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News Scan Oct 2013

Credit Card News, Economy News, Banking Industry News - Oct 2013
Oct 2013
  • U.S. consumer confidence fell sharply in October as consumers turned gloomier in their outlook for the future.
  • An industry group, said its index of consumer attitudes dropped to 71.2 in October from a revised 80.2 in September, previously reported as 79.7.
  • The expectations index also sank, down to 71.5 in October from a revised 84.7 in September.
  • Consumers were also less optimistic about their current standing, with the present situation index down to 70.7 in October from a revised 73.5 in September.
Oct 2013
  • Some of the largest U.S. banks said a proposed rule to increase the capital they hold against potential losses is arbitrary and would put them at a disadvantage against non-U.S. banks facing easier requirements.
  • The leverage ratio, proposed by banking regulators at 5 percent for holding companies and 6 percent for their banking units, targets banks with the most assets.
  • Citigroup , said the idea could worsen an uneven global playing field for U.S. banks, and State Street said the regulators’ proposal showed “no evidence” that they studied the potential impact on banks.
  • The minimum ratios are highly arbitrary. The rule could squeeze global custody banks’ ability to provide client access to “core payment, clearing and settlement functions.
  • The July proposal is intended to be a backstop to the Basel III risk-based capital rules already set by the U.S. regulators. This week, the agencies will also propose a rule setting a higher standard for the minimum amount of easy-to-sell assets banks have to hold to tide them over during a credit drought.
Oct 2013
  • U.S. employers added far fewer workers than expected in September, suggesting a loss of momentum in the economy.
  • Nonfarm payrolls increased by 148,000 workers last month. While the job count for August was raised, the employment gain in July was revised lower and was the weakest since June 2012.
  • The closely watched report suggested the economy lost steam even before an acrimonious budget fight that led to a damaging 16-day partial shutdown of the federal government.
  • But there was a silver lining in the report. The unemployment rate fell a tenth of a percentage point to 7.2 percent, the lowest level since November 2008.
  • A measure of underemployment that includes people who want a job but who have given up searching and those working part time because they cannot find full-time jobs also fell a tenth of point, to 13.6 percent, the lowest since December 2008.
Oct 2013

2013 bankruptcy filings continue decline

Source: creditcards Category: Banking Industry News
  • Consumer bankruptcies extended their decline in the third quarter of 2013, edging down from their recession-inflated levels of past years as the economy continues to recover.
  • There were 801,783 personal bankruptcies in the first nine months of 2013, down about 13 percent from the corresponding period in 2012.
  • That puts 2013 on track to achieve a third straight year of reduced filings. In 2010, the aftermath of the recession pushed personal bankruptcies to about 1.53 million.
  • Filings began to ebb the next year, falling to about 1.37 million and receded further to less than 1.2 million in 2012.
Oct 2013
  • MasterCard is rolling out a service to allow its corporate clients to monitor and control travel costs. The Travel Controller is a service that lets companies reconcile their travel accounts.
  • The system tracks travel expenses, linking charges with individual account and card numbers, and provides detailed information about travel purchases, allowing companies to reduce spending by controlling travel costs and ensuring that employees adhere to corporate travel policies.
  • The Travel Controller will be available in early 2014 for card issuers, travel management companies and corporate clients. It is currently being used in a pilot phase by a few banks and other companies.
Oct 2013
  • The Federal Reserve said economic growth slowed in a few key regions of the United States from September through early October, as businesses grew worried about a budget impasse that led to a partial government shutdown.
  • Eight of the Fed’s 12 banking districts reported the same growth rate reported in August through early September.
  • But four districts — Philadelphia, Richmond, Chicago and Kansas City — reported that growth had slowed.
  • Boston, in particular, reported that the tourism industry was worried about the impact of a prolonged shutdown. And several Districts reported that businesses were cautious about hiring.
Oct 2013

Study Suggests Younger Adults Better With Cards

Source: cutimes Category: Credit Card News
  • A new study finds that cardholders between the ages of 40 and 44 are 12% more likely to go seriously delinquent on a credit card than a cardholder age 19.
  • Serious card delinquency is defined as being more than 90 days late on a card account payment.
  • The researchers acknowledged that the data showed younger card account holders had higher rates of 30-60 day delinquency, but that “the magnitude of the differences in minor delinquency across ages is much smaller than those we find for serious delinquency.
  • The study also did not attribute the better card behavior among younger borrowers to the Credit Card Accountability and Responsibility Act.
  • Researchers deliberately looked at data coming from both before and after the Act were implemented to evaluate cardholder behavior.
  • Furthermore, these individuals are more likely to be homeowners early in life. We interpret these results as indicating that some young individuals choose to enter the credit card market to establish a credit record and thus facilitate the transition to home ownership.
Oct 2013

