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News Scan Dec 2011

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Dec 2011

Banks Revamp Checking by Watching Cable TV

Source: Americanbanker Category:Banking Industry News
  • Financial institutions of all sizes are increasingly tiering and bundling their services together in an effort to attract new customers and increase profits.
  • That strategy emulates the business models of cable companies, which offer tiered channel plans ranging from basic to premium, as well as bundled phone, TV, and internet packages.
  • The Portland, Ore., bank's different checking accounts are "based on what you use, and if you buy those five things, I will give you this for the overall package.
  • Efforts to tier and bundle banking services are not new. But such efforts are expected to ramp up next year as banks seek to raise revenue lost under new regulations.
  • Now we have a lot more banks, from the community banks and credit unions all the way up to the top ten banks, looking at tiering and bundling as required strategies.
  • Umpqua now offers five checking accounts, with a sixth on the way designed for seniors.
  • Monthly prices range from free to $20, with each account also offering ways for customers to avoid paying the fees by maintaining a certain balance or having other accounts at the bank.
Dec 2011

Natural-gas price likely to drop in 2012

Source: Dispatch Category:Economy News
  • Gas might tumble 8.2 percent from its 2011 average next year, as output rises 2.8 percent to a record 67.72 billion cubic feet a day, the Energy Department forecasts.
  • Demand probably will grow 1.7 percent, after a 1.8 percent increase this year, the department said this month.
  • Booming U.S. natural-gas production from shale formations and slowing demand from households, factories and power plants are poised to send prices down for an unprecedented fifth year in 2012.
Dec 2011
  • The U.S. government fell deeper into the red in fiscal 2011 with net liabilities swelling more than $1 trillion as commitments on government debt and federal benefits rose.
  • Government’s liabilities exceeded assets by $14.785 trillion. That compared with a $13.473 trillion gap a year earlier.
  • However, the government's net operating cost, or deficit, in the report dropped to $1.313 trillion for the year ended September 30 from $2.080 trillion the prior year.
Dec 2011
  • Residential construction surged in November, sparking cautious hope that the U.S. housing market is gaining traction.
  • Housing starts hit a seasonally adjusted annual rate of 685,000 units, the highest level in 19 months.
  • Starts in November were up 9.3% from October and 24.3% ahead of the November 2010 figure.
  • Much of November's increase came from the construction of apartments, town houses and other multifamily developments, evidence that rising demand for rental housing has encouraged developers to begin building again.
  • Starts of residential developments with two or more units saw a 25.3% increase, while starts of single-family homes, which make up about 65% of the housing market, rose 2.3%.
Dec 2011

Fed proposes new, tougher rules for big banks

Source: Cleveland Category:Banking Industry News
  • The proposal by the chief U.S. banking regulator will affect banks with over $50 billion in assets.
  • There are even stricter rules for companies with over $500 billion in assets such as JPMorgan Chase & Co., Goldman Sachs Group Inc. and Citigroup Inc.
  • Fed officials didn't give a timeline for when the rules will be implemented but said the final rules will be released only after the regulators will have a chance to incorporate comments from the public. The Fed is accepting comments for 90 days.
  • The rules are part of new regulation proposed under the Dodd-Frank Act, which was passed last year.
  • Most U.S. banks opposed the rules. They argued holding too much extra cash would hamper their ability to make loans
Dec 2011
  • Consumer prices were flat in November as Americans paid less for cars and gasoline, a further sign of a cooldown in inflation that could give the Federal Reserve more room to help a still weak economy.
  • The report leaves the Fed ample cover for any additional monetary policy accommodation they may see warranted in the New Year.
  • Still, some of the data could give pause to policymakers at the central bank.
Dec 2011
  • The in-depth survey, conducted by Forrester Consulting on behalf of Fiserv in September 2011, evaluated the plans of 10 banks and credit unions that in total hold more than one-third of all U.S. deposit accounts.
  • The results revealed that these financial institutions are moving beyond the basics to deliver increasingly sophisticated mobile capabilities.
  • Transactional services such as remote deposit capture and mobile person-to-person payments will account for the bulk of mobile investment in 2012.
  • However, despite a nearly unanimous commitment to expand overall mobile functionality, institutions remain split on plans to support mobile point-of-sale payments.
Dec 2011
  • A study recently published by SecurityMetrics shows 71% of merchants who entered the study were found to store unencrypted payment card data in 2011, which is an increase of 8% since 2010.
  • There's so much going on in the security industry that it's sometimes difficult to target the most important things, said SecurityMetrics CEO Brad Caldwell.
  • We think these findings are a game changer for the security industry, and will help focus priorities on the bigger problem plaguing merchants today. After all, criminals can't steal card data merchants don't have.
Dec 2011

Budget gap narrows in November from year ago

Source: Reuters Category: Economy News
  • The government budget deficit fell 9 percent in November to $137.30 billion from a year-earlier level of $150.39 billion.
  • The cumulative deficit for the fiscal year that began in October stands at $235.77 billion compared with a $290.83 billion in the same period last year.
  • The burgeoning U.S. debt load has become a hot-button political topic heading into elections next year. November's deficit market the 38th straight monthly shortfall.
Dec 2011

Card Chargeoff Rates Drop Again

Source: americanbanker Category: Credit Card News
  • The bank card chargeoff rate was 5.21% in October, down six basis points from 5.27% in September and down 358 basis points from 8.79% in October 2010, Moody's said in a report last month.
  • The average delinquency rate in October on accounts at least 30 days past due held steady for the second consecutive month at 3.04%, an all-time low.
  • The average credit card chargeoff rate peaked in March 2010 at 11.21%, and the average delinquency rate peaked one year earlier, in March 2009, at 6.4%.
Dec 2011

Expect More Cross-Border M&A in 2012

Source: americanbanker Category: Banking Industry News
  • Most of the past year's large stateside bank deals involved overseas conglomerates getting rid of unwanted assets, a trend that experts say should continue through the New Year.
  • The healthiest big U.S. banks have plenty of cash and capital, but are wary of building branches or buying other publicly traded companies.
  • That makes foreign bank sales of branches, loans, businesses and other assets one of the few games in town for wannabe buyers.
  • The returns also are more predictable, industry observers say. Mortgages may be still risky, but credit card portfolios, auto loans and business loans have stabilized.
  • Foreign sales of these types of assets will not completely satiate revenue-starved banks' merger ambitions.
  • So far this year, there have been 16 deals worth nearly $18 billion involving a U.S. bank buying a foreign-owned banking asset.
Dec 2011
  • Employment growth picked up speed in November and the jobless rate dropped to a 2-1/2 year low of 8.6 percent, further evidence the economic recovery was gaining momentum.
  • The payrolls were about in line with expectations, with payrolls rising 120,000, private sector up 140,000 and a drop in government jobs of 20,000.
Dec 2011
  • The pace of growth in the U.S. manufacturing sector picked up in November at its strongest level since June.
  • The Institute for Supply Management (ISM) said its index of national factory activity rose to 52.7 from 50.8 the month before.
  • New orders gained to 56.7, its highest level since April, from 52.4. But the employment gauge lost some steam, falling to 51.8 from 53.5.
  • Manufacturing growth has slowed from stronger levels seen at the beginning of the year, though the national reading has avoided outright contraction, unlike some regional indicators.