Trends in Market Shares

At times, it is easy to become engrossed in the day-to-day challenges in the consumer credit industry, and lose sight of broader trends. The table below provides some perspective on trends in the industry over the period from the end of 1997 to the end of April 2002. The table shows that during the period consumer credit outstandings rose by 33.3 percent. The totals include pools of securitized loans. These pools grew by 87 percent over the period shown and largely represent loans that had been made by commercial banks and finance companies. However, analysts cannot identify the original lenders represented in the pools, since the pools do not appear on the original lenders' balance sheets. Consequently, the originations of those institutions are understated.

Note that the outstandings of credit unions rose almost 23 percent over the period shown. However, this rate of growth was notably less than that the 33.3 percent growth rate for the industry. Although the growth rate for credit unions was well above the 8.5 percent growth shown for commercial banks, we should remember that large banks remove a large portion of their consumer credit outstandings from their balance sheets through securitization. Since the pools are properly included in the totals of outstandings, it is probably accurate to conclude that credit unions account for just over a tenth of the total consumer credit market. If we assume that few, if any, credit unions transferred their loans into pools, their share of all loans, including pools, dropped from 12 percent to 11 percent. Pools rose by 87 percent over the period shown, and at the end of April 2002 accounted for more than a third of total industry funds.

Source: Federal Reserve Bulletins.