Spotlight on Financial Services

"According to the Internal Revenue Service, during the 2003 tax-filing season, 559,600 people paid their federal income taxes by credit card, up 79% from 2002."


Michael E. Staten		Robert W. Johnson

APRIL 2004

U.S. Auto Sector Outlook

In the March 2004 issue of the Chicago Fed Letter, Federal Reserve Bank of Chicago senior economist Thomas Klier outlines the proceedings of a conference sponsored by the Bank last November. The conference brought together over 80 auto industry experts in order to assess the outlook for the U.S. auto industry and the impact of changes in the industry on the Midwest economy. Issues of interest included: 1) identifying the key market participants; 2) describing the different operating practices of these manufacturers; and 3) tracking the changing location of industry activity.

U.S. Auto Sector Outlook

In the March 2004 issue of the Chicago Fed Letter, Federal Reserve Bank of Chicago senior economist Thomas Klier outlines the proceedings of a conference sponsored by the Bank last November. The conference brought together over 80 auto industry experts in order to assess the outlook for the U.S. auto industry and the impact of changes in the industry on the Midwest economy.

ABA Delinquency Measures Mixed

The latest results from the American Bankers Association (ABA) quarterly survey of a panel of 400 banks nationwide revealed "...a rare combination where credit card delinquencies increased as all other consumer lending delinquencies declined," according to James Chessen, the ABA’s chief economist.

Personal Bankruptcies Still Down From a Year Ago

Lenders are undoubtedly pleased that personal bankruptcies continue to lag behind last year’s pace.

Penalty Fees on Credit Cards

Your odds of paying a penalty fee on your credit card are going up, as are the size of the fees themselves. The Wall Street Journal reported that competition among card issuers on interest rates is increasing the pressure to generate revenue from other sources.

Plastic for Taxes

Paying your income tax bill via credit card is becoming increasingly popular in the U.S. According to the Internal Revenue Service, during the 2003 tax-filing season, 559,600 people paid their federal income taxes by credit card, up 79% from 2002.

Million-Dollar Homes: A Growing Market

If you are involved in mortgage lending, you appear to have a bright future. The Joint Center on Housing Studies at Harvard University reports that million-dollar homes are now a fast-growing part of the housing market.

Plastic for Pills

Beginning this summer, United Health Group plans to issue patients identity cards that look a lot like MasterCard’s. However, the cards may be used only for the purchases of health-care products: prescriptions, eyeglasses, or visits to a doctor or physical therapist.

E-Commerce Update

About two-thirds of U.S. internet users, or 83 million people, shop online. This statistics was just released by the Pew Internet and American Life Project. The director of the project, Lee Rainie, told the New York Times, "It’s a milestone in the norming of e-commerce."

U.S. Credit Grantors Look Overseas

David Nissen, president and CEO of General Electric Company’s Consumer Finance Division has announced that it will soon have a new name, GE Money, in the 37 countries where it operates. The division specializes in developing private-label charge cards for retailers such as Wal-Mart.

Identity Theft

An article by Keely Helgasome in a recent issue of Collector summarizes the major findings of the Federal Trade Commission’s latest study of fraud and identity theft: National and State Trends in Fraud & Identity Theft. The report lists the top ten scam reported by consumers in 2003.

Major Holders and Types of Consumer Credit
Outstanding, Year-End 2000 and the 3rd Quarter of 2003

The accompanying table shows the major changes that occurred in the consumer and mortgage credit markets between the end of 2000 and the end of October 2003. The purpose of the table is to provide a long-term analysis of the basic shifts in the types of firms providing (1) closed-end, or non-revolving credit, such as automobile and home mortgage loans, and (2) open-end or revolving, such as bank or retail credit cards.

Disclosures Increase Confusion

More information is not necessarily a good thing. The Federal Trade Commission (FTC) has found that a proposed new disclosure on mortgage transactions would actually do more harm than good.

New Credit Card Disclosures in the UK

New studies from the United Kingdom’s Office of Fair Trading (OFT, the British equivalent of the U.S. Federal Trade Commission) have recommended that the British government require credit card issuers to adopt the "Schumer box" approach to disclosure of card pricing and terms. The "Schumer box" refers to the U.S. requirement under the Truth in Lending Act that card issuers display a summary box prominently on the monthly statement that discloses items such as the annual percentage rate, additional charges, minimum payment due, and credit limit.

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