Spotlight on Financial Services

"In its June survey of 485 small businesses nationwide, the National Federation of Independent Business (NFIB) found the most aggressive price increases seen since
the late 1980s."


Michael E. Staten		Robert W. Johnson

AUGUST 2004

U.S. Housing Bubble?

Joseph E. Stiglitz, a 2001 Nobel Laureate in economics defined a bubble as: "[i]f the reason the price is high today is only because investors believe that the selling price will be high tomorrow—when 'fundamental' factors do not seem to justify such a price—then a bubble exists." Using this definition, Federal Reserve Bank of New York (FRBNY) senior economist Jonathan McCarthy and vice president Richard W. Peach examine data on U.S. house prices for evidence of a bubble.

Greenspan on the Economy

As we try to separate the economic wheat from the chaff over the next six weeks of political posturing in Campaign 2004, here is a sampling of what Federal Reserve Chairman Alan Greenspan had to say in his Senate Banking Committee testimony on July 20, 2004.

Troubling Signs of Inflation

Inflation hawks will take no comfort in the latest survey results from the National Federation of Independent Business (NFIB). In its June survey of 485 small businesses nationwide, the association found the most aggressive price increases seen since the late 1980s.

Mortgage Delinquencies

In its latest quarterly National Delinquency Survey detailing the results from the first quarter of 2004, the Mortgage Bankers Association (MBA) reported a seasonally adjusted overall delinquency rate for one-to four-unit residential mortgage loans of 4.33 percent. The overall delinquency rate was down 52 basis points from the same period in 2003, and was also down 16 basis points from the fourth quarter of 2003.

Bankruptcy Filings Stabilize

Personal bankruptcy filings appear to have settled into a steady-state pattern somewhat below last year's volume but somewhat above levels observed in 2002.

New Scoring Solutions

At the end of July, Fair Isaac Corporation unveiled an extension of its FICO credit score product to cover "historically credit-underserved U.S. customers." This segment of the U.S. population typically has limited credit information on file and includes young adults, those with lower incomes, recent immigrants, and women recently widowed or divorced.

Car Leasing Retrenchment

The American Banker reports that Consumer Bankers Association surveys show that banks lost money on over 90 percent of leased cars returned in 2001 and 2002. Banks, in turn, are leaving the auto leasing business.

Card Issuers Increasingly Rely on Fees

The importance of fee income has increased dramatically for credit card issuers over the past three years. Major card issuers recently rolled out another (seemingly annual) round of hikes in penalty fees (e.g., late payment and overlimit fees).

Workout Programs Prevent Foreclosure

Last month we reported on a new program that supports credit counseling in order to reduce foreclosure losses on the company's non-conforming mortgage loan portfolio. Now, the mortgage industry newsletter Inside B&C Lending reports that a new study by Freddie Mac found that loan workout programs have been effective in getting delinquent mortgage borrowers current and keeping them in their homes.

U.S. Housing Bubble?

The CRA and the Rise in Low-Income Home Lending

When Congress passed the Community Reinvestment Act (CRA) in 1977, the goal was to increase the incentives for the banking community to meet the credit needs of underserved individuals and neighborhoods.... A recent article by economist Elizabeth Laderman in the Federal Reserve Bank of San Francisco's Economic Letter summarizes research on whether CRA has effectively met that goal.

FTC Issues Final Rule on Free Credit Reports

On June 4, 2004 the Federal Trade Commission issued its final rule on the free annual credit reports that credit reporting agencies are required to provide consumers under last year's Fair and Accurate Credit Transactions Act (FACTA). The rule calls for a transition period characterized by a gradual roll out of the free reports.

HOME | FORECASTS AND STATISTICS | PRODUCT TRENDS | INDUSTRY TRENDS
LEGISLATIVE AND LIGITATIVE TRENDS