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News Scan Sep 2015

Credit Card News, Economy News, Banking Industry News - Apr 2014
  • Ask people where they were on 9/11, and most have a memory to share. Ask where they were when Lehman Brothers collapsed, and many will struggle even to remember the correct year. The 158-year-old Wall Street bank filed for bankruptcy on 15 September 2008. As the news broke, insiders experienced an atmosphere of unprecedented panic.
  • One former investment banker recalled: “I thought: so this is what the threat of war must feel like. I remember looking out of the window and seeing the buses drive by. People everywhere going through a normal working day – or so they thought. I realised: they have no idea. I called my father from the office to tell him to transfer all his savings to a safer bank. Going home that day, I was genuinely terrified.”.
  • A veteran at a small credit rating agency who spent his whole career in the City of London told me with genuine emotion: “It was terrifying. Absolutely terrifying. We came so close to a global meltdown.” He had been on holiday in the week Lehman went bust.
  • "Flat is the new up." That's the pithy, and sobering, assessment of Goldman Sachs (GS) in predicting what's in store for the U.S. economy and for investors next year. The investment bank on Tuesday cut its forecast for 2016 U.S. economic growth to 2.4 percent, down from a previous estimate of 2.8 percent.
  • That sharply reduced estimate would barely exceed Goldman's forecast for 2015 growth and only match the tepid pace of expansion last year, a sign the economic recovery is running in place rather than sprinting ahead as many economists were predicting late last year.
  • In forecasting global gross domestic product growth next year of 3.7 percent, down from Goldman's previous forecast of 4.3 percent, the firm underscored the fear that has so many investors running scared: China's once high-flying economy is losing altitude faster than officials in Beijing care to admit.
  • If you have poor credit but want to open up a credit card, the numbers are in your favor: For the past several years, banks have approved credit card applications from an increasing number of consumers with bad credit, according to the latest data from the American Bankers Association.
  • In the first quarter of this year, consumers opened up 73 million new credit card accounts, which is a 14% increase in account originations from the first quarter of 2014. That 14% jump was driven by a 28% increase in subprime credit card accounts: 20 million of the new accounts were for subprime borrowers, 24 million for prime borrowers and 29 million for superprime borrowers.
  • The ABA breaks out score tiers like this: subprime borrowers have credit scores below 680, prime borrowers have scores between 680 and 759, and prime borrowers have scores of 760 and higher (the report does not specify the credit score scale ABA uses).
  • They're topics that may not be as sexy as state-sponsored cyberthieves or imperialistic island-building. But with Chinese President Xi Jinping making his first state visit to the U.S. this week, stock volatility, currency devaluations and the supremacy of the dollar are fresh on the minds of U.S. business leaders and government officials. And they're arguably topics of greater importance.
  • Xi arrived in Washington state on Tuesday to begin a series of meetings with U.S. business leaders a little more than a month after Chinese volatility shook global stock markets and government officials devalued the country's yuan currency.
  • But it's what China has been doing with the U.S. dollar, not the domestic yuan, that has some economic spectators spooked. Some believe the country is – intentionally or otherwise – threatening America's status of having the world's hegemonic reserve currency.

Ignore US Federal Reserve Bank

Source: The Pioneer Category: Banking Industry
  • The Fed’s decision to keep interest rates unchanged is not an invitation for this country to cut its repo rates. In fact, the latter should increase its rates. This could be the beginning of a new economic phase.
  • The sudden change in US decision against interest rate increases, apparently under pressure from US corporates, should not deter India from raising its rates. The volume of the two economies are different. The US has not taken a wise decision in putting off the interest rate increase. The US economy, as per the Federal Reserve, is gradually heating up. The present decision is a stop-gap measure. The Fed is likely to take a fresh view in December.
  • The Fed has kept its interest rates at almost zero per cent since the 2007-2008 recession. Despite the devaluation of the Chinese yuan and cheaper imports, the US economy has heated up to 1.2 per cent as there was an increase in employment and prices
  • Credit cards can be very secure and convenient methods of payment, but they aren’t perfect. Credit card users will make mistakes, and cards carry fees and penalties that will in a sense “punish” you for your bad behavior.
  • Thankfully, the most common credit card problems also have solutions. So when you find yourself wrestling with one your cards, consider these five common credit card problems, and how to fix them.
  • 1. Your Card Is Declined: There are few things more frustrating than having your credit card purchase declined by a merchant, but there are several reasons why this can happen. Your first step should be to contact the card issuer and ask what’s going on. Their customer service should be able to tell you whether they can see that the merchant attempted to process the charge, and if so, the reason why it failed.
  • This week it's all about the U.S. Federal Reserve. Markets are poised, financial leaders are tuned in and everyone is wondering… will the Fed raise rates on Thursday?.
  • While central bankers won't typically give much away, one former policymaker-turned-bank chairman told CNBC that the U.S's recent positive economic data showed a rate hike was due.
  • "The underlying economic data in the U.S. warrants a rate hike. The U.S economy can stand it. The U.S. economy in my view actually needs it medium- to long-term and I'm pretty convinced that the U.S. will see a rate hike, most likely in September," Axel Weber, now chairman of UBS and formerly president of Germany's central bank, told CNBC on Tuesday
  • If your credit or debit card is embedded with a chip, you may have already noticed some changes to how you check out at some retailers: Instead of just swiping your card like you’re used to, you may have had to dip your card into another part of the point of sale system, so it can read your chip.
  • Then again, it’s highly likely you haven’t yet had this experience, given that most people don’t yet have EMV cards, and the majority of retailers aren’t ready to accept them, according to a recent report from Software Advice, a software consulting group. In a survey of 200 consumers (hardly a scientific sample, but still interesting), 62% said they do not have EMV-enabled credit cards, and 24% said they have one and have already used it.
  • Many of the nation’s largest retailers have already started rolling out the new payment process, though the deadline for doing so is still a few weeks away. Only 22% of small businesses surveyed by Software Advice said they’re prepared to accept EMV cards.
  • Credit Suisse Group (CSGN.VX) intends to sell its U.S. private bank and slash its prime brokerage business under a strategy being developed by new Chief Executive Tidjane Thiam, Swiss newspaper Schweiz am Sonntag reported on Sunday.
  • Results will be presented to the bank's board in early October of a strategic review announced in July, earlier than first envisaged to give markets time to absorb news of a planned capital increase, the newspaper said, citing anonymous sources.
  • A spokesman for Switzerland's second-biggest bank declined comment on the report. The newspaper cited "insiders" as saying the bank's U.S. private banking business had around 100 billion Swiss francs ($103 billion) under management but was not making progress there, unlike rival UBS (UBSG.VX).
  • Interest rates on new credit card offers remained stuck in place again this week, according to the CreditCards.com Weekly Credit Card Rate Report.
  • None of the cards monitored by CreditCards.com advertised new interest rates. As a result, the national average annual percentage rate (APR) remained at 15 percent for the 12th consecutive week.
  • This is the longest stretch of time interest rates have remained in place since CreditCards.com began tracking rates in mid-2007. Long periods without a rate change have become more common in recent years, thanks in part to the Credit CARD Act of 2009. The law curbed issuers ability to re-price accounts without first giving cardholders 45 days' notice. Issuers responded by lowering advertised rates less often. Since then, the number of weeks that go by without a rate change has substantially increased.

