Bank News

Equifax Helps Financial Institutions Improve Account Management Productivity Across Portfolios

2009-11-06T08:13:41-07:00

BOSTON -- Equifax Inc. (NYSE: EFX) today announced at the BAI Retail Delivery Conference the launch of a new solutionto help banks and financial institutions drive increased return-on-investment from their portfolio review processes. InterConnect for Account Management(TM) enables banks to automate account segmentation and risk decisioning for credit line adjustments and cross-sell offers. Now, banks can better identify customers most likely to accept product and service offers, resulting in increased cross-sell acceptance rates and improved customer retention.

"Providing this automation as a hosted solution will make it possible for more institutions to see the advantages of customer-centric decisioning," said James Taylor, CEO of Decision Management Solutions, a consulting firm focused on helping companies adopt decisioning technologies. "With complete control over credit policies, portfolio segmentation and customer treatment and no software to install, lenders can maximize their agility and keep their operating costs down."

While financial institutions historically have leveraged these types of tools with their credit card portfolios, many have considered them too complex and costly to use when managing deposit accounts. According to the Federal Deposit Insurance Corporation, the percent of increase year-over-year in total deposits for both commercial banks and savings institutions was approximately 27.4 percent from June 2005 to June 2009. Recent Equifax research has shown that while consumer debt has declined year-over-year more than $440B since 2000, the average personal savings rate reached its highest levels in the past decade during Q2 and Q3 2009.

InterConnect for Account Management enables banks to cost-effectively evaluate portfolio changes in both credit and deposit accounts - resulting in a comprehensive view of customers and their relationships with the financial institution. The solution provides a consolidated look at each customer within the portfolio and segments these customers based on behavioral and transactional data from Equifax, third-party sources and internal databases.

With this insight, banks can better measure individual risk and assess the overall ROI associated with an account.

"Current economic pressures make consistent account management especially important for today's financial institutions, which must address increasing regulatory requirements and respond quickly to changing market needs," said Dann Adams, president, US Information Solutions. "Our new solution provides the flexibility lenders need to accurately segment their portfolios and optimize credit risk decisions to reflect evolving market conditions and business priorities. Those that do stand a greater chance of winning the battle for reduced risk and profitable growth over time."

Financial institutions that adopt InterConnect for Account Management gain access to actionable customer intelligence delivered in real-time from internal and external databases. Leveraging business rules technology, the solution automates account-level decisions for:

Credit line assignments
Exception handling and compliance reporting
Implementation of new risk policies
Cross-sell and product optimization

Other benefits of the solution include its flexible suite of modules for data integration, decision management, rules editing and reporting which can be easily deployed, allowing businesses to respond quickly to market changes. The solution's comprehensive reporting tools enable financial institutions to view credit risk as well as transaction and operational activity to identify emerging trends.

InterConnect for Account Management is the latest addition to Equifax's Technology and Analytical solutions, which include loan origination, credit risk decisioning, fraud prevention and account opening products. For more information about InterConnect and other Equifax technology solutions, visit www.equifax.com/consumer/risk/account_opening/appro/en_us .

About Equifax Inc. (www.equifax.com)
Equifax empowers businesses and consumers with information they can trust. A global leader in information solutions, we leverage one of the largest sources of consumer and commercial data, along with advanced analytics and proprietary technology, to create customized insights that enrich both the performance of businesses and the lives of consumers.

With a strong heritage of innovation and leadership, Equifax continuously delivers innovative solutions with the highest integrity and reliability. Businesses - large and small - rely on us for consumer and business credit intelligence, portfolio management, fraud detection, decisioning technology, marketing tools, and much more. We empower individual consumers to manage their personal credit information, protect their identity, and maximize their financial well-being.

Headquartered in Atlanta, Georgia, Equifax Inc. operates in the U.S. and 14 other countries throughout North America, Latin America and Europe. Equifax is a member of Standard & Poor's (S&P) 500® Index. Our common stock is traded on the New York Stock Exchange under the symbol EFX.

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Bharatbook.com Included New Report On "Collections and Debt Management In UK Personal Lending" In Its Market Report

2009-11-05T08:35:07-07:00

The current economic downturn is forcing many banks to rethink their debt management and collections strategies as more individuals become unemployed and unable to repay their loans.

Scope of this research

Analyzes the current personal loan market performance and provides forward looking estimates for the non-standard population up to 2013.

Assesses the process of debt management and recovery and provides analysis on how it can be enhanced throughout the current climate.

Research and analysis highlights

Generally, financial institutions do not invest in debt collection activity until there is an economic downturn. Devoting resources towards improving debt recovery generates an income stream that would otherwise be lost.

The single biggest obstacle for any bank offering a personal loan is assessing the likelihood of a potential default. To help eliminate this problem there needs to be a more rigorous lending criteria and a greater degree of customer data sharing.

