Cycle Research Institute (ECRI) (Moody's Economy.com May 4). April's reading is 1.9 points below its year-ago level. The small decline in the index is consonant with expectations that inflation will remain at a steady pace, which supports the outlook that the economic recovery will proceed in an environment of comparatively stable prices, ECRI said …
  • Retail sales in the U.S. unexpectedly slowed at 19 chain stores monitored by Thomson Reuters in a report (The New York Times May 3). The stores saw a 0.8% rise in sales at stores open at least a year. That was below the 1.5% gain that analysts had forecast, the Times said. The tepid April sales, following strong sales at the beginning of the year, show that an early burst of consumer spending dissipated quickly, the Times said. However, the drop-off doesn't constitute a huge shopping pullback, because the "new" consumer behavior is to spend in small binges or in "peaks" according to the time of the year, Alison Jatlow Levy, a retail strategist at the consulting firm Kurt Salmon, told the Times  …

News of the Competition (05/03/2012)

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MADISON, Wis. (5/4/12)

  • By picking up debit card business in the aftermath of new federal regulations, MasterCard's first-quarter profit increased 21% from a year earlier (American Banker May 3). In October, an amendment to the Dodd-Frank Act capped debit interchange fees and mandated that--beginning April 1--banks process debit cards over a minimum of two networks.That amendment ended some banks' exclusive debit processing contracts, and figures to help MasterCard siphon some of the processing business from bigger rival Visa--which is the major force in the U.S. debit market, the Banker said …
  • General Motors Co.'s (GM) first-quarter profit dropped 69%, largely because of losses in Europe and a one-time charge, despite a 30% profit gain in North America (The Wall Street Journal and The New York Times May 3). GM recorded net income of $1 billion--down from $3.2 billion a year earlier when several big isolated gains buoyed its bottom line, the Times said. First-quarter revenue rose 4% to $38.7 billion. GM earned--excluding taxes, interest, the one-time charge and other special items--$2.2 billion, or 93 cents per fully diluted share--up from $2 billion, or 95 cents per share, a year ago. First-quarter results beat analysts' estimates that averaged 85 cents per share ...
  • Core providers Fiserv and Jack Henry & Associates are seeing revenue gains from electronic payments products (American Banker May 2). Fiserv, which works with larger banks, is attempting to separate itself from the competing pack of core providers by establishing itself as a payments company, the Banker said. Jack Henry is seeing gains from its smaller bank and credit union clients, which continue to introduce mobile banking and online bill payment to customers, according to industry experts …

Market News (05/03/2012)

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MADISON, Wis. (5/4/12)

  • Initial claims for U.S. unemployment benefits last week fell to their lowest level in a month, allaying worries about a weakening labor market (The Wall Street Journal and Bloomberg.com May 3). Claims declined 27,000--to 365,000--for the week ended April 28 from 392,000 the prior week, the Labor Department said Thursday. The decrease was the largest since May 2011 and follows three weeks of high claims, the Journal said. The decline in job cuts indicates that the claims spike during the past three weeks likely was not caused by an erosion in employment, but rather the timing of the Easter holiday, Bloomberg said. In a related matter, U.S. employers announced 40,559 job cuts in April, according to the Challenger Report issued by Challenger, Gray and Christmas Inc. (Moody's Economy.com May 3). Meanwhile, continuing claims for unemployment benefits for the week ended April 21 declined 53,000--to 3.276 million--from 3.329 million the prior week (Moody's Economy.com May 3) ...
  • U.S. worker productivity declined in the first quarter, signaling that businesses are reaching the end of the line regarding how much efficiency they can extract from their work forces (Bloomberg.com and Moody's Economy.com May 3). The gauge of employee output per hour dropped to a 0.5% annual rate following a 1.2% gain in the fourth quarter of 2011, the Labor Department said Thursday. Expenses per worker rose less than originally estimated, at a 2% rate. At the beginning of 2012, employers had to hire more workers, even though growth slowed, indicating they no longer depend on existing staff to meet demand, Bloomberg said.  Also, U.S. service industries likely grew at a slower pace in April, an indication that the biggest part of the national economy may have trouble picking up speed without quicker job growth, according to the Institute for Supply Management's index of nonmanufacturing industries (Bloomberg.com May 3). The index dropped to 55.3--the lowest level in four months--from 56 in March …
  • With more Americans becoming worried about their personal finances, U.S. consumer confidence fell last week to a two-month low, according to the Bloomberg Consumer Comfort Index (Bloomberg.com and Moody's Economy.com May 3). The index declined to 37.6 for the week ended April 29 from -35.8 the prior week--taking back gains that had put it at a four-year high earlier last month. Outlooks on personal finances dipped to the lowest level since January. Also, more consumers said it was not a good time to buy needed items. After purchases grew in the first quarter at the fastest pace in more than a year, a drop-off in economic growth and hiring--as well as high fuel prices--may be adding to worries that consumers won't be able to sustain spending, Bloomberg said …

