| Quote of the Month:
"Although compliance with the privacy provisions of the Gramm-Leach-
Bliley Act is not required until July 1, 2001, many banks have completed their privacy policy development and are mailing the mandatory notices to account holders."
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January 2001
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| Corporate Economists Report Slump in Demand |
| In its latest member survey of business conditions the National Association for Business Economics (NABE) found that both demand and profit growth slowed sharply in the fourth quarter, 2000. Based on responses from 102 NABE members who were polled during December/January regarding conditions in their firm and industry, the overall economy is still growing, but much more slowly than in the first half of 2000.
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| Signs of Recession Loom Large
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| Do the tea leaves used by professional forecasters look that much different today than they did back in November? Well, yes, according to Goldman Sachs economists William Dudley and Ed McKelvey. |
| Mixed Reports on Holiday Shopping
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| According to the research of CardTrak, on an overall basis "the biggest shopping season of the year was a bust." Data from TeleCheck show that same store sales rose 2.4 percent above last year's level, well below the expected increase of four percent to six percent. |
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| Credit Card Profits Up in 2000 |
| For the second consecutive year, the credit card industry experienced growth in profitability, a welcome change from the downward slide in profitability that characterized most of the 1990s. According to an annual survey by R.K. Hammer Investment Bankers (Thousand Oaks, CA) net income on credit card loans rose to 18.4% this past year, up from 17.9% in 1999 and 17.4% in 1998. |
| Credit Card Interest Rates Rose During 2000 |
| Not surprisingly given the rise in market interest rates during 2000, credit card issuers adjusted upward the rates charged on revolving balances. The Federal Reserve reported that for credit cards issued by commercial banks, the average rate on accounts assessed interest during November 2000 was 15.23%, up 46 basis points from one year earlier. |
| American Express Acquires Card Portfolio |
| American Express Co. acquired the credit card portfolio of the Bank of Hawaii. An American Express executive remarked "We have hung out a new shingle to regional and local banks. It says we would be very happy to buy their business, manage it as the owner, and have a marketing alliance that allows us to help them grow their business." |
| Potential Smart-Card Sale |
| Schlumberger, Ltd. is discussing the acquisition of the smart-card unit of Group Bull SA. Bull is a French firm and Schlumberger is a French-American technology-service firm that is already one of the top smart-card makers. The binding offer by Bull is valued at between $285 million and $380 million. |
| Ethnic Ownership and Use of Credit Cards |
| CardLine reports an interesting survey by Zogby International of credit card ownership and use. Zogby is an independent polling and research firm headquartered in Utica, NY. The telephone surveys of nearly 4,000 people were made over four months beginning in December 1999. |
| Auto Leasing Slows |
| According to CNW Marketing Research, during the last ten months of 2000 personal-use leases accounted for 29.0 percent of total unit sales of autos and light trucks, down from 32.5 percent during the same period in 1999. In the most recent period, leasing of autos amounted to 27.6 percent of industry car sales, while leasing of light trucks accounted for 30.6 percent of sales of trucks. |
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| Changing Life Styles: The Decline in Marriages |
| Changes in consumers' life styles have a major impact on their financial strategies and upon the financial institutions that serve them. Research recently published in American Demographics provides some rather startling data. The first sentence in the article provides a pithy summary of the findings: "Mae West was ahead of her time when she quipped that while marriage was a great institution, she wasn't fond of living in institutions." |
| Survey of Rent-to-Own Customers |
| The Federal Trade Commission has published an extensive study of the rent-to-own business, with a title identical to the heading of this section. It addresses three basic goals... |
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| Fleet Sued for Privacy Violations | | The Minnesota attorney general has sued the mortgage group of FleetBoston Financial Corp., alleging that it had illegally 1) divulged personal financial information about consumers having mortgage loans to telemarketers and 2) participated in their deceptive sales tactics. The suit filed in the state District Court in Minneapolis charges that Fleet Mortgage Corp., Columbus, S.C. violated state consumer-fraud, consumer-protection, and consumer-advertising laws. |
| Banks Push Privacy Policies out the Door Early | | Although compliance with the privacy provisions of the Gramm-Leach-Bliley Act is not required until July 1, 2001, many banks have completed their privacy policy development and are mailing the mandatory notices to account holders. Tens of millions of consumers have already begun receiving a description of how their financial institutions use personal information and, when appropriate, those customers are being offered a choice as to whether their data can be shared with unaffiliated companies. |
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