Spotlight on Financial Services

"At recent mortgage banking conventions, both Freddie Mac and Fannie Mae announced that they would be moving more aggressively into subprime mortgage lending, increasing the number of non-prime loans that each would buy."


Michael E. Staten		Robert W. Johnson

NOVEMBER 2004

Projections for Global Growth

Providers of retail financial services have increasingly been looking beyond the borders of the United States for new growth opportunities. A fascinating new research study from economists at Goldman Sachs offers some powerfully positive observations about where that growth is most likely to occur.

Strong Job Growth Bodes Well for Credit Quality

The U.S. economy's job creation engine has accelerated in recent months. According to new data from the Bureau of Labor Statistics, non-farm payroll employment rose by 337,000 new jobs in October, and the statistics for the prior two months were revised upward as well.

Employment Growth Fails to Bring Down Bankruptcies

Stronger employment growth has yet to make itself felt in the personal bankruptcy statistics. Personal bankruptcies remain stuck in a year-long track that has kept them about 3 percent below last year's volume.

More Signs of Stronger Growth

The U.S. Bureau of Economic Analysis (BEA) announced that gross domestic product (GDP) grew at a seasonally-adjusted annual rate of 3.7% during the third quarter of 2004. Consumer spending and business investment were key drivers, an encouraging sign for continued growth.

Tax Burdens

In his first press conference after winning re-election, President Bush made it clear that income tax reform and tax cuts will be central issues in his second term. Newly released data from the Internal Revenue Service provide where the tax burden under the current system rests.

Experian Launches Prospect Alert Service

Creditors on the prowl for consumers who may be in the market for new loans are the target for a new product from Experian. The credit bureau has launched its Prospect Triggers product which offers subscribers daily alerts on consumers shopping for new credit.

Co-Branding of Card Products

The forging of new co-branded credit card relationships continues on. Two new co-branded products were rolled out in recent months.

MBNA Is Now Issuing American Express Cards

When the U.S. Supreme Court refused to hear an appeal of a lower court's ruling against Visa and MasterCard in early October, the last vestige of uncertainty about the ability of banks to offer Visa, MasterCard and the products of other card brands was swept away. Since then, MBNA has become the first major Visa and MasterCard issuer to also issue American Express cards.

Capital One Purchases UK Home Equity Loan Broker

Enhancing its existing presence in the U.K., Capital One Financial Corp (McLean, VA) announced that it was purchasing HFS Group, a British home equity loan broker.

Projections for Global Growth

Freddie and Fannie to Move into "Emerging" Markets

At recent mortgage banking conventions, both Freddie Mac and Fannie Mae announced that they would be moving more aggressively into subprime mortgage lending, increasing the number of non-prime loans that each would buy.

Bipartisan Federal Predatory Lending Bill

Prior to the recent elections, two lawmakers in the U.S. House of Representatives announced plans to sponsor and push legislation next year that would set preemptive national standards for subprime mortgage lending.

Massachusetts Predatory Lending Law
Causing Pullback

A law passed last summer that became effective in Massachusetts on November 7 is having a negative impact on the potential supply of subprime mortgage credit. Massachusetts passed an anti-abuse law that coupled vague wording with a stringent prohibition on refinancing activity.

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