Consumer Spending Gives Some Retailers a Lift, But Risks Abound - ABI

U.S. consumers ramped up spending last month, supported by low unemployment, rising confidence and a sense their personal finances have been repaired a decade after the housing crisis spurred a mission to pare back debt, the Wall Street Journal reported today. But there is a catch: Households are again running up debt, and they are saving less, which could constrain spending in the future. Sales at U.S. retailers rose a larger-than-expected 0.6 percent in July, the biggest monthly gain since December, the Commerce Department said yesterday. Americans spent more for cars, furniture, home-improvement supplies and, more than anything, online goods, including purchases during Inc.’s annual “Prime Day” event. Retail sales in June were also far higher than previously reported.

CFPB Finds Percentage of Borrowers with $20K in Student Debt Doubled over Last Decade - CUInsight

The Consumer Financial Protection Bureau (CFPB) yesterday released a new report finding that nearly half of student loan borrowers leave school owing at least $20,000 – double the share of borrowers a decade ago, according to a press release. The Bureau also found that more borrowers are taking out student loans later in life, and fewer borrowers are paying down their student debt in five years. A separate CFPB report found that record student debt and associated borrower stress is spurring more employers to offer student loan repayment benefits to their employees.  The Article cites: CFPB Data Point: Student Loan Repayment Report.

TransUnion: Mortgage Delinquencies Hit New Post-Recession Low - HousingWire

Mortgage delinquencies are continuing to fall, hitting a new low in the second quarter, a report from TransUnion, one of the three largest credit reporting agencies in the U.S., showed, reported yesterday. This confirms Tuesday’s report from S&P Dow Jones Indices and Experian, which showed that the average mortgage default rate hit its lowest level in a decade. Experian is also one of the nation’s largest credit reporting agencies, explaining the similar findings in both reports. TransUnion’s report showed that mortgage delinquency rates dropped below 2 percent for the first time in nearly 10 years as it hit 1.93 percent in the second quarter. This is down 16.5 percent from the second quarter of 2016, when it decreased to 2.3 percent.

More Borrowers Are Defaulting on Their ‘Green’ PACE Loans - ABI

Loan defaults in a popular program meant to finance energy-saving home upgrades have increased substantially, despite lenders’ claims that few borrowers have missed payments, the Wall Street Journal reported today. The small, high-interest-rate loans were made as part of the Property Assessed Clean Energy program (PACE), a nationwide initiative designed to help people afford solar panels, energy-efficient air-conditioners and other “green” appliances. PACE loans are among the fastest-growing types of loans in the U.S. Private lenders in the PACE program have told Wall Street investors, as well as local and federal government officials, that borrower defaults are rare and that no homeowners have gone into foreclosure as a result of the program, according to investors and public officials. But a Wall Street Journal analysis of tax data in 40 counties in California — by far the biggest market for PACE loans — shows that defaults have jumped over the last year. Roughly 1,100 borrowers have missed two consecutive payments this year through the tax year that ended June 30, compared with 245 over the previous year. That means they are in default, and could potentially have their homes auctioned off by local governments within five years.

Household Debt Hits New Record High, Credit Card Delinquencies Rising - Washington Examiner

Household debt hit a new record high in the second quarter of 2017, and credit card delinquencies are on the rise, according to a new report from the Federal Reserve Bank of New York on Tuesday, the Washington Examiner reported. The report marked the first time since 2009, when the country was still reeling from the financial crisis, that the economy saw a year-over-year rise in people falling behind on credit card payments. Total household debt rose $114 billion in the second quarter to $12.84 trillion, according to the report, eclipsing the previous all-time peak set in the first quarter. Researchers at the New York Fed noted that, unlike in 2008 when the level of debt first approached $13 trillion, there isn't a lot of questionable mortgage debt this time around. The release also showed aggregate student debt flat at $1.34 billion, and that the delinquency rate for student loans rose to 11.2 percent in the quarter.

