Thursday, December 31, 2009

Dow Jones Economic Sentiment Indicator Up Only Slightly to 38.7; Suggests Recovery Could Be Losing Momentum

/PRNewswire/ -- The media's coverage of mixed economic news led to a marginal rise in the Dow Jones Economic Sentiment Indicator (ESI) in December. The ESI rose to 38.7, up only minimally from 38.3 in November. This slight rise is the ESI's third weakest performance in a year and much less convincing than increases in October and November.

While the ESI ends the year significantly higher than the 22.4 level it registered in January at the start of the year, December's weaker performance means the indicator failed to break back above the level it held before the collapse of Lehman Brothers in September 2008.

The Dow Jones Economic Sentiment Indicator aims to predict the health of the U.S. economy by analyzing the broad coverage of 15 major daily newspapers in the U.S. During December, media coverage that included references to better-than-feared holiday retail sales was outweighed by articles referencing mixed or negative economic news including continuing double-digit unemployment and slower economic growth.

"The ESI's significantly slower rate of improvement in December suggests the U.S.'s economic rebound could be starting to level off and that non-farm payrolls neither advanced nor declined by much during the month," Dow Jones Newswires 'Money Talks' columnist Alen Mattich said.

The ESI represents one of the most comprehensive and far-reaching examinations of media coverage as an economic indicator. The ESI's back-testing to 1990 shows that the ESI clearly highlighted the risk that the U.S. economy was sliding into recession in 2001 and 2008 and suggests the indicator can help predict economic turning points as much as seven months in advance of other indicators.

Unlike some other indicators where 50 is a clear break-point between recession and recovery, the ESI needs to be read with reference to longer trends. Based on the ESI's performance since 1990, previous recoveries have been marked by substantial month-to-month gains, with a jump of three points seeming to be a sign of significant improvement. A drop below 50 marks the point at which there is a clear risk of a slowdown.

The Dow Jones Economic Sentiment Indicator is calculated using a proprietary algorithm through Dow Jones Insight, a media tracking and analysis tool. More information about the Economic Sentiment Indicator and its development is available at .

Dow Jones Insight uses innovative text mining and analytic technologies to help organizations keep informed about relevant issues, news, conversations and trends emerging in mainstream, Web and social media. Dow Jones Insight's global content collection includes more than 25,000 news and information sources as well as blogs, message boards, and posts from YouTube and Twitter.

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Monday, December 28, 2009

Five Gifts to Give Yourself in the New Year

/PRNewswire/ -- The holidays are a wonderful time full of having fun with friends and family and giving gifts to the people we care about. For many consumers, however, the joy of the season will soon be replaced by the stress of paying holiday debt.

"It is easy to get caught up in the excitement of giving during the holidays," said Mechel Glass, Director of Education for Consumer Credit Counseling Service of Greater Atlanta (CCCS). "But many overdo a good thing and then struggle to make even minimum payments on their credit cards."

CCCS of Greater Atlanta advises consumers to top their list of New Year's resolutions with a commitment to improve their financial outlook. To help consumers tackle what can be a stressful time, CCCS suggests following the following tips:

