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News Scan Nov 2013

Credit Card News, Economy News, Banking Industry News - Nov 2013
Nov 2013
  • U.S. business inventories rose more than expected in September as sales advanced modestly, suggesting the government's third-quarter growth estimate could be revised higher.
  • The inventories increased 0.6 percent after advancing 0.4 percent in August. That was the largest increase since January.
  • The increase in inventories ex-autos implies the government will raise its 2.8 percent growth estimate for the third quarter when it publishes gross domestic product revisions.
  • The rate of inventory accumulation in the face of tepid consumer spending suggests businesses will have little appetite to maintain the brisk pace in the fourth quarter.
  • The three-page Loan Estimate will replace the early Truth in Lending statement and the current Good Faith Estimate.
  • Business sales rose 0.2 percent in September after gaining 0.3 percent the prior month.
  • At September's sales pace, it would take 1.29 months for businesses to clear shelves, matching the prior month.
Nov 2013
  • The CFPB released a much-anticipated final rule that merged mortgage disclosure forms in an effort to help consumers more clearly understand the total costs of a loan.
  • The agency is calling the two new mortgage forms "Know Before You Owe," an apt description since a hodgepodge of federal mortgage disclosures that the new forms will replace have long been considered duplicative and confusing.
  • The rule restricts lenders from imposing new or higher fees on a final loan unless there is a legitimate reason, the CFPB says. The final rule takes effect on Aug. 1, 2015, giving mortgage lenders time to implement the changes.
  • When the rule takes effect in 2015, consumers will be given a Loan Estimate form within three business days after they submit a loan application.
  • The three-page Loan Estimate will replace the early Truth in Lending statement and the current Good Faith Estimate.
  • The form provides a summary of loan terms, closing costs and the ability to compare costs and features of different loans.
  • The final rule also places restrictions on when lenders can charge borrowers more for settlement services than the amount stated on their loan estimate.
Nov 2013
  • Both the credit card delinquency rate (the ratio of borrowers 90 days or more delinquent on their general purpose credit cards) and the average credit card debt per borrower dropped on a yearly basis during Q3 2013.
  • The credit card delinquency rate dropped to 1.36% in Q3 2013, down 14 basis points from the 1.50% reading in Q3 2012.
  • On a quarterly basis, the credit card delinquency rate experienced a seasonal increase from 1.27% in Q2 2013. Credit card debt per borrower declined 1.3% over the last year to $5,235 in Q3 2013.
  • Quarter over quarter, credit card debt essentially remained flat, increasing by only nine dollars.
  • Every state experienced either a decline or had their credit card delinquency rates remain flat between Q3 2012 and Q3 2013.
  • The largest delinquency declines occurred in Massachusetts, West Virginia and Washington.
  • All but two states saw their average credit card balances drop on a yearly basis, and the two states with increases – Rhode Island and Vermont – experienced only minimal rises.
Nov 2013
  • The U.S. budget deficit narrowed more than expected in October, aided by an improved economy and an austerity push that has cut spending and raised taxes.
  • The federal government spent $92 billion more last month than it received, taking in about 70 cents for every dollar in outlays.
  • America's deficit widened sharply during the 2007-09 recession, which hit tax revenues and increased payments for unemployment benefits.
  • But a strengthening economy, tax hikes and cuts to federal spending nearly halved the deficit in fiscal year 2013, leaving it at $680 billion.
  • In October, the government took in $199 billion in revenues, up 8 percent from a year earlier. Federal spending declined 5 percent to $291 billion.
Nov 2013