Investors Take on Mortgage Risk From Taxpayers - ABI

Investors are snapping up a new type of security sold by Fannie Mae and Freddie Mac, increasingly assuming the risks of mortgage defaults from taxpayers and powering a quiet transformation of the housing giants after almost a decade of government control, the Wall Street Journal reported today. Fannie and Freddie have sold roughly $48 billion of the securities since 2013 to a broadening group of buyers including asset managers and insurance companies. Sales are expected to reach a fresh high of $15 billion this year, up from the previous record $13 billion last year, according to JPMorgan Securities. The sales mark an early step toward reducing the government’s role in the $14.4 trillion U.S. mortgage market. The amount of mortgage debt funneled through Fannie and Freddie and other taxpayer-backed entities roughly doubled after the financial crisis, to around 70 percent.

Trump Chips Away at Post-Crisis Wall Street Rules - ABI

Efforts toward financial deregulation are beginning to take concrete shape on rules governing trading desks, bank boardrooms, corporations’ financial disclosures and more, the Wall Street Journal reported today. Nearly seven months into the Trump administration, regulators are setting the stage for a wave of eased rules. Several agencies are reviewing the Volcker rule, a part of the 2010 Dodd-Frank Act that limits banks’ trading. Some regulators also recently dropped a plan to restrict bonuses on Wall Street that had been opposed by banks and brokerage firms. And the Labor Department on Wednesday disclosed an 18-month delay in the so-called fiduciary rule that requires brokers to act in retirement savers’ best interests rather than their own.

Report: Oil Service Firms See Fewer, but Bigger, Bankruptcy Filings in 2017 - ABI

Oilfield service creditors have been hit harder this year by bankruptcy court filings than during all of 2016, according to law firm Haynes and Boone, a sign of the oil industry's uneven recovery, Reuters reported. Through the first seven months, U.S. oilfield service companies filed for bankruptcy owing $16.4 billion, compared with $13.5 billion in total debt for all of last year. There were 33 oilfield service bankruptcies through July, compared with 46 filings in the same period last year, according to the law firm. While drilling activity has sharply gained among U.S. onshore producers and oil prices [CLc1] at about $48.50 are above last year's low, they are still not high enough to lift offshore drilling activity and pricier international projects. "Many of the larger companies were able to do some out-of-court restructurings to weather the storm, but as depressed commodity prices continued, the market drove them into bankruptcy," said Stephen Pezanosky, a restructuring partner with Haynes and Boone in Dallas.

Analysis: Hertz’s 101-Year-Old Business Nearing Twilight in Uber Age - ABI

Losses at Hertz Global Holdings Inc. are piling up and Avis Budget Group Inc. just dialed back its profit forecast, prompting analysts to question if the U.S. car-rental business can thrive in the era of Uber Technologies Inc., Lyft Inc. and, one day, autonomous vehicles, Bloomberg News reported yesterday. In recent years, Hertz bought more cars than it needs, and it’s been struggling to unload them at decent prices. Perhaps more troubling, however, is that car-rental companies face the kind of threat that felled Blockbuster, which was undone by new technology in the form of digital video and Netflix Inc. There will always be a market for rental cars, but for a growing number of business customers, and even some casual consumers, they seem like a throwback. To be sure, the industry’s tough times may have more to do with mismanagement than Uber, Lyft or new mobility companies delivering a glancing blow. Hertz in particular built up a bloated fleet of too many cars to rent. To keep those vehicles generating revenue, the company had to drop rental rates. The companies have had to slim down their fleets at the worst possible time. Millions of vehicles are coming back off leases from when the U.S. auto industry was on its years-long growth spurt.

U.S. Credit Card Debt Surpasses Record Set at Brink of Crisis - ABI

U.S. consumer credit card debt just passed an ominous milestone, beating a record set just before the global financial system almost collapsed in 2008, Bloomberg News reported. Outstanding card loans reached $1.02 trillion in June, data from the Federal Reserve show, as lenders including Citigroup Inc. and JPMorgan Chase & Co. compete to sign up cardholders who may carry balances — a relatively lucrative business in a prolonged period of low interest rates. Investors have been skittish over the potential for defaults to rise ever since card balances eclipsed $1 trillion in February. Credit card issuers Capital One Financial Corp., Synchrony Financial and Discover Financial Services said write-off rates ticked up in the second quarter from the previous three months.