1. Know how much you owe. A common mistake is not keeping track of debt.
The thinking is that as long as you can keep up with the payments,
everything is fine. However, if circumstances change due to a layoff
or other unexpected event, you could find yourself unable to make
payments and in immediate financial stress. The only way to understand
what you are facing is to have a realistic picture of what you owe.
Gather all your credit card statements and other bills and add up the
2. Create a spending plan. The easiest way to take control of your money
is to set out a plan for how you will spend it. This is not glamorous
and can be something of a task, but it gives you the power to decide
where your money goes. The plan should be flexible and include monthly
expenses such as mortgage or rent, utilities, food, transportation,
entertainment, clothing, etc. Make sure your expenses are not more than
your income. If they are, go back to the plan and make adjustments.
3. Pay off credit card debt. The average household has more than to $8,300
in credit card debt (Nilson Report, April 2009) and the interest paid
on those balances can be as high as $1,500 a year. Just think of what
you could do with an extra $125 a month in your budget! Stop charging
additional purchases today and make a commitment to yourself that once
you have paid off your debt, you will not charge any purchases unless
you have a plan in place to pay off the balance in 90 days or less.
Sacrifices now will mean less stress and a better financial future.
4. Build a savings cushion. Once you have paid off your credit card
balances, you should begin to build a savings cushion for emergency or
unexpected expenses or if you lose your job. Your goal is three to six
months of living expenses put aside in a savings account. With this
cushion in place, when the refrigerator stops working, your car's
transmission gives out or your mother-in-law moves in, you will not
have to put those unexpected expenses on a credit card.
5. Develop a strategy for your financial future. Set aside time at least
twice a month to manage your finances including paying bills, balancing
your checking account and analyzing your expenses. Begin thinking
about, and planning for retirement--consider when you would prefer to
retire, how much money you will need to live the lifestyle of your
choice and what you need to do now to get there. Establish a retirement
fund and contribute to it on a regular basis.

Not sure where to start? If you are feeling overwhelmed, there is help. CCCS of Greater Atlanta provides confidential budget counseling, money management education, debt management programs and other services to help consumers. Contact CCCS at 800-251-CCCS or online at

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Tuesday, December 22, 2009

Equifax Data Show U.S. Consumer Payment Trends Continue to Deteriorate

/PRNewswire/ -- Consumer delinquency rates for bankcards, first mortgages and home equity lines of credit again rose month-to-month in November, according to Equifax Inc.'s (NYSE:EFX) monthly Credit Trend Report.

Home mortgages at least 30 days late reached another record of 7.91 percent in November (in total dollars), up from 7.76 percent in October and 7.65 percent the previous month. This record rate is a significant increase over the 5.83 percent rate of November 2008 and the 3.93 percent rate of November 2007.

In addition, home equity lines of credit (HELOC) available to consumers are now an estimated $68 billion lower and the number of accounts is an estimated 855,000 lower than the September 2008 peak of approximately 14.5 million accounts. This represents an improvement from October when outstandings were $77 billion lower and accounts were lower by approximately 934,000. Delinquency rates have crept up from 3.39 percent in October to 3.43 percent in November. These rates far exceed the 2.95 percent rate of November 2008 and the 1.92 percent rate of November 2007.

"The story of 2009 continues to be one of consumer retrenchment and credit tightness as people strive to pay down debt or are forced to abandon it, and lenders more aggressively manage risk in their portfolios," said Dann Adams, president of Equifax's U.S. Consumer Information Solutions.

U.S. consumers reduced their debt by more than five percent or $575 billion from a year ago. First mortgage debt dropped 5.4 percent; credit cards by 7.3 percent and auto loans by 9.5 percent. The declines put overall consumer debt at September 2007, pre-recession levels of about $11 trillion.

Bankcard issuers continued a year-long trend of closing accounts and reducing credit lines. Card risk management programs have accelerated since July of 2008, reducing card credit lines by $803 billion and the number of accounts by 93 million. Delinquency rates for bankcards picked up notably since the end of 2008 in tandem with rising unemployment. The November 2009 60-days-past-due rate of 4.62 percent is almost a full percent higher than the November 2008 rate of 3.76 percent. However, the rate still remains below the peak of 4.79 percent in May 2009.

In addition, the number of bankcard accounts opened in September -- 2.4 million -- was 45 percent lower than September 2008. Year-to-date, the number of new accounts is down 46 percent from the same period in 2008. Also, lenders are being more selective about who they give credit to as the percent of cards issued to those with credit scores greater than 740 grew from about 30 percent in 2007 to almost 51 percent so far this year.

With U.S. home prices declining, originations for home equity lines of credit are also declining. In September of this year (the most recent month that data is available) originations were 75,600, 36% below the September 2008 total of 117,800. Year-to-date 2009 new home equity lines opened -- 761,000 -- were 47 percent below 2008 year-to-date totals of 1.5 million. This continues a trend from 2008 when total originations were 1.7 million lines, 41% below the total for 2007 (2.9 million lines).

