Interested parties have until the end of this week to bid on about 5,500 artifacts from the sunken ship Titanic, some intellectual property relating to video footage and imagery of the wreck, and the rights to explore and salvage the wreckage site for more objects, the Wall Street Journal reported today. The auction is the first of its kind for the ship’s treasures and goods, and comes more than a year after Premier Exhibitions Inc., the company behind the traveling “Titanic” and “Bodies” exhibitions, filed for bankruptcy. Potential buyers are bidding on such trinkets as a bronze cherub from the grand staircase used by first-class passengers, a blue sapphire ring surrounded by 14 small diamonds, a steward’s jacket and a silver-plated chocolate pot used in the ship’s first-class restaurant. Private-equity firms and other companies have reportedly already expressed interest in the sale. Offers are due Friday, and if more than one is received, an auction is scheduled for November.
With consumers feeling better about the economy, the amount of money borrowed has reached its highest level since the Great Recession. Total consumer borrowing rose by $18.4 billion in May, the strongest gain since November's $25.1 billion increase, according to a recent report by the U.S. Federal Reserve. While household income has grown over the past decade, it has failed to keep up with the increased cost of living over the same period. To bridge the gap, more Americans rely on credit cards, one of the most expensive ways to borrow. Consumers' revolving credit, or credit cards, rose by $7.4 billion in May to $1.02 trillion, the highest level since July 2008, according to a separate report by the Federal Reserve Bank of St. Louis. Altogether, total household debt, including mortgages, student loan balances, credit cards and car loans, reached $12.73 trillion in the first quarter of this year – a record high, topping the previous peak also hit in 2008.
CFPB Director Richard Cordray fired back at Comptroller of the Currency Keith Noreika Friday, saying that the OCC cannot challenge the agency’s arbitration rules through a little-used process, the Credit Union Times reported on Friday. Cordray said that the OCC did not meet the statutory requirements needed to challenge the CFPB’s rules through the Financial Stability Oversight Council. In a letter to Noreika, Cordray said to meet the FSOC requirements, the OCC had to object to the rules earlier in the rulemaking process, which has taken two years. “At no time during this process did anyone from the OCC express any suggestion that the rule that was under development could threaten the safety and soundness of the banking system,” Cordray wrote. “Nor did you express any such concerns to me when we have met or spoken.” For instance, he said, as late as June 26, OCC staff said it had not objections to the arbitration rule.
The Consumer Financial Protection Bureau’s structure meets the requirements of the U.S. Constitution, a federal judge said Aug. 4 in an enforcement lawsuit brought by the CFPB (Cons. Fin. Protection Bureau v. Navient Corp. , M.D. Pa., 17-cv-00101, 8/4/17). The decision is the latest on the CFPB’s constitutional status, a question that’s before several courts, most prominently the U.S. Court of Appeals for the District of Columbia Circuit. It’s hearing a case that could end up in the U.S. Supreme Court. The Aug. 4 ruling also insulates the CFPB against other decisions that say it doesn’t pass constitutional muster. Navient Corp., a student loan servicer based in Wilmington, Del., sought to dismiss a suit filed by the CFPB by saying the agency is unconstitutional. Navient cited the agency’s single-director leadership, limits on the director’s removal by the president under the Dodd-Frank Act, and a funding mechanism outside the normal budget process.
Wiping out student loan debt in bankruptcy is so difficult it’s rarely an option for distressed borrowers. But there are indications that bankruptcy courts are starting to play a bigger role in addressing what is widely considered a financial crisis and a drag on the U.S. economy. While not aiming to discharge debt, about two dozen bankruptcy jurisdictions allow debtors to participate in programs that cap repayments based on income. And attorneys are having anecdotal success in negotiating with the government to get more debtors into these repayment plans even when they are in bankruptcy. Although borrowers in these types of plans may have lower default rates, according to one consumer agency, they, too, come with caveats in bankruptcy. Some debtors, in the end, may not be that much better off as interest on their loan piles up.