Banks are offering advice on budgeting and financial maintenance to help reduce the threat of delinquency, especially for individuals in difficult situations.

Key reasons to purchase this research

Sizes and forecasts the non-standard population as well as providing historical data for the personal lending market in the UK.

Describes in detail the process of debt recovery for borrowers who have fallen into repayment difficulties.

Offers insight and recommendations for enhancing debt management and recovery strategies.

To know more and to buy a copy of your report feel free to visit : http://www.bharatbook.com/Market-Research-Reports/Collections-and-debt-management-in-UK-personal-lending.html

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Online Resources Launches New Consumer-Friendly Online Banking & Billpay

2009-11-04T08:32:58-07:00

CHANTILLY, Va. – Online Resources Corporation (Nasdaq:ORCC), a leading provider of online financial services, today announced it has launched the next generation of its online banking and bill payment services, with approximately 200 clients deployed to date.

Developed with extensive usability testing, the services are expressly designed to enable financial institutions to provide the utmost in consumer-friendly online service.

The result of a two year, multi-million dollar investment, Online Resources’ hosted Internet Banking and Bill Pay applications now feature:

Highly adaptive, intuitive navigation – created in conjunction with usability, visual design and information architecture specialists, the new interface was consumer tested to meet the needs of any level of online banker, from the novice statement viewer to the small business user to the experienced power payer. The new, clean interface uses the latest in Rich Internet Applications (RIA) technology and “smart windows” for easy access to important information, which reduces information overload for the consumer.

Intelligent marketing and CRM tools – leveraging consumer-specific data, these new tools maximize awareness and education, boost online customer service power and drive adoption and up-sell opportunities. Driven by consumer usage pattern intelligence, the service incorporates contextual messaging throughout the interface, such as help links and advertisements that are timely and relevant to the user.

Seamless premium payments services – extensively integrated expedited payments, bill presentment and personal financial management services to promote deeper online interaction and individualization, backed by the consumer-friendly, real-time guaranteed funds model that puts the consumer in greater control of their finances.

For example, expedited payments are available within the standard online payments flow to enable consumers to make last minute payments with same day, guaranteed posting. Bill presentment is also available to all bill payers in the integrated payments service for easy access to actionable bill payment information. In addition, enhanced personal financial management tools, based on the company’s award-winning Money HQ service, offer useful budgeting, reporting and alert features.

“We are pleased to provide our customers an enhanced online banking and bill payment service. The Online Resources product incorporates usability best practices with enhanced bill payment features in a fresh, easy-to-use interface," said Susan Peterson, Chief Retail Banking Officer for MB Financial Bank. “The integrated online banking and bill payment services provides a superior online experience for our customers through what we call ibankmb.com.”

“Online Resources’ new release achieves a unique balance in providing comprehensive online services while delivering an intuitive, consumer-friendly interface,” said Sandra Shiba, Service and Information Manager at the University of Utah’s University Credit Union. “We are very pleased to make this latest release available to our members as an extension of our high quality service.”

“We believe we have addressed three complex areas – usability, marketing and payments – that are crucial to a successful online channel through an enhanced set of services that are sophisticated yet simple to use,” said David P. Munger, Vice President of Online Resources’ Banking Payment Services. “In addition, by providing consumers with ‘perfect knowledge’ of their finances, such as providing exact information about when a payment goes out and exactly how it is being sent, we are helping our clients deliver a highly consumer-friendly online service.”

Financial institutions can choose from multiple deployment options of Online Resources’ online banking and bill payment services. Based on their in-house IT capabilities, configuration needs, customization levels, operational priorities and numerous other factors, clients choose from highly flexible options for software, support and payments. For example, clients have combined Online Resources’ on-premise software to support extensive customization needs for online banking, but fully integrated hosted bill payment to support user interface requirements, augment customer service and meet payment warehousing needs.

About Online Resources
Online Resources (NASDAQ: ORCC) powers financial interactions between millions of consumers and the company’s financial institution and biller clients. Backed by its proprietary payments gateway that links banks directly with billers, the company provides web and phone-based financial services, electronic payments and marketing services to drive consumer adoption. Founded in 1989, Online Resources is the largest financial technology provider dedicated to the online channel. For more information, visit www.orcc.com.

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Fitch: U.S. Credit Card Performance Measures Mixed as Chargeoffs Drop

2009-10-30T06:33:44-07:00

NEW YORK--U.S. credit card performance measures exhibited mixed results last month with chargeoffs declining for the second time in three months while delinquencies resumed their upward trends according to the latest Credit Card Index results from Fitch Ratings. The results come as consumers continue suffer from high unemployment rates and a lack of credit availability.

"U.S. consumer credit quality measures remain pressured and chargeoffs will stay high until we see some improvement in employment conditions and in delinquency trends," said Managing Director Michael Dean.