Furthermore, home equity lines have primarily been issued to lower-risk consumers. Eighty-one percent of the consumers who received HELOCs in September 2009 were considered low-risk (Equifax Risk Scores of 740 and above) an increase from 66% in September of 2007. In conjunction with declining home prices and home equity, average home equity lines are 25% lower over the past two years, declining from approximately $105,000 to $79,000 today.

"The contraction in home equity lines is a reflection of the credit crunch both consumers and small businesses are facing," said Adams. "Restrictions in this traditional source of financing make finding credit harder than ever."

Regionally, home equity line originations have diminished in states where home price values have been the most volatile, notably California and Florida. California comprised almost 20% of line originations two years ago with nearly 38,000 originations in September 2007 but dropped to second with about 7% or 5182 originations in September 2009. Florida, once the second top state by originations has dropped to ninth.

The dramatic impact of these shifts is illustrated by new credit lines available in California declining from $6 billion in September 2007 to well under $1 billion today.

Data for the Credit Trends Monitor Report is sourced from Equifax's nearly 200 million files of US consumers using credit.

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Friday, December 18, 2009

Consumer Groups Call On Fed to Adopt Stricter Gift Card Rules

/PRNewswire/ -- In comments filed with the Federal Reserve Board today, consumer groups urged regulators to rein in gift card fees and related terms and conditions that can quickly diminish their value. The Fed is considering a set of proposed gift card regulations that are required under the Credit CARD Act of 2009 and will go into effect on February 22, 2010.

"Banks earn billions every year from gift card fees just because consumers don't always get around to using their cards right away," said Michelle Jun, staff attorney with Consumers Union. "Congress passed limits on gift card fees earlier this year and now it's up to the Fed to make sure consumers are fully protected. The Fed should impose reasonable limits on fees so consumers stand a better chance of enjoying the full value of the gifts they receive."

Many consumers end up losing money on their gift cards because they don't redeem them right away. A recent Consumer Reports poll found that one quarter of those given gift cards last holiday season still have at least one card they haven't used and 11 percent of recipients have four or more. The TowerGroup estimated that about $8 billion remained unredeemed on gift cards in 2006.

In a letter to the Fed today, Consumers Union, Consumer Action, Consumer Federation of America, and the National Consumer Law Center urged regulators to:

-- Cap the amount that gift card issuers can charge for inactivity fees.
The Credit Card Act of 2009 prohibits card issuers from charging
inactivity fees on cards if they have been used within the past 12
months. After twelve months of inactivity, card issuers will be
allowed to charge a monthly inactivity fee. Consumers Union urged the
Fed to protect consumers more fully by limiting the amount that that
can be charged for inactivity to no more than the actual cost incurred
by card issuers for maintaining the card.

-- Limit fees on low value cards. Consumers Union urged the Fed to
follow the lead of states like California, Oklahoma and Washington
which have limited fees that can be charged for inactivity when the
balance on the card is $5 or less. These states limit card issuers to
charging a $1 per month fee.

-- Limit when inactivity fees can be charged. Many consumers report that
they face difficulties using their gift cards because merchants often
will not accept their cards when they don't cover the full cost of the
purchase or when they cannot determine the remaining amount on the
card. Consumers Union urged the Fed to count such transactions as
"activity" on the card so that consumers don't start incurring
inactivity fees when they've attempted to use them.

-- Make sure consumers are protected from early expiration of gift cards.
Under the Credit Card Act of 2009, gift cards cannot expire less than
five years from the date the card was purchased or money was last
added to the card, whichever is later. However, many gift cards are
stamped with a "valid thru" date," which is the estimated lifespan of
the card's magnetic stripe and could be less than five years from the
time the card was purchased. Consumers Union urged the Fed to require
card issuers to select expiration periods long enough that the card
will have at least five years of remaining life when it is purchased.
Card issuers should be required to disclose on the card that the card
may be valid beyond the date imprinted on it and to provide an 800
phone number on the card that consumers can use to easily find out
when their cards actually expire.