Weekly Rate Report
  Avg. APR Last week 6 months ago
National average 15.00% 15.00% 14.87%
Low interest 11.62% 11.62% 11.53%
Balance transfer 14.12% 14.12% 14.00%
Business 12.85% 12.85% 12.85%
Student 13.14% 13.14% 13.14%
Cash back 15.27% 15.27% 15.26%
Airline 15.10% 15.10% 15.15%
Reward 15.14% 15.14% 14.99%
Instant approval 18.00% 18.00% 17.93%
Bad credit 22.73% 22.73% 22.48%


Bye-bye branches: Banking hits 'inflection point'

Source: CNBC Category: Banking Industry
  • The successful bank of the future will have fewer branches but better branding, with technological advancements getting priority over the traditional neighborhood touch, according to an analysis that sees an industry "inflection point" at hand.
  • Amid shifting customer needs and demands to find new ways to make money as regulatory pressures increase, banks are adjusting their models toward improving the mobile experience and continuing customer service with less of a physical footprint.
  • There was something for everyone in August’s US jobs report. The headline figure for jobs growth was less than expected, but the last two months were revised up. Wages grew, but the number of people out of the workforce remains worryingly high. What’s a central banker to do? Sadly the answer is exactly what they want to do, and no one – not even Donald Trump – seems to think that’s an issue.
  • At their annual retreat in Jackson Hole last month, several top officials of the Federal Reserve board reiterated their desire to raise interest rates, even if the recent market turmoil may have put these plans on hold for the moment.
  • The basic point remains the same: these officials argue the labor market is approaching full employment and they need to hike interest rates to slow the rate of job growth. If the economy keeps creating jobs at a rate near 200,000 a month, they say, we will soon have problems with inflation.
  • The Federal Reserve’s decision to keep interest rates around record lows since the economic downturn has played a crucial role in ensuring strong growth in loans for U.S. banks over recent years. But the move also led to a drying up of lucrative investment options for investors – in turn helping deposits grow at a faster rate than loans.
  • This has resulted in a marked decline in loan-to-deposit ratios across the industry since 2011. To put things in perspective, data compiled by the Federal Reserve indicates that the loan-to-deposit ratio for the U.S. commercial banking industry has fallen from a peak level in excess of 100% in late 2008 to 77% now.
  • In this article, which is a part of our series on key metrics comparing the country’s five largest commercial banks – JPMorgan Chase, Bank of America, Citigroup, Wells Fargo and U.S. Bancorp – we offer insights into their loan-to-deposit ratios and also highlight the expected changes in this metric over subsequent quarters.
  • A long day of down selling without much respite across the globe has ended with the US’s Dow Jones Industrial Average stock index closing down lower in a single day than it has since the country’s national debt was downgraded by Standard & Poor’s. The Nikkei lost a full 3.8% today and the FTSE lost 3.03%, with other European markets faring poorly as well.
  • The bad news that appears to have kicked off the crunch comes primarily from the Chinese manufacturing sector, which was lower last month than it has been in three years. Those specific economic woes aren’t solely Chinese: the French manufacturing sector contracted at a faster rate in August than it had the month prior, and growth in US manufacturing has slowed, as well.
  • Last week’s highs and lows in the American market were marked by frantic trading throughout the day; today the Dow collapsed at open and stayed low throughout the day.