US Finance World

Bloomberg said:

Feb. 5 (Bloomberg) — U.S. stocks rose, rebounding from the biggest losses since March, as investors speculated the European Union may come up with a solution for budget deficits in Greece and Spain and consumer credit dropped less than forecast.

Bah.

Here’s the shorter-term outstanding credit picture…

And the rate of change….

Yes, there was a small uptick in non-revolving debt taken on (cars?) but the credit card rate-of-change continued to blow and during the Christmas month it declined by a net $8.5 billion.

Let me also point out that last December, which allegedly was the “depths of Hell” when it came to consumer behavior, revolving credit declined by $6.6 billion.

This December revolving debt declined by 29% more than it did last Christmas season.

Now perhaps you can square that with the claims of a “good” Christmas season that had increased consumer sales, and perhaps you can claim that this somehow represents that the de-leveraging is coming to an end in the consumer space, but I cannot.

First, from a “big-picture” perspective, here’s the consumer credit outstanding graph going back to the late 1960s:

The so-called “consumer revolution” happened through “increased earnings” eh?

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Banking today seems to be a much more complicated affair than it was just 10 or 20 years ago. The advent of debit cards, online banking, the ability to link checking and savings accounts, and tons of banks competing actively for your business can be overwhelming for the average customer.

After all, most of us just want a few simple things from our bank: a safe place to keep our money, access to our cash when we need it, and the ability to charge purchases or write checks to pay for things we need in a convenient fashion.

However, banking is big business. And, where there’s money, there’s creativity. Banks are always looking for ways to make themselves more attractive. In the 1980s it was ATMs. In the 1990s, it was free checking. In the current decade, it is overdraft protection programs.

Overdraft protection sounds like a great idea. After all, who doesn’t want to be “protected from their overdrafts?” In fact, protection sounds like just the kind of thing we all should expect from our banks, right?

Still, the reality of overdraft protection is not so simple.

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Those low, low monthly minimum payments no longer will be an excuse.

Under the credit card reform law that starts to kick in Feb. 22, credit card issuers must put the bad news right upfront on your monthly bills:

If you make only the minimum payment each period, you will pay more in interest, and it will take you longer to pay off your balance.

And then they have to show you the math, such as how many months’ worth of minimum payments it would take to reduce your balance to zero and how much you would save in interest by paying off the balance in 36 months.

That’s one of many changes coming to your credit card accounts and statements courtesy of the Credit Card Accountability, Responsibility and Disclosure Act of 2009. You’re going to have new protections, and the card companies will have fewer opportunities to take advantage of you. Some of the first changes you’ll notice will be on your monthly statements.

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Over the past decade franchised mortgage brokers have experienced boom times. Mortgage Choice, RAMS, Wizard and others expanded to meet the demand for credit from the proliferation of non-bank credit providers; until recently. There’s no escaping the brutal reality of the credit crisis: it’s hitting the non bank sector hardest.

According to the Mortgage & Finance Association of Australia (MFAA) the market share of non bank mortgage originators has declined from a peak of 15 per cent to about 4 per cent; effectively bringing an abrupt halt to the trend from the late 1990s. The appeal of buying into a branded, non bank franchise may be waning.

Mortgage brokers often work in what are referred to as a franchise environment. This is distinct from a being an “independent”. A franchisor has a lot of controls placed on the mortgage brokers. Consumers do trust brands but the franchisees are disadvantaged by not being able to operate freely in their markets. Commiss

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A Ponzi scheme uses money from later investors to pay unrealistically high returns to earlier investors. Accordingly, earlier participants are more likely to have received a financial benefit than later investors. When a Ponzi scheme unravels, a key question is how to fairly distribute any recoveries to the victims. Should earlier investors be required to return the amounts they withdrew? Should the recovered funds be distributed in proportion to the amounts invested (net of any withdrawals) or in proportion to the amounts reported on the last account statements? 

Similar issues were argued before Judge Burton R. Lifland on February 2, 2010, in connection with the proposed allocation of funds recovered from Bernie Madoff (Securities Investor Protection Corp. v. Bernard L. Madoff Investment Securities LLC, 08-01789, U.S. Bankruptcy Court, Southern District of New York (Manhattan)).

The attorney for the trustee, Irving H.

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