-- Protect consumers from losing funds on lost or stolen prepaid cards.
Prepaid cards are reloadable cards that can be used to make payments
similar to debit cards and are becoming increasingly popular. But
consumers using prepaid cards don't enjoy the same safeguards as debit
cards if their cards are lost or stolen and could end up losing all of
their funds. Consumers Union urged the Fed to ensure that prepaid
cards come with the same protections as debit cards so the consumer's
liability is limited to $50 and he or she can recover missing money.

The new gift card regulations will cover both retailer gift cards and prepaid general use gift cards (the ones that often are branded as Visa, American Express, MasterCard, or Discover). The law does not cover rewards, loyalty, telephone or promotional cards and does not cover paper gift cards or paper gift certificates.

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Friday, December 11, 2009

Financial Reform Approved Today by U.S. House Contains More Good Than Bad for Consumers, but More Work Needed, Says Consumer Watchdog

/PRNewswire/ -- Consumer Watchdog applauded approval by the U.S. House of Representatives of its financial regulatory overhaul bill, H.R. 4173, including the creation of a strong consumer regulator, but cautioned that more must be done to protect American homes and savings and prevent the big banks and Wall Street from dragging the nation into the next economic crisis.

An amendment to the bill that would have eliminated the consumer regulator from the bill entirely was defeated by just 15 votes, demonstrating the continuing efforts of the financial industry, which gave $28 million to members of the House this year, to defeat real reform.

Critical protections for American consumers, homeowners and investors are missing from the House bill. Problems that still must be addressed include:

-- Limits on the authority of states to act on citizens' behalf to
address financial abuses (inserted into the bill late Wednesday after
New Democrats held the bill hostage; read the Consumer Watchdog
analysis of financial industry contributions to New Dems and amendment
sponsors here:
-- Loopholes in derivatives regulation proposal that could leave 30% or
more of the multi-trillion dollar market unregulated
-- Exemptions for some public firms from outside audits of their books
(rolling back provisions of post-Enron accounting reforms)
-- Little authority to break up banks that endanger the financial system
with their size or behavior
-- No relief for struggling homeowners to allow bankruptcy judges to
adjust the terms of home mortgages

"It's vital that the consumer protection agency withstood the assault from the banks, but restrictions on states' ability to protect consumers and exemptions for some financial institutions must still be addressed. The House bill takes critical steps towards reform, but was weakened by the financial firms who want to avoid strong oversight," said Carmen Balber, Washington director for Consumer Watchdog. "We look to the Senate to strengthen financial reform as it moves forward so consumers are truly protected against abuses and outrageous treatment by lenders and financial institutions."

Download a detailed analysis of the good and bad in the bill, compiled by Americans for Financial Reform, here:

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Council Applauds House Passage of Financial Reform Bill

/PRNewswire/ -- The Council of Institutional Investors applauds the House of Representatives' efforts to strengthen the regulation of the U.S. financial system through the reforms contained in the Wall Street Reform and Consumer Protection Act of 2009 (H.R. 4173).

The Council is grateful to Representative Barney Frank (D-Mass.), chairman of the House Committee on Financial Services and prime sponsor of the bill, for his leadership on this important and comprehensive legislation.

"The House of Representatives has taken a significant step toward restoring trust in U.S. financial markets," said Ann Yerger, executive director of the Council of Institutional Investors. The Council believes that the global financial crisis revealed critical gaps in the regulation of U.S. markets and the urgent need for improvements in corporate governance. "The Wall Street Reform and Consumer Protection Act gives regulators and investors new tools to oversee financial firms more diligently and promote market stability," Yerger added.

Many provisions of the act are in tune with Council priorities and the recommendations of the Investors' Working Group, which the Council has endorsed. In particular, the Council welcomes the act's affirmation of the authority of the Securities and Exchange Commission (SEC) to give shareowners the right to place their nominees for directors on company proxy cards. Making it easier for investors to nominate their own candidates for director would invigorate board elections and make directors more responsive, thoughtful and vigilant.