CUNA to IThe StreetI Job growth report significant

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NEW YORK (5/3/12)--The April nonfarm government payrolls report due out Friday can have considerable impact on the psyche of consumers, a Credit Union National Association (CUNA) economist told The Street Monday. 

In March, the U.S. economy added 120,000 jobs--roughly half the gains recorded in the previous three months, a blow to investors looking for sustained indications of a strengthening economy, The Street said.   

"The monthly jobs report is an incredibly significant number driving consumer confidence," Bill Hampel, CUNA chief economist, told The Street. "While unemployment is misbehaving, monthly job numbers will be the No. 1 way we pay attention to … most people are talking in the mid-100,000s. Growth between 120,000 to 170,000 should be yawned at. Where you get a significant downtrend is if it's below 100,000 and we'd get a real rift it's over 200,000. Consensus is somewhere around 150,000."

Private sector jobs rose 119,000 in April, according to a national employment report compiled by payroll processor Automatic Data Processing Inc. (ADP) and the consultancy Macroeconomic Advisers, which was released Wednesday (The Wall Street Journal and Bloomberg.com May 2).

That is the fewest number of jobs added in seven months, in part due to a decline in factory jobs, the Journal said.

The ADP report indicates the U.S. economy may take more time to strengthen, Bloomberg said.

News of the Competition (05/02/2012)

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MADISON, Wis. (5/3/12)

  • Wells Fargo, in its efforts to add quality assets to its balance sheet, intends to give underwriters more authority to approve mortgages that it retains in its portfolio (American Banker May 1). The new strategy is dubbed "judgment underwriting," and Wells is promoting it as part of a movement to entice borrowers that may not qualify for conventional mortgages backed by the Federal Housing Administration, Fannie Mae or Freddie Mac. Wells will keep these mortgages it underwrites in its "held for investment" portfolios rather than selling them to government-sponsored enterprises, the Banker said …
  • To provide a credit card that rewards users for money they spend on discounts, JPMorgan Chase is partnering with LivingSocial, a daily deals provider that vies with Groupon (American Banker May 1). Each day, LivingSocial users are provided locally directed deals such as a half-price voucher at a nearby retailer. The new JPMorgan Chase card allots five points for every dollar spent on LivingSocial deals, three points for dining and one point for all other purchases. Card users then can redeem every 100 points garnered for one dollar to spend on more LivingSocial deals, the Banker said …
  • Some U.S. banks, in attempting to make acquisitions, are trying a different tack of approaching healthy banks instead of filtering through troubled banks that are desperate to sell, said American Banker (May 1). Friendly unsolicited offers are emerging as a way to do business, as buyers look to take a targeted approach to locate acquisition candidates, deal makers told the Banker. Clients are receiving more cold calls, say their banking lawyers. Also, investment bankers indicate their clients are asking them to make the first contact with banks that may not be actively pursuing a buyer, the Banker said ...