Despite the ongoing unfavorable trends, Fitch continues to expect current ratings of senior credit card ABS tranches to remain stable given available credit enhancement and structural protections afforded investors. The outlook for subordinate tranches remains negative. Fitch expects the U.S. unemployment to peak at 10.3% in second-quarter 2010 and remain above 10% throughout 2010.

During the month, Fitch's Credit Card Chargeoff Index declined 77 basis points (bps) to 10.75%, marking just the third month-over-month improvement. Despite pulling back from last month's record high, the chargeoff index remains 71% above year-earlier levels.

Measured by Fitch's 60+ day delinquency index, late payments rose 16 bps to 4.22% after a 20 bp dip last month. Late stage delinquencies are running 33% higher on a year-over-year comparison. Early stage late payments increased for the month as well, with 30+ day delinquencies rising 13 bps.

"While somewhat seasonal, the rise in delinquencies provides further evidence that chargeoffs will remain elevated in the coming months," said Senior Director Cynthia Ullrich.

Monthly payment rate (MPR) remains stronger than earlier this year at 17.98%. MPR is well above the historical average of 15.98% and remains above the 2009 average of 17.37%. MPR has remained consistent year-over-year as current MPR is 9 bps higher than it was during October 2008.

During October, gross yield decreased 27 bps to 19.39%. However, gross yield continues to be strong relative to historical data as a result of discount options and repricing initiatives in various trusts. Compared to last year, gross yield is up 254 bps or 12%.

Three-month average excess spread increases 50 bps this month to 5.75%., its highest level since the February 2009 period. This increase is driven by the one month excess spread increasing to 5.99% this month. The increase in three-month average excess spread has enabled trusts that were trapping excess spread to release all or part of the trapped amount.

Additional information is available at www.fitchratings.com.

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Banks Charging Off Debt at a Higher Rate than in Great Depression

2009-10-28T06:07:39-07:00

Bank charge-offs are continuing to grow and are likely to do so for at least the next few months, even though the government and most economists say that the recession is over.

“Charge-offs are a lagging indicator,” said Dan North, said Dan North chief economist at Euler Hermes ACI a trade credit insurance firm. “I think we’re getting near the peak. The charge-offs are on loans that were made in the past.”

Moody’s Investors Service reported earlier this week that bank charge-offs had reached $116 billion year to date, or 2.9 percent of outstanding loans on an annualized basis. According the report, the rate is higher than the charge off rate during the Great Depression.

“While the latest reports of net charge-offs to banks are alarming and unprecedented, the credit economy during the Great Depression and the one we have now are very different from each other,” cautioned Dana Wiklund, research director for Financial Insights' Risk Management Advisory Service. “There is no comparison between the diversity and terms of products or the levels of borrowing. Taken as a percentage comparison, the numbers are alarming, but one needs to look beyond charge-off numbers to make economic comparisons.”

“They were still awarding too much credit when they should have been cutting back. Banks are now able to make good loans going forward,” North said.

“The economy we have today is much more diversified and has many stabilization features not available during the Great Depression.” Wiklund added. “Monetary policy makers also have tools, mechanisms and authorities that were not available to their counterparts 77 years ago.”

So while charge-offs will continue to grow, at least for a while, neither North nor Wiklund expects the fall out to be as bad as it was during the Depression.

“Economic growth over the past several years has in part been based on a consumer and commercial credit bubble that has burst, we are now charging off the fall out,” Wiklund added. “Moving forward financial institutions will have to balance drivers of economic growth with the necessary increased accountability of a consumer or a business's willingness and more importantly, ability to pay."

While the economy is improving, banks are still very hesitant to lend until they see more evidence of improvement, according to North.

“Many U.S. banks justified a smaller loan loss reserve build in the third quarter compared to previous quarters in 2009 because of both the slower rate of increase in charge-offs and the early signs of moderating delinquency trends,” Moody’s said.

The rating agency estimates loan loss provisions for rated U.S. banks in the quarter at $55 billion, or approximately 120 percent of charge-offs or just less than five quarters coverage.

The excess of provisions over charge-offs represents a $10 billion allowance for loan loss build in the quarter down from $21 billion in the first quarter of 2009 and $16 billion in the second quarter of 2009, according to the ratings agency.

“We continue to believe it’s premature for banks to lower their reserve build since problem loans and net charge-offs continue to show an upward trend even though some, but not all, consumer delinquencies showed improvement,” Moody’s said.

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Equifax to Acquire IXI Corporation

2009-10-22T07:12:59-07:00

ATLANTA -- Equifax Inc. (NYSE: EFX - News) announced today it has reached a definitive agreement to acquire IXI Corporation, a leader in collecting, analyzing and delivering consumer wealth and asset data. Equifax will pay $124 million in cash for the company.

With its proprietary measures of wealth, assets, income, spending and other data, IXI helps its clients better segment households, resulting in improved marketing and customer management. IXI's client base includes leading companