Receiving Wide Coverage ...
What crisis?: Commercial banks have managed to mostly shrug off the meltdown in the American retail business by holding mostly asset-based loans, which are typically backed by stores' inventories and accounts-receivable and are considered very safe. Banks have made asset-based loans to 15 of the 21 retailers that have filed for bankruptcy so far this year, "but those loans are all repaid or expected to be repaid," the Wall Street Journal reports. The industry's troubles are "bad for retail, but not so bad for banks," a bank analyst at Evercore ISI said.

Spooked: But banks are cutting back on their exposure to auto loans, "fearing that consumers have taken on more debt than they can handle," the Financial Times reports. While total auto loans rose to $1.17 trillion at the end of the first quarter, up almost 70% since 2010, the amount held by banks fell by $1.6 billion in Q1 to $440 billion, "the first sequential drop in car loans outstanding at commercial banks in at least six years," the paper said. That suggests "that banks, wary of repeating the mistakes of the subprime mortgage crisis, have been spooked by rising delinquencies and the threat of litigation."

Cars on a dealer's lot.
Bloomberg News

Looking up: Overall, though, Americans' credit scores are getting better. The average consumer credit score hit a record 700 in April, at the same time the number of people with scores below 600 hit a new low of 40 million, or 20% of those with credit scores, according to Fair Isaac. The improvement is being attributed to falling unemployment, a growing economy and the passage of time. "In ever-growing numbers, the worst personal financial setbacks, namely foreclosures and bankruptcies, are falling off Americans' credit reports," the Journal reports. "More than six million U.S. adults will have personal bankruptcies disappear over the next five years," according to a recent report by Barclays.

Close call: A group of Royal Bank of Scotland investors has accepted a £200 million settlement from the bank to end their suit alleging that RBS misled them before they agreed to invest more money in the bank just before the 2008 financial crisis. "The settlement may spare RBS the prospect of seeing former chief executive Fred Goodwin cross examined in court," the WSJ said. "Executives at RBS wanted to keep it that way." Wall Street Journal, Financial Times

Wall Street Journal
How big is big?: Federal lawmakers are trying to decide how big a bank has to be to come under the strictest rules of Dodd-Frank. "One of the few points of bipartisan agreement is that $50 billion isn't the right number," the Journal reports. "Lawmakers can't agree on a better one, though."

Refi madness: U.S. homeowners are refinancing their mortgages to cash out the equity in their homes "at levels not seen since the financial crisis," the Journal reports. More than half of refis in the first quarter were cash-outs, according to Freddie Mac, the highest level since the fourth quarter of 2008.
"The cash-out level is still well below the almost 90% peak hit in the run-up to the housing meltdown," the Journal reports. "But it is up sharply from the post-crisis nadir of 12% in the second quarter of 2012."

Financial Times
Coming up: Banks are concerned over meeting a data protection deadline.

New York Times
Failure to launch: Orchard Platform, which provides loan data to financial institutions, has failed to follow through on its ambitious plan last year to launch its own trading platform for loans. The company has "burned through more than $5 million in legal fees and other expenses," the Times reports, and has completed "just a scattering of transactions." Next month, the company plans to unveil a "scaled-back version of the platform." Orchard's struggles, the paper comments, "reveal just how hard it can be for a new entrant — even one with successful founders, a promising service and big-name investors — to break into a highly regulated industry," the Times says.

Big payments deal: First Data agreed to buy CardConnect, a much smaller payments processor, for about $750 million in cash plus the repayment of debt. First Data handles about $2.2 trillion worth of transactions annually, while CardConnect processes about $26 billion worth.

Connecting the dots: Google says it can now "connect the dots between the ads that it shows its users and what they end up actually buying," the MIT Technology Review reports. "This is a crucial link for Google's business," it says. "If Google can show that someone who saw an ad for a furniture store in Google Maps, say, then went and made a big purchase at that store, the store's owner is much more likely to run more ads."

"Higher scores lead to more available credit. We'd see more activity in terms of loan approvals and credit-card approvals, more spending and that would have a ripple effect across the economy, increasing aggregate demand for goods and services." — Cris deRitis, senior director in the economics group at Moody's Analytics.

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