Consumer Borrowing Hits Highest Levels Since 2008
ATLANTA-Strong demand for new cars has boosted consumer borrowing to its highest level since 2008, according to a new report from Equifax. In its latest study on consumer credit trends, Equifax said consumers took $141 billion of new loans in the first two months of this year, up 12% from the same period on 2012 and 33% from three years earlier, when borrowing hit a recession-era low. Automobile loans, which rose 13% year over year, to $70 billion, accounted for nearly half of the total, according to Equifax.
Demand for student and home-equity loans also rose substantially in the first two months of the year. Lenders originated $11.7 billion of student loans in January and February, up 27% from a year earlier, and $12.4 billion of home-equity lines of credit, up nearly 16% year over year.
Fed's Bernanke Testifies On Low Interest Rates
WASHINGTON-Federal Reserve Board Chairman Ben Bernanke last week told lawmakers that his concerns about the financial stability risks from historically low interest rates have "increased a bit" and the central bank continues to factor such concerns into policy decisions. The Fed has tried to maintain a delicate balance of keeping rates low for an extended period to help improve economic growth and employment trends while monitoring the implications of its monetary policy action for the health of the financial system.
"It's a very difficult tradeoff because, as I mentioned, a weak economy means low interest rates, which creates some of the same problems, and moreover, a weak economy means worsening credit quality, for example, and that too has financial stability implications," said Bernanke. "There are tradeoffs and difficult judgments to make."
TILA Rules In Effect June 1
WASHINGTON-A prohibition on mandatory arbitration provisions in certain mortgage loans goes into effect June 1 as part of the Truth in Lending Act (TILA). Lenders now using mortgage loan documentation containing such provisions are being urged to take steps to ensure that they (and references to them) are removed from documentation to be used for any loans that will be subject to the ban. The prohibition applies to loans for which an application is received on or after June 1, 2013. It does not apply to loans for which the application was received before then, even if the loan is consummated on or after June 1. The prohibition does not affect arbitration provisions in existing documents for closed loans.
New Senate Bill On MBL Cap
WASHINGTON-Sen. Mark Udall (D-CO) has introduced the "Small Business Lending Enhancement Act of 2013," the latest legislation in Congress that seeks to raise the member business lending cap for credit unions. Udall's bill would raise that cap to 27.5% for eligible credit unions. Both credit union trade groups issued statements in support of the bill, calling the current 12.25% cap "arbitrary" and saying the increased cap would lead to the creation of more jobs. The bill has more than a dozen co-sponsors. A companion piece of legislation, The Credit Union Small Business Jobs Creation Act, was introduced in the House in February by Reps. Ed Royce (R-CA) and Carolyn McCarthy (D-NY).
Iowans Asked To Take Pledge
DES MOINES, Iowa-The Iowa Credit Union League (ICUL) has launched the Iowa Credit Union Pledge to encourage credit union members to show their support of their credit union. The pledge is part of an ongoing effort to educate members on the value of membership and legislative issues affecting their financial futures, according to the ICUL. The pledge can be found on ICUL's website: at www.iowacreditunions.com/pledge.
Tiny CU In Conservatorship
ALEXANDRIA, Va.-NCUA has assumed control of First Kingdom Community FCU of Selma, Ala. The tiny, $88,400 First Kingdom Community FCU is the second CU to be placed into conservatorship in 2013.
