The Bankwatch

Tracking the consumer evolution of financial services

Posts Tagged ‘US

American rhetoric turns protectionist

President Obama is beginning to take on the mantle of an embattled and potentially protectionist leader with this comment in Yokohama today.

My interest is less politics and more Banks. Such inward looking approaches will inevitably result in inward looking institutions within the US, especially those with government ownership, or essentially government protection.


Addressing business executives in Yokohama, President Obama said the economic crisis had shown the limits of depending on US consumers and Asian exporters to drive growth.

Written by Colin Henderson

November 13, 2010 at 15:42

Posted in Uncategorized

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Peer-to-peer lending gets a new regulatory regime in the US

A fascinating development in the US as a new regulator for peer-to-peer lending appears following vigorous efforts from Prosper to promote an even handed regulatory regime for both borrowers and lenders. Currently the Securities and Exchange Commission (SEC) is the prime regulator, and a similar situation exists in Canada. The creation of the Consumer Financial Protection Agency (CFPA) is apparently designed to protect consumers in a host of financial services from p2p lending to reverse mortgages. Certainly more to come on that, but interesting for peer-to-peer lending.

Prosper Hails House Passage of Landmark Peer-to-Peer Lending Reforms

“Once again, Representative Jackie Speier and Chairman Barney Frank are doing the right thing by putting consumers’ and investors’ interests first,” said Chris Larsen, Prosper Chief Executive Officer and Founder of the Coalition for New Credit Models. “In terms of how the Bill relates to peer-to-peer lending, we’ve always believed that the industry should be regulated as a bank-like sector by a strong, holistic regulator focused on providing robust protections for both lenders and borrowers. The Obama Administration and other leading policy makers have been calling for the nurturing of alternative, transparent, and durable credit markets that will benefit consumers and small businesses; this landmark Bill heeds that call.” Prosper, together with the Coalition for New Credit Models, has advocated that America’s economic future depends on new and alternative credit models being embraced in the same way green technologies are being nurtured by policy leaders to help solve the energy and environmental crises.

Written by Colin Henderson

December 11, 2009 at 16:22

Non Cash Growth as a barometer of Payment Innovation

CapGemini have come out with their World Payments Report – 2009 [pdf 60 pages]. Lots of statistics, but the one that leapt out at me is this.


Japan stands out as a growth leader, despite being a mature economy.   Certainly their growth potential is large given the traditional consumer cash economy, but I have to look at the North American lowly 5% and wonder that lack of innovation in payments is not a driver. Certainly there remains lots of cash transactions to convert to payments but nominal innovation in the works to migrate to electronic.  The report notes that cash in circulation continues to growth in the Eurozone.

There is an interesting section reviewing the payments innovation in Asia, and a chapter devoted to summarising the state of SEPA.



Written by Colin Henderson

September 10, 2009 at 09:06

Posted in Payments, SEPA, US

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US antitrust is the devil

Fascinating insght into US antitrust thinking that is quite mind boggling.  They actually believe that the antitrust case against Microsoft promoted Google Chrome and Firefox!  This is a great example of reverse analysis thinking where the result rationalises the approach.

Microsoft Internet Explorer became huge because it was better and faster than Netscape.  That was 1996.  Time passes and IE became known as slow.  Firefox emerged, followed by Chrome  I see no connection to antitrust stuff here.

My Interview With Antitrust Expert Gary Reback: Google’s Looming Antitrust Issues | TechCrunch

One interesting insight from the conversation: I ask Reback if he thinks we’d be in a better world if Microsoft had in fact been broken up into two or more companies as was originally ordered. His response – “no.” The investigation and lawsuits themselves, he said, did enough to force Microsoft’s hand and allow browsers like Firefox, Chrome and others to blossom.

Written by Colin Henderson

July 5, 2009 at 02:32

Posted in Uncategorized

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China and America economic future – Ferguson/ Fallows debate

A summary in NYT of the fascinating Ferguson/ Fallows debate at Aspen on the economic relationship between China and US.

Ferguson: US and China are divorcing economically.  China will focus on internal consumption, not exports.  “Depreciation (of US $) is inevitable and the Chinese are working to end the dollar’s role as the world’s reserve currency.”

Fallows: “…  doesn’t know what the future will hold, but he believes that Chinese officials still see the dollar as their least risky investment. Domestically, China will not turn democratic, but individual liberties will expand. He agreed that China and the U.S. will dominate the 21st century, but he painted the picture of a more benign cooperation.”

Chinese Fireworks Display | NYT

I came to the debate agreeing more with Fallows and left the same way, but I was impressed by how powerfully Ferguson made his case. And I was struck by their agreement about what to do. This conversation, like many conversations these days, gets back to America’s debt. Until the U.S. gets its fiscal house in order, relations with countries like China will be fundamentally insecure.

Written by Colin Henderson

July 4, 2009 at 22:48

Posted in economy, US

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Consumer mindsets in North America have shifted permanently with regard to finances

After my last post, I thought it better to follow up with some facts to support my contention that this economic recovery is L shaped in Canada and US.  This is not meant to be an economic projection, and I leave that to the professional economists.  However in terms of planning, banks ought to consider the high probability of a scenario where the reduction in economic activity will level off but hardly see growth in the near future.  This will be driven by consumer confidence and frankly their financial circumstances.

