Battle Plan Shifts on Dodd-Frank
President Barack Obama's victory means the 2010 Dodd-Frank law will stand. But the finance industry could still cut some parts of the law because changes now are politically less risky for the administration and Democrats in Congress. Some changes have already been made to Dodd-Frank particularly when changes can be shown to benefit the broader economy rather than just the biggest financial firms. The House Financial Services Committee has adopted several Dodd-Frank changes with bipartisan support, many of them tweaking the derivatives provisions banks and nonfinancial firms have protested. The financial sector still has other means to delay or even overturn some parts of the law. No fewer than five Dodd-Frank rules, with estimated upfront costs of more than $4 billion, have been rejected by the courts or are the subject of lawsuits. Story by Victoria McGrane and Jean Eaglesham for the Wall Street Journal.
Beware of Bank 'Deposit Advance' Loan Products
Some banks are offering loans that are very similar to what payday lenders offer. But banks reject the payday loan label, and have given their products other names. Wells Fargo's product is called "Direct Deposit Advance," and Regions Bank's account is called "Regions Ready Advance." "It is important to note this service is an expensive form of credit designed for short-term borrowing needs," said Wells Fargo. "Alternative forms of credit may be less expensive and more suitable to your long-term financial needs." Wells Fargo charges an "advance fee" of $1.50 for every $20 borrowed, so a $100 advance would cost $7.50 in advance fees. Story by Pamela Yip for the Dallas News.
Study Uncovers 10,000 Identity Fraud Rings in U.S.
A new study found that there are more than 10,000 identity fraud rings throughout the country. The study by ID Analytics found many of these rings were made up of career criminals, but also a large number consisted of groups of friends or members of families. The southeastern United States has the greatest concentration of fraud rings. Alabama, North Carolina, South Carolina, Georgia, Mississippi, Texas and Delaware were among the states with the highest number of fraud rings. A significant number of fraud rings were found in rural areas of the country. Story by Natalie Rutledge for LowCards.com.
Child's Education, but Parent's Crushing Loans
According to federal data, there are a record number of young adults in financial distress due to their student loans. But millions of parents who have taken out loans to pay for their child's college education make up a less visible generation in debt. In the first three months of this year, the number of borrowers of student loans age 60 and older was 2.2 million, a figure that has tripled since 2005. That makes them the fastest-growing age group for college debt. All told, those borrowers owed $43 billion, up from $8 billion seven years ago, according to the Federal Reserve Bank of New York. Almost 10 percent of the borrowers over 60 were at least 90 days delinquent on their payments during the first quarter of 2012, compared with 6 percent in 2005. The consequences of such debt can be dire because borrowers over 60 have less time--and fewer opportunities--than younger borrowers to get their financial lives back on track. It can wipe out a retirement fund and send the borrower into bankruptcy. Story by Tamar Lewin for The New York Times.
Facebook Makes You Spend More, Research Suggests
People who take part in online networking feel better about themselves, according to some recent research. But this could also make you spend more, or even eat more. Two marketing professors say their research shows that using online social networks can influence behavior by reducing self-control and have significant effects on consumer judgment and decision-making. People who use Facebook more tend to have a higher body-mass index, increased binge eating, carry more credit card debt and have lower credit scores. Story by Herb Weisbaum for Today.
Using Your Credit Card to Maximize Holiday Shopping
Shoppers and retailers are both turning their attention to the holiday season. Consumers will spend an average of $749.51 on their holiday shopping, up 1.2 percent from the $740.57 spent last year, according to the National Retail Federation. Shoppers can save money by using their rewards card to help pay for holiday shopping. Here are some ideas for making the most of your credit cards during the holidays. Story by Bill Hardekopf for LowCards.com.
The Power of Plastic
More revenue is being extracted from small businesses by credit card payment networks and card-issuing banks taking advantage of their market power. Visa and MasterCard dominate the market, along with Discover and American Express. Among issuers, the top 10 credit-card-issuing banks accounted for more than 90 percent of outstanding credit card debt in 2009. Small businesses have long been limited in their ability to steer customers toward credit cards that charge lower fees, partly as a result of payment-network rules and partly because they fear inconveniencing their customers and reducing sales. This strategy seems to be working well for credit card issuers. A recent report from the Federal Reserve notes that credit card earnings have almost always been higher than returns on all commercial
bank activities. Story by Nancy Folbre for the New York Times.
Libor Probe Wrangle
Nearly five months after the fierce public reaction to Barclays’ settlement of rate-rigging allegations with U.S. and U.K. regulators, several other banks in Europe and the United States are negotiating similar settlements. The FSA, one of the agencies leading the probes throughout the world, is worried about the appearance of having the first two banks that settle Libor-rigging allegations both hail from the U.K. and has voiced a preference to have the next settlement involve a bank from another country. After Barclays’ settlement, the timing of subsequent bank settlements has been repeatedly delayed, and the probes have grown in complexity. Additional regulators in various countries launched their own investigations, making it harder to coordinate settlement negotiations across jurisdictions, according to
people briefed on the investigations. The banks involved have been looking to settle with several regulators at once. Story by David Enrich and Max Colchester for the Wall Street Journal.
LowCards.com Weekly Credit Card Rate Report
Based on the 1000+ cards in the LowCards.com Complete Credit Card Index, the average advertised APR for credit cards is 14.29 percent, identical to last week. Six months ago, the average was 14.26 percent. One year ago, the average was 14.14 percent.