OCC Issues New Standards for Bank Consultants

Source: americanbanker Category: Banking Industry News
  • The guidance dictates when a bank or thrift under an enforcement action must hire a consultant and whether that work is acceptable to the OCC.
  • It also details the proper due diligence procedures banks must use in hiring a consultant as well as how to monitor any work performed through a contract.
  • The guidance follows recent regulatory and political controversy over the use of certain consultants after flopped reviews resulted in weaker compliance oversight.
  • Properly used, independent consultants can help further important supervisory objectives, particularly in the context of enforcement actions.
  • However, while consultants can provide knowledge, expertise, and additional resources, we must take care to ensure they maintain independence and are subject to appropriate oversight.
  • The standards we are publishing today help us achieve those important objectives while ensuring that a consultant's conclusion is never substituted for the OCC's supervisory oversight.
  • The OCC cautioned banks that using an independent consultant "does not absolve" the responsibilities of bank management and directors to ensure the bank is in compliance with enforcement order.
  • Moreover, an independent consultant is not a substitute for the supervisory judgment of the OCC," the agency warned.
Nov 2013
  • While older generations are more likely to hold tight to their credit and debit cards, younger people are more liberal about sharing them with others, according to an October 2013 survey from Jumio Consumer Insights.
  • The survey found that about half of those in the 18-to-24 crowd had used another's credit or debit card (either online or at a store) with or without the cardholder's permission.
  • The popularity of card-swapping declines with age, though, bottoming out at just 16 percent in the 50-plus crowd.
  • The financial sector saw the second-biggest cuts, with 8,717 layoffs announced. The sector has seen the deepest downsizing so far this year, with 57,591 cuts announced since January.
  • How is this possible? Aren't retailers supposed to check IDs? Most don't, according to the survey.
  • Eighty-seven percent of respondents said that the majority of the time, they're not asked to provide proof of ID when making a debit or credit card purchase.
  • The survey, performed by Harris Interactive, polled 2,022 U.S. adults in September 2013.
Nov 2013
  • The number of planned layoffs at U.S. firms rose 13.5 percent in October on cuts in the pharmaceutical and financial sectors.
  • The October figure was lower than the year-ago tally, which came in at 47,724. For 2013 so far, employers have announced 433,114 cuts, close to the 433,725 seen in the first ten months of last year.
  • The pharmaceutical sector saw the most layoffs, with plans to cut 10,585 employees.
  • The financial sector saw the second-biggest cuts, with 8,717 layoffs announced. The sector has seen the deepest downsizing so far this year, with 57,591 cuts announced since January.
  • Furthermore, improvements in the economy are also pushing interest rates back up, which is curbing demand for refinancing.
  • The figures come two days ahead of the key U.S. non-farm payrolls report, which is forecast to show the economy added 125,000 jobs in October with the unemployment rate edging to 7.3 percent from its current 7.2 percent.
Nov 2013

Fed: banks loosen credit limits

Source: creditcards Category: Credit Card News
  • Banks aren't rushing to grant more credit cards to new applicants, but they are being more generous about expanding credit limits on cards, according to the Federal Reserve's latest survey of senior loan officers.
  • The quarterly survey found that nine of them (18 percent) "eased somewhat" their terms and conditions for credit limits on new or existing consumer credit cards in the previous three months.
  • But as for new customers, the welcome mat was not exactly out. When it came to applications for new cards, only 7 percent of bankers said that they "eased somewhat" their credit standards in the past three months. Just 2 percent of bankers said they "tightened somewhat."
  • The survey includes responses of senior loan officers from 73 domestic banks and 22 U.S. Representatives of foreign banks.
  • Bankers reported they also loosened their grip slightly for other forms of consumer credit.
  • Thirteen percent said they were "somewhat more willing" to make consumer installment loans, while 12 percent said their standards "eased somewhat" for new and used auto loans.
  • The loan term for autos is also going up, as 11 percent of bankers said they "eased somewhat" the maximum maturity for auto loans, while 8 percent said they eased their minimum down payment requirement.
Nov 2013
  • Banks have eased lending standards for U.S. commercial loans and residential mortgages in the last three months, the Federal Reserve said, but they have not witnessed an increase in demand for borrowing.
  • Domestic banks, on balance, reported having eased their lending standards and having experienced little change in loan demand, on average, over the past three months.
  • The poll covered 73 domestic banks, including 37 large lenders with assets of more than $20 billion, as well as 22 U.S. branches of foreign firms.
  • The U.S. central bank's survey also asked whether a sharp climb in home loan rates over the summer had resulted in any changes.
  • The Fed found that, on net, demand had weakened for home mortgages, while most banks reported a drop in mortgage refinancing activity.
Nov 2013
  • Most surveys of bankers about cloud computing indicate that their biggest worry is security.
  • But research released earlier this month by NTT Com Security found the key factor financial executives consider when evaluating a new delivery mechanism for an application, by a wide margin, was cost: 80% cited it.
  • The financial services firms queried mostly use their own data centers today: 41% predominantly use a corporate-owned data center to deliver compute resources.
  • Almost a quarter (22%) refers to their main source of computing as a private cloud; 22% use a third party hosted data center. Far fewer (13%) say they use a hybrid cloud and 2% say they make use of a public cloud.
  • The financial services executives that do use a hybrid or public cloud say they devote, on average, 25% of their IT budget to cloud computing.
  • North American businesses in general are far more committed to the cloud: 94% interviewed said cloud-based operations have been part of their infrastructure for six months or longer.