Market News (05/02/2012)

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Madison, Wis. (5/3/12)

  • The Mortgage Bankers Association (MBA) said mortgage applications increased 0.1% for the week ended April 27 from one week earlier, according to its Market Composite Index, part of MBA's Weekly Mortgage Applications Survey. On an unadjusted basis, the index rose 0.4%. The Refinance Index decreased 0.7%. The seasonally adjusted Purchase Index climbed 2.9%. The unadjusted Purchase Index went up 3.7% and was 3% higher than the same week one year ago. The refinance share of mortgage activity dropped to 72.6% of total applications from 73.4% the previous week. The government share of purchase applications remained steady at 37%, a slight increase from a couple of weeks ago when the share was 36.4%. The government share of purchase applications over the past three weeks has been at the lowest level since 2009. For the MBA report, use the link …
  • U.S. manufactured goods (factory) orders declined 1.5% in March, which was in line with expectations, following a 1.1% rise in February, according to the Census Bureau (Moody's Economy.com May 2). New orders for durable goods fell 4%, while shipments of durable goods grew 0.9%. Unfilled orders increased 0.1%. For the 27th consecutive month, inventories grew. Core capital goods orders dropped by 0.1%. Overall shipments climbed 2.6%. The letup in production likely is temporary, and the second quarter should see a healthy level of business investment, Moody's concluded  …

News of the Competition (05/01/2012)

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MADISON, Wis. (5/2/12)

  • Banks that offer better payment services will attract more businesses, according to a new SunGard Data Systems corporate business-to-business payments study (American Banker April 30). Nearly half of companies surveyed said they would be willing to switch from their current bank to another one if it provided better payment services, the survey indicated. Also, 48% of businesses surveyed were unaware of what payment services their banks offered or else skipped that survey question. More than 80% of respondents said their bank did not offer the two payments services they most desired--integrated solution and vendor enrollment services, SunGard said …
  • Bank of America (BofA) intends to cut 2,000 jobs in its commercial banking, investment banking and non-U.S wealth-management units, said sources familiar with the situation (The Wall Street Journal April 30). BofA significantly grew those operations with its 2009 purchase of Merrill Lynch & Co., the Journal said. The reduction will affect high income-earning employees who helped the Merrill Lynch business account for most of BofA's profit since the financial crisis, the Journal said. The move is the most recent tactic by CEO Brian Moynihan to let investors know he can rein in BofA's costs while the company's bottom line is being pinched by stodgy U.S. economic growth and federal regulations that have cut into company revenues, the Journal said  …

Market News (05/01/2012)

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MADISON, Wis. (5/2/12)

  • The International Council of Shopping Centers (ICSC) chain store sales index dropped 0.3% for the week ended April 28 from one week earlier (Moody's Economy.com May 1). In recent weeks, the index has stayed at a higher level and is registering at a better performance mark than it did at this time one year ago, ICSC said. Despite inclement weather, year-over-year growth rose to 4.2% from 3.6% the prior week. Overall, customer traffic was down, with a specific weakness reported at dollar and discount stores, ICSC said. A moderation in gasoline prices likely helped the index hold up despite cooler weather and the Easter holiday coming earlier in April this year, Moody's said …
  • Business confidence worldwide is consonant with a global economy that is growing in step with its potential, according to Moody's Analytics Survey of Business Confidence (Moody's Economy.com May 7). There are no signs that this growth is significantly weakening or strengthening, Moody's said. Businesses in South America are the most positive, while Japanese businesses are the bleakest. Businesses still are the most upbeat in assessing current business conditions and the strength of their sales. However, they are guarded when answering specific questions regarding hiring and investment, Moody's said …
  • U.S. sales at Chrysler Group LLC increased 20% in April from a year earlier because of strength in the auto manufacturer's namesake brand, which accounted for 56% of its sales (The Wall Street Journal May 1). Jeep sales rose 19%, and Dodge sales increased 2%. Chrysler sold 141,165 vehicles last month--up from 117,225 a year ago and 14% fewer than the 163,381 vehicles sold in March. Car sales went up 37%, while truck sales rose 13%. Chrysler reported a 59-day supply of inventory at the end of April. Overall U.S sales for the auto industry in April are estimated to be 14.6 million units at a seasonally adjusted annualized rate …