American consumers increased their borrowing at a slower pace in June, as the category that includes auto and student loans posted the smallest gain in a year. Still, the June increase brought overall consumer credit -- not including mortgages or other debt secured by real estate, including home-equity loans -- to a fresh record of $3.86 trillion. In addition, the total for the category of "revolving debt," primarily credit card balances also hit a new record high of $1.027 trillion. The Federal Reserve said Monday that overall consumer credit expanded by $12.4 billion in June, down from May's $18.3 billion increase and less than economists had been expecting. Revolving debt, the category that includes credit cards, climbed $4.1 billion, down from May's $6.9 billion gain. This category of debt had crossed the $1 trillion threshold in fourth-quarter 2016, not having seen that level since the Great Recession. "America's credit card balances have never been higher, but there's no reason to think they won't just keep climbing," said Matt Schulz, CreditCards.com's senior industry analyst. "Combine that with steadily rising interest rates and you have a potentially volatile mix."
The U.S. economy continues to show signs of modest growth in 2018 according to the latest forecast by the Economic Advisory Committee panel comprised of 15 leading economists from investment banking and financial institutions. “The forces that have sustained eight years of progress, such as low interest rates and improvements in labor markets, will continue into next year,” said Christopher Probyn, chairman of the group and managing director and chief economist of State Street Global Advisors. “Moreover, business and personal tax cuts, along with an increase in infrastructure spending, should boost the economy.” The U.S. economy is already at or near full employment, according to the group, which believes that job growth will taper progressively through 2018. The national unemployment rate, currently 4.3 percent, is forecast to drift gently downward and could drop to 4.0 percent or lower before the end of 2018, the group said.
The Consumer Financial Protection Bureau yesterday finalized a sweeping new rule banning arbitration agreements that prevent class actions against banks and other financial institutions, the Legal Times reported. "Arbitration clauses in contracts for products like bank accounts and credit cards make it nearly impossible for people to take companies to court when things go wrong," said CFPB Director Richard Cordray. "These clauses allow companies to avoid accountability by blocking group lawsuits and forcing people to go it alone or give up. Our new rule will stop companies from sidestepping the courts and ensure that people who are harmed together can take action together." The move comes more than a year after the CFPB proposed the rule for arbitration agreements, calling such terms “contract gotchas” that allow the financial industry to sidestep the legal system. In taking the final step to push forward with the rule, the CFPB crossed off a bucket-list item for Cordray as he enters the final year of his five-year term and mulls a run for governor in his home state of Ohio. The rule will take effect 60 days after it is published in the Federal Register and apply to contracts entered into more than 180 days after that date.
Consumer credit expanded in May at the fastest rate in seven months, in what could be a sign that strong levels of confidence will lead to growth in consumption, MarketWatch.com reported yesterday. U.S. consumer credit rose at a seasonally adjusted annual rate of 5.8 percent, for growth of $18.4 billion, in May, the Federal Reserve said yesterday. Revolving credit like credit cards jumped 8.7 percent. Non-revolving credit, typically auto and student loans, increased 4.7 percent. The monthly growth of consumer credit often seesaws, but the first quarter’s 4.8 percent growth was the slowest quarterly expansion in more than six years.
Delinquencies in both open- and closed-end loans rose in the first quarter of 2017, according to the ABA Consumer Credit Delinquency Bulletin released today. The rise in closed-end delinquencies was driven by an uptick in late payments on auto loans, the report noted. The composite ratio, which tracks delinquencies in the closed-end installment loan categories, rose 5 basis points to 1.56 percent of all accounts, but remained well below the 15-year average of 2.17 percent. Delinquencies in indirect auto loans rose 8 basis points to 1.83 percent of all accounts, while direct auto lending delinquencies increased by 9 points to 1.03 percent of all accounts. Both remained well beneath 15-year averages, however. In the home-related category lines tracked, home equity line of credit delinquencies and home equity loan delinquencies rose to 1.11 percent and 2.59 percent, respectively. Property improvement loan delinquencies held steady at 0.98 percent of all accounts. Meanwhile, bank card delinquencies rose 5 basis points to 2.74 percent of all accounts.