The Council also lauds measures in the legislation that enhance the oversight and accountability of credit rating agencies and bolster the resources of the SEC. However, the act's provisions to regulate over-the-counter derivatives trading, while an improvement, need to be strengthened.

Passage of the Wall Street Reform and Consumer Protection Act of 2009 marks progress toward an urgently needed, broad overhaul of financial markets and corporate governance regulation. The Council looks forward to Senate approval of comprehensive regulatory reform legislation next and is eager to work with Senate Banking Committee Chairman Christopher Dodd (D-Conn.) and Senator Richard Shelby (R-Ala.), ranking member of the Senate Banking Committee, on the proposed Restoring American Financial Stability Act of 2009.

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Monday, December 7, 2009

State Bank and Trust Company Acquires Assets and Deposits of The Buckhead Community Bank and First Security National Bank from FDIC

/PRNewswire/ -- Georgia Department of Banking and Finance and the Office of the Comptroller of the Currency announced December 4 that State Bank and Trust Company has agreed to acquire assets and deposits of The Buckhead Community Bank and First Security National Bank, in a transaction facilitated by the Federal Deposit Insurance Corporation (FDIC).

State Bank is one of Georgia's healthiest and best capitalized community banks with branches throughout Middle Georgia and Metro Atlanta. As of December 5, 2009, all bank branches previously owned and operated by Buckhead Community Bank and First Security National Bank will become branches of State Bank.

The Buckhead Community Bank was founded in 1997 in Atlanta with branches in Buckhead and Midtown, as well as Sandy Springs, Alpharetta, Cobb County, Cumming and Gainesville. As of Sept. 30, 2009, the bank had $856.2 million in assets and $813.7 million in deposits.

First Security National Bank was founded in 1985 in Norcross, Georgia with branches in Atlanta, Cumming, and Canton. As of Sept. 30, 2009, First Security had more than $128 million in assets and $123 million in deposits.

The acquisitions became effective at the close of business on Friday, after regulators closed the banks and named the FDIC as receiver. The FDIC then approved the whole bank acquisitions with loss share by State Bank, which includes all deposits, loans and other assets.

State Bank was determined the winning bidder after submitting to the FDIC a bid for the assets and deposits of the banks. With FBR Capital Markets serving as placement agent, State Bank previously raised close to $300 million, including investments from the executive management team, to provide the capital to facilitate these acquisitions.

This is the second FDIC transaction that State Bank has completed. In July 2009, State Bank acquired certain assets and deposits of the bank charters owned by Security Bank Corp. That acquisition made State Bank the market leader in Middle Georgia with a presence in Metro Atlanta. Evans and the State Bank management team previously led Flag Financial Corp., which was acquired by RBC Centura in 2006.

"With the addition of these two established community banks, State Bank solidifies its position as one of the best capitalized and largest community banks in metro Atlanta," said Joe Evans, chairman and CEO of State Bank. "We are especially pleased to have secured a presence in Buckhead, where my team and I were so successful at Flag Bank."

"We have made great progress with our integration of the former Security Banks. Our strong capital position and depth of experience allows us to continue to pursue other opportunities that fit our strategic goals," Evans said. "As we stated previously, developing a significant presence in Metro Atlanta is a central part of our strategy."

"Our first order of business is to assure the customers of these banks that their deposits are safe, sound and readily accessible," Evans added. "State Bank is one of the healthiest financial institutions in Georgia, with a sound balance sheet and very strong capital ratios."

Customers of The Buckhead Community Bank and First Security National Bank should continue to use their existing branches, checks, ATM or debit cards. If clients have any questions regarding their accounts involved in this transaction, they should continue to use the same channels as they have in the past, including contacting their local branch. All offices and branches will be open during their normal days and hours as in the past.

