Spotlight on Financial Services

"According to Alan Cowell's article in a recent issue of the New York Times, the British economy is currently 'one of the fastest- growing in the industrialized world.'"


Michael E. Staten		Robert W. Johnson

MAY 2004

Preemption Battle Continues in Congress

Regular readers of this newsletter are aware that the OCC sparked a firestorm of criticism from state and local regulators when it issued regulations in February that affirmed its sole authority to regulate the lending operations of national banks. Attorneys General in various states denounced the move as stripping state residents of the opportunity for additional consumer protections that they claimed were provided by numerous state and local laws that have been recently passed to curb abusive mortgage lending. Nevertheless, the OCC has been aggressive in asserting it preemptive authority over such state and local laws. Now the battle has moved to Congress.

Economic Growth Lifts Employment, Wages And Income

Proving that last year’s growth spurt was not an aberration, the U.S. economy continued an above-average growth track in the first quarter of 2004, as GDP rose at a 4.2% annual rate.... Economic forecasters now see growth continuing at a 4% pace or better for the remainder of 2004.

Fed May Have Misdiagnosed Deflation Risk

A fascinating new study from economists at the Federal Reserve Bank of Atlanta suggests that the Federal Reserve Board may have misinterpreted some key signals of inflationary pressures three years ago, leading it to push interest rates lower than was otherwise warranted.

Personal Bankruptcies Still Down From a Year Ago

Continued good economic news seems to be helping the personal bankruptcy picture, although not as much as one might hope. The National Bankruptcy Research Center reports that through the first 16 weeks of 2004, personal bankruptcy filings are down 3.0% from the same period in 2003.

Subprime Mortgage Delinquencies Fall

Recent data reported by the Mortgage Bankers Association (MBA) National Delinquency Survey show improvement in subprime mortgage loan performance.

Credit Card Holdings

Experian has released data from its recent nationwide survey of consumers’ use of credit cards, based on sampling from its large national credit database. Some of the highlights are listed here.

New Offerings From MBNA

CardTrak reports that MBNA has introduced on behalf of Merrill Lynch a new Visa credit card: the Merrill+ that provides a credit line up to $250,000.... Separately, MBNA is exploring whether to expand its card issuance to China.

Visa Debit Exceeds Credit Volume

The American Banker reports that in 2003, for the first time ever, cardholders worldwide spent more with Visa debit cards than with Visa credit cards.

Rising Home Values and Debt Drive British Boom

According to Alan Cowell’s article in a recent issue of the New York Times, the British economy is currently "one of the fastest-growing in the industrialized world."

Credit Card Losses and Personal Bankruptcies

The Federal Deposit Insurance Corporation provided the accompanying chart showing credit card loss rates in relation to the annual number of bankruptcy filings from 1984 through 2003. The chart clearly reveals the close association of credit-card charge-offs and bankruptcy filings.

Our Changing Market

Markets for credit in the U.S., as for other consumer goods, have changed dramatically over the past decade. According to the article by Sandra Yin in the most recent issue of American Demographics, "the foreign-born population in the U.S. rose to 31 million people in 200l, up by 57 percent from 1990."

NY Attorney General Calls for Rate Cap on Auto Loans

New York State Attorney General Eliot Spitzer has called for legislation to limit the amount that auto dealers may mark up the interest rates on consumer car loans.

Preemption Battle Continues in Congress

FTC Announces New Complaint Referral Program

The Federal Trade Commission announced on April 23 a new program under which it will refer consumer complaints to the three major national consumer reporting agencies (CRAs).

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