Why the Hybrid Cloud Matters to Banks

Source: americanbanker Category: Banking Industry News
  • The "hybrid cloud" is gaining popularity and banks aren't immune to the allure of this IT trend.
  • Using this very broad definition, many banks have hybrid clouds already. They use cloud-hosted software or compute resources for certain needs, such as application development and testing, and keep other applications, such as core processing, on their own servers.
  • Banks tend to lag other industries in cloud usage by 10-15 years. While banks don't necessarily need to be on the leading edge of cloud technology.
  • Banks could eventually lose business to cloud-savvy competitors that have cheaper processing costs.
  • The Receivables Exchange, an online marketplace for selling accounts receivable, relies on cloud computing for much of its work.
  • More banks using private clouds, too. All of Santander's software is run out of two or three data centers globally. Deutsche Bank and Commonwealth also make heavy use of private clouds.
Oct 2013
  • The 9-day-old government shutdown has put a hitch in the U.S. credit system by closing the Internal Revenue Service's income verification office, and some credit card applications are among the loans getting caught in the bottleneck.
  • Card issuers don't routinely check applicants' incomes, as mortgage lenders do, but a slice of card applications is being held up, experts said, and the effects will deepen the longer the outage continues.
  • Experts estimate that only about 2.5 percent to 5 percent of the credit applications affected by the shutdown are credit card loans; but that is bound to affect thousands of applicants in a U.S. market with more than 175 million credit card users.
Oct 2013
  • As the partial government shutdown stretches into a second week, banks are making plans for how they'll deal with waves of federal workers and others forced into economic hardship.
  • They're prepared to waive late fees and overdraft fees, renegotiate payment amounts and schedules and, in some cases, extend emergency loans to those in financial distress.
  • Bankers say the government shutdown is a reminder that banks are typically willing to work with customers facing money troubles, whether those result from layoffs, personal hardships, natural disasters or government furloughs.
  • Banks all around the country have a long record of reaching out and making accommodations in times of financial difficulties. There are a lot of things banks can and will do to help people caught in unfortunate situations.
  • Most large banks have special teams in place that specialize in helping customers in need, and they say they consider each case individually.
  • Capital One, for instance, placed a note on its website encouraging customers affected by the shutdown to contact the bank if they required assistance.
Oct 2013
  • The number of Americans filing new claims for jobless benefits edged higher last week but remained at pre-recession levels, a signal of growing strength in the labor market.
  • Initial claims for state unemployment benefits rose 1,000 to a seasonally adjusted 308,000.
  • However, employers have been more reticent about taking new workers on, and many economists doubt whether the claims data still provides a clear signal on the pace of hiring.
  • Long-standing jobless claims rose sharply in the week ending September 21, which the department analyst said reflected California catching up on unprocessed claims following an update to its computer processing systems.
Oct 2013
  • A partial shutdown of the U.S. government began to delay the release of data on the world's largest economy, leaving policymakers and investors in a fog.
  • From crop yields to unemployment figures, many of the nation's most closely watched data will not be published during the shutdown that began at midnight.
  • The Bureau of Labor Statistics, which was scheduled to publish the nation's employment report for September on Friday, said it would not issue anything until government operations resumed.
  • During the shutdown period BLS will not collect data, issue reports, or respond to public inquiries," the agency said.
  • Updates to the site will start again when the federal government resumes operations. Revised schedules will be issued as they become available.
Oct 2013

Study: CARD Act cut fees $20 billion

Source: creditcards Category: Credit Card News
  • The Credit CARD Act of 2009 succeeded in cutting fees for cardholders to the tune of about $20 billion per year -- without boosting interest rates or drying up the availability of credit, according to a new study based on 150 million accounts.
  • Industry studies, looking at different data sets and time periods, have found that the CARD Act had significant benefits for consumers, but some trade-offs as well.
  • Faced with restrictions on fees, banks have reined in card lending and raised rates, pushing some borrowers toward payday lenders.
  • The new paper looks at a data set of 150 million general purpose credit card accounts from eight large banks tracked by the Office of the Comptroller of the Currency, from January 2008 through December 2012.
  • Subprime borrowers saw the greatest drop in fees, the study found. Accounts with FICO scores below 620 had paid fees of about 23 percent of their average daily balance, on an annualized basis, before the law took effect.
  • After the law's full implementation in August 2010, total fees had fallen to about 9 percent of the average daily balance, with over-limit fees reaching practically zero.
  • Groups with higher credit scores saw more muted benefits, as they were paying less in fees than subprime borrowers to begin with.