| Quote of the Month:
"The National Bureau of Economic Research (NBER) made it official: the U.S. economy slid into its first recession in a decade in March 2001, ending the longest expansion since 1854... The delay in calling the recession stems from this one's unusual characteristics."
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December 2001
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| Recession is Here for a While |
| The National Bureau of Economic Research (NBER) made it official: the U.S. economy slid into its first recession in a decade in March, 2001, ending the longest expansion since 1854. . . . NBER defines a recession as a widespread decline in economic activity lasting more than a few months.
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| Bankruptcies Closing in on New Record
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| As of the end of the 47th week of 2001 (through Thanksgiving week), 1,321,023 personal bankruptcies had been filed in the U.S. this year. With 5 weeks to go, the cumulative total for the year is only 57,000 cases short of the record-high 1,378,000 cases filed in 1998. |
| Slumping Auto Production
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| In its Chicago Fed Letter for November, the Federal Reserve Bank of Chicago reported a dramatic decline in automobile production: 4.9 million units in July, down from 5.7 million units a year ago. |
| The Profitability of Credit Card Banks |
| Since 1988 the Federal Reserve Board (FRB) has been required by Congress to report annually on the profitability of the credit card operations of depository institutions. The report for the year 2000 . . . reveals some interesting trends that highlight the competitive nature of the credit card market. |
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| Rising Thefts from ATMs |
| A group of computer-literate thieves has been stealing thousands of dollars from New Yorkers whose accounts can be accessed from ATMs. Their scam involves stealing the customer's personal identification number (PIN) and then using it at an ATM to drain cash from the account. |
| Education Affinity Cards Have a New Twist |
| Credit cards that carry the image or logo of a favorite college pioneered the "affinity card" niche marketing strategy. Now there are some new twists on this old theme. |
| Debt Cancellation Product Poised for Takeoff |
| Credit insurance may be soon replaced by debt cancellation agreements on a variety of consumer loans. The Office of Comptroller of the Currency (OCC) is finalizing new rules governing such agreements for release in early 2002. The rules are expected to encourage more banks to offer the product in conjunction with loans. |
| Credit Card Ownership and Use |
| The David W. Moore Gallup Organization has released a study on our credit card usage showing that eight out of ten Americans have credit cards. Among households with incomes above $50,000, 93 percent carry credit cards, as do 82 percent of those with household incomes of $30,000 to $50,000. |
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| Residual Losses on Auto Leases Fall |
| For the first time in several years residual losses on automobile leases have finally declined, although they are still high. The good news is provided in a study just released by the Association of Consumer Vehicle Lenders (ACVL) and reported by Randall R. McCathern in the latest edition of Auto Finance Update. |
| Baby Boomers and Young Adults |
| To a great extent, the market for consumer financial services is divided between Baby Boomers and Post-Boomer Young Adults. . . . If you were to target either of these two groups for your financial services, you would want to know their basic characteristics and where they live. |
| Tighter Lending Standards on Home Mortgages |
| At the same time that home mortgage rates have been falling, lenders' credit standards have been rising. Prime borrowers with clean credit records will not be affected but those with flaws in their credit record will find that the low rates advertised do not apply to them. |
| E-Commerce Update |
| As the holiday shopping season shifts into high gear, we offer these tidbits regarding online shopping and purchasing trends. |
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| Anti-Predatory Lending Laws Suspended | | In December 2000 the City Council of Washington, D.C. unanimously passed a bill to curb "predatory lending" by mortgage lenders in the District. According to S. Katherine Allen, Commissioner of the D.C. Department of Banking and Financial Institutions, the bill promised to shield consumers from "abusive loans that people don't understand and can't afford or are fraudulent." |
| U.S. Supreme Court Ruling for Credit Bureaus | | In a unanimous ruling the U.S. Supreme Court ruled that consumers who have been harmed by a violation of the Fair Credit Reporting Act have two years from the date of violation to bring suit. The case sets an important precedent for limiting credit bureau liability in the event of identity theft. |
| Flaws in the HMDA Data | | Over the past several years there have been numerous articles and press reports suggesting that there is racial/ethnic discrimination in residential mortgage lending. Most of these publications have been based on the data gathered under the provisions of the Home Mortgage Disclosure Act of 1975 (HMDA). |
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