If we go back to the root cause of the recession it remains this;   a dramatic drop in consumer asset values resulting in leverage that is too high.  Layer in the concern about job security, and the real increase in unemployment, we must look carefully at ability to manage the debt based on current income, and the effect of that on the business of banking.

Here is the ratio of debt to disposeable income in Canada and US at end of 2008. [source: CGA Association Canada & Federal Reserve Bank of San Francisco]

Canada              US

%                                  136.5%             130%

The first surprise is that Canadians are more highly levered than Americans.  The CGA report makes these points amongst others:

… prospects of improving households’ financial situation in the near future are low. A balanced approach to spending, saving and paying down debt may be a desirable feature of households financial behaviour in the near future.

Hardly earth shattering stuff but the consequences remain that strategies need to account for this new consumer mindset in North America for the next few years.

Written by Colin Henderson

June 22, 2009 at 14:47

US releases draft regulatory framework for Financial Institutions

The US administration released a draft of their proposed regulatory framework today, putting the Federal Reserve front and centre.

The big theme is to promote broader control of any institution involved in banking, and to specifically eliminate exemptions such as the Thrift Charter.

Draft Fed report on Financial Institution Regulation pdf – 85 pages

Written by Colin Henderson

June 17, 2009 at 09:05

Posted in regulation

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Option ARM – $98 pm on a $315K mortgage … for now

The last time saw a graphic such as this was 2007, when the schedule for mortgage resets on US sub prime mortgages pointed to an inevitable crash beginning end of 2007 and through early 2008.

Well here is the next picture that is eerily similar with forward predictions of similar catastrophe in 2011.   The US option ARM.  Apparently these are not necessarily sub-prime at least right now.  The real danger exists in the event that interest rates increase meaningfully to co-incide with the reset dates.

Also we must look at this in the context of the Banks rushing to repay government TARP / SCAP money.  It is quite possible the reverse will be happening with some banks in trouble again in 2011.

Option ARMs: Paying $98 a month on a $350 Thousand Mortgage | Calculated Risk

About 1 million option ARMs are estimated to reset higher in the next four years, according to real estate data firm First American CoreLogic of Santa Ana, California. About three quarters of those loans will adjust next year and in 2011, with the peak coming in August 2011 when about 54,000 loans recast, the data show.

“The option ARM recasts will drive up the foreclosure supply, undermining the recovery in the housing market,” [Susan Wachter, a professor of real estate finance at the University of Pennsylvania’s Wharton School in Philadelphia] said in an interview. “The option ARMs will be part of the reason that the path to recovery will be long and slow.”


Written by Colin Henderson

June 11, 2009 at 15:17

Posted in subprime, US

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No consumer driven economy in US | Geithner in China

Some important messages within Geithners speech in China today that paint a very different next few years compared to the last 10, and as the ‘G2’ move to manage a transition the American economy into one that is very different, yet stable.  And all this to be managed against the backdrop of  the fear of eventual inflation, which would devalue foreign holdings in US T-Bills, something China is acutely aware of.

These macro factors will play a large role in US banks and credit unions strategy design for the next 5 years.

  1. no consumer purchase driven economy in US – with the implication of extended higher Government spending for some time to counter
  2. US consumers save (increasing savings accounts and paying down debt)
  3. China’s manufacturing supply is sold more and more within China, not Wal-Mart

Speech by Secretary Geithner – The United States and China, Cooperating for Recovery and Growth

In the United States, saving rates will have to increase, and the purchases of U.S. consumers cannot be as dominant a driver of growth as they have been in the past.

In China, as your leadership has recognized, growth that is sustainable growth will require a very substantial shift from external to domestic demand, from an investment and export intensive driven growth, to growth led by consumption. Strengthening domestic demand will also strengthen China’s ability to weather fluctuations in global supply and demand.

If we are successful on these respective paths, public and private saving in the United States will increase as recovery strengthens, and as this happens, our current account deficit will come down.  And in China, domestic demand will rise at a faster rate than overall GDP, led by a gradual shift to higher rates of consumption.

Globally, recovery will have come more from a shift by high saving economies to stronger domestic demand and less from the American consumer.

Written by Colin Henderson

June 1, 2009 at 09:11

Posted in economy, US

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California is in trouble – hard to imagine what that means

Could we see the state of California go under … ?

California – a nightmare vision of the future | FT

The Californian budget crisis is so severe that all public employees are having to take pay cuts. Public-health services are under serious threat, and there is talk of pushing Aids patients and the terminally-ill out onto the streets. It has proved impossible to raise taxes any further and the bond markets are in revolt. California is looking to Washington for help. But with the federal government running budget deficits of 12% of GDP, and the federal debt pushing up towards 100% of GDP – you have to wonder whether California’s present might, once again, be America’s future.

Written by Colin Henderson

May 30, 2009 at 23:04

Posted in Uncategorized

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