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News Scan Aug 2012

Credit Card News, Economy News, Banking Industry News - Aug 2012
Aug 2012
  • Contrary to popular belief, the majority of malware attacks originate from within the United States.
  • Indeed, Perimeter E-Security found that more than half of all attacks and threats (55.62%) originated from within the United States during the first six months of 2012.
  • The company, which tracked data from 861 of its financial institution customers, credits the "made in the USA" trend to two likely factors:
  • One, the majority of its customers block traffic to and from non-U.S. IP addresses ranges. And two, the majority of financial institutions "under scrutiny" are almost all U.S.-based.
  • The report's data also showed that the number of security incidents steadily increased from January to May, with a slight dip in June; thus, suggesting that threats and attacks are more likely to take place in spring than winter.
  • In total, 1,619 likely and confirmed compromises were detected during the report's time period. More than half of the company's clients (56%) experienced at least one security incident, the study found.
  • Though Zeus and SpyEye generally get the most coverage, Perimeter identified the Blackhole exploit kit as accounting for the highest percentage of security incidents (11.80%).
  • Of all security threats tracked in the report, Perimeter found that Trojan-related infections were the most prevalent.
Aug 2012
  • The U.S. economy expanded more than previously estimated in the second quarter, reflecting an improvement in the trade deficit and a pickup in household spending on utilities.
  • Gross domestic product climbed at a 1.7 percent annual rate from April through June, up from an initial estimate of 1.5 percent.
  • A second straight quarter of slowing growth shows the world’s largest economy is having difficulty making headway as consumers stay frugal and looming tax changes prompt companies to limit investment and hiring.
  • Consumer spending, about 70 percent of the economy, climbed at a 1.7 percent annual rate, the weakest in a year and revised from a 1.5 percent initial estimate. Purchases added 1.2 percentage points to growth.
  • At the same time, consumers’ purchasing power eased, with disposable income adjusted for inflation rising 3.1 percent from April through June after a 3.7 percent gain in the first quarter.
  • The saving rate in that period climbed to 4 percent from 3.6 percent in January through March.
Aug 2012

Banks drop credit protection plans

Source: Creditcards Category: Credit Card News
  • Many of the nation's largest credit card issuers are scaling back their offerings of credit protection plans, following years of scrutiny by consumer activists and regulators.
  • In a survey 6 out of 7 top issuers said they had permanently or temporarily stopped marketing the products, or altered them to make them more customer-friendly.
  • Credit card protection plans, also known as payment protection plans or debt cancellation products, are marketed to credit card customers and typically cover the cost of monthly minimum card payments if the cardholder becomes unemployed or disabled. They are typically marketed by phone or mail to existing cardholders by outside vendors acting on the issuers' behalf.
  • Most of the banks said they were making the changes as a result of routine examinations of their business practices.
  • The pullback comes a month after the new federal Consumer Financial Protection Bureau reached a $210 million settlement with Capital One and released guidelines for card companies on the additional products they market to cardholders.
  • The rules don't ban credit protection plans, but they demand that issuers institute policies to guard against deceptive marketing.
Aug 2012
  • Despite an order last month from the Federal Deposit Insurance Corp. to its 7,241 member banks to stop using its name on any fees charged to business account holders, many banks continue flouting the instructions and are socking businesses with extra charges.
  • By using the agency name in charging an "FDIC assessment" or fee, banks mislead customers into thinking that the agency charges depositors for deposit insurance, or that the financial institutions are simply collecting and passing through a government fee.
  • Although the practice is prohibited, investigation found that it remains common, with some banks in most communities where publishes newspapers hitting businesses with such improperly labeled fees.
  • The so-called FDIC fees appear to be imposed mostly on non-interest-bearing accounts that belong to businesses.
  • The FDIC adopted the rule that imposed the changes in February 2011, and the new rates charged to banks began last year on April 1.
  • Since then, some banks have passed along the costs to unwitting business customers, burying the fees in the footnotes and fine print of fee disclosures that are often unavailable to the general public.
Aug 2012
  • Sales of previously owned homes rose 2.3 percent to an annual rate of 4.47 million units.
  • The pace of sales has rebounded since bottoming out in 2010, but remains about 40 percent below its 2005 peak. Indeed, the current sales pace is roughly in line with 1997 levels.
  • Households are still heavily in debt, and many owe more on their homes than they are worth, making those properties harder to sell.
  • The number of existing homes on the market has fallen sharply since last year, though inventory rose slightly in July to 2.4 million homes. That was 1.3 percent higher than in June but 23.8 percent below its year-ago level. At the current pace of sales, the inventory would last 6.4 months.
  • Distressed home sales - which are often sold at deep discounts - made up 24 percent of sales in July, down from 25 percent in June.
  • The median price for a home resale was $187,300 in July - 9.4 percent higher than in the same month a year earlier.
Aug 2012