For more information, bank customers can contact State Bank at 1-800-414-4177 or visit their branch location. They can also go to

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Friday, December 4, 2009

Market Gains in November Boost Funding Status of U.S. Pensions, According to BNY Mellon Asset Management

/PRNewswire/ -- U.S. stocks rose 5.7 percent in November, contributing to a 2.6 percentage-point improvement in the funded status of the typical U.S. corporate pension plan, according to monthly figures published by BNY Mellon Asset Management. The funded status of the typical plan improved to 82.5 percent at the end of November, which was the highest level since May, and up from 79.9 percent at the end of October, according to the BNY Mellon statistics.

Assets for the typical U.S. corporate plan rose 3.6 percent, outpacing the 0.2 percent gain in liabilities during the month, which reflected interest accruals as the discount rate for November was unchanged from October. For the year, through November 30, the funding ratio for the typical plan is up 8.6 percentage points, as represented by the BNY Mellon Pension Liability Index.

"U.S. corporate pension plans continued their road to recovery as domestic and international equity markets registered strong results," said Peter Austin, executive director of BNY Mellon Pension Services, the pension services arm of BNY Mellon Asset Management. "Equities have rallied in eight of the last nine months and have been the driving force for the funding improvement. Liability discount rates are only 14 basis points lower for the year, which has limited the impact on pension plan liabilities. Plan sponsors that maintained their equity allocations, which hasn't been easy given market volatility, have been rewarded for their commitment to their strategic asset allocation."

Plan liabilities are calculated using the yields of long-term investment grade corporate bonds. Lower yields on these bonds result in higher liabilities.

"With funding levels near 2009 highs and 2010 financial planning underway in many organizations, there is increased interest in discussing pension risk reduction programs," said Austin. "These programs would include new or increased allocations to liability driven investing (LDI) strategies. Plan sponsors remain fearful of plan surplus/deficit volatility, which remains a relevant topic given the fragility of the global markets."

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Thursday, December 3, 2009

The Consumer Credit Bureaus are Unraveling American Self-Reliance and Compromising Our Greatest National Assets: The Individual and Small Business

/Standard Newswire/ -- The Consumer Credit Reporting Bureaus, which purport to help lenders
evaluate risk, control the flow of credit and encourage fiscal responsibility, have instead played a significant role in destabilizing the economy and are impeding America's recovery.

It is a predatory system that seizes on financial hardships and turns short-term setbacks into long-term liabilities. For the small business owner, he risks losing not only his business but also his personal livelihood and often a lifetime of investment.

And the nation loses its critical buffer: the once-resilient small business, when 'big business' falters.

"The Consumer Credit Bureaus have been ruthlessly chipping away at small business and are now derailing America's economic recovery. We created the website (, Video-short and Petition as vital tools for change; including examining recent comments by President Obama and Federal Reserve Chairman Bernanke," says small business owner, Deborah Fineout-Launey, of marketing firm LHH&F.

"Second mortgages, personal credit cards, large personal guarantees and the Consumer Credit Score should not be the tools for corporate lending. A national summit on small business is meaningless without lending reform," says Ms. Fineout-Launey.

When economic setbacks or downturns occur, many in the economy are affected - not because of
credit 'abuse.'

Yet, in this system, the small business owner, working in good faith to stabilize his business and
ride out the economy, finds that:

· A personal debtor's prison quickly arises;
· Leading to usurious fees;
· Loss of essential banking relationships;
· Credit defaults increase;
· Assets, personal and corporate, are stripped;
· Putting all parties' investments in escalating risk

The result is the unmerited loss of viable small businesses, loss of essential tax revenues, rampant unemployment, loss of real estate leases, healthcare, personal livelihoods, home foreclosures, and a dangerously weakened middle class.

"It is time to abolish the Consumer Credit Report and Score from small business lending and, frankly, in general. It reduces the small business owner's significant investment, and the investment of his lenders, to a gamble of epic proportions. It is a matter of moral conscience and economic necessity," she adds.

Robert Launey and Deborah Fineout-Launey are small business owners in New York, committed to drawing attention to the economic fallout created by the Consumer Credit Report and Score in small corporate lending.

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