Credit card surcharges? No way, poll says

Source: CreditCards Category: Credit Card News
  • Nearly two in three Americans say they would stop using their credit cards if retailers start tacking on extra fees for paying with plastic.
  • The scientific survey found that 65 percent of Americans who use credit cards would pay another way if any fee was charged, no matter how small.
  • Visa and MasterCard have long banned such surcharges at businesses that accept their cards, but they recently agreed to abolish that rule as part of the settlement of a longstanding class-action lawsuit.
  • In fact, only 2 percent of Americans would be willing to pay a fee that was capped at 2 percent of the purchase price.
  • Poll indicates that those least likely to flinch at paying a surcharge are those under age 35. In the survey, the younger the respondent, the less willing they were to stop using their card.
  • Only about half of 18- to 34-year-olds would use a different payment method to avoid a fee (52 percent), compared to 63 percent of those age 35 to 49, and more than 7 in 10 of those older than 50.
  • Also, one in four in the younger group said they would pay up to $1 extra to use plastic, while only 13 percent of those over age 65 were willing.
Aug 2012
  • Proposed capital requirements from Basel III could douse more water on a mergers environment that is still trying to catch fire.
  • Heightened regulation usually induces weak banks to sell, but there is a growing belief that certain proposed rules in Basel III could hurt the valuations of some banks. And lower values could create an even greater divide between buyers and sellers during merger negotiations, industry observers say.
  • Certain proposals such as requiring higher risk-weighting on residential real estate and capital buffers could lead buyers to offer low-ball bids to at-risk banks.
  • It could lead some buyers to suppress their own appetite for acquisitions in order to hold onto more capital.
  • As a result, the advancement of Basel III is leading some industry experts to wonder if the optimal time to sell a community bank has already passed.
  • Proposed rules for Basel III will make [mergers] more difficult, but only in the seller's expectations.
  • One of the biggest constraints is a proposal requiring a "capital conservation buffer" of 2.5% in addition to the new minimum capital standards.
  • If a bank falls below that buffer, it is restricted from certain payouts including dividends, bonuses and share repurchases.
  • This would especially stymie the ability for many small, privately held banks to raise capital because investors can find other industries that produce higher returns with fewer regulatory capital constraints.
Aug 2012

Late Mortgage Payments Drop to a 3-Year Low

Source: NPR Category: Banking Industry News
  • U.S. homeowners are getting better about keeping up with their mortgage payments, driving the percentage of borrowers who have fallen behind to a three-year low.
  • The second-quarter delinquency rate is down from 5.82 percent in the same period last year, and below the 5.78 percent rate for the first three months of 2012.
  • The positive second-quarter trend coincided with an improving outlook for the U.S. housing market.
  • A measure of national home prices rose 2.2 percent from April to May, the second increase after seven months of flat or declining readings.
  • Home refinancing surged in the second quarter, as interest rates sank to historic lows. And more borrowers with underwater mortgages or home loans that exceed the value of the home refinanced through the government's Home Affordable Refinance Program than ever before.
  • Even as housing trends turned positive earlier this year, the U.S. economy began to show signs of faltering.
  • The national delinquency rate remains well above its historical range, an indication many homeowners are still struggling five years after the housing downturn. Home prices need to recover further for the delinquency rate to decline.
Aug 2012
  • Consumer credit card balances tumbled in June after shooting up the previous month. Latest monthly G.19 consumer credit report showed a 5.1 percent drop in revolving debt as more people shied away from charging their purchases to credit.
  • Revolving debt, which in the report is made up almost entirely of credit card debt, dropped by $3.7 billion in June to $864.6 billion
  • June's drop in revolving debt marks the third time this year that consumers have trimmed their credit card balances, and economists say that rising economic uncertainty deserves much of the blame.
  • People are just not sure what the future is going to bring and so consumers are being very careful.
Aug 2012

July nonfarm payrolls rise by 163,000

Source: Reuters Category: Economy News
  • Employers in July hired the most workers in five months, but an increase in the jobless rate to 8.3 percent will probably keep expectations of additional monetary stimulus from the Federal Reserve intact.
  • It's marginally better on the balance. More importantly they have a drop in household employment, which is not such good news.
  • Even with the better-than-expected payroll number, it's not sufficiently big enough to change the big-picture view.
  • The economy is growing but not at a satisfactory rate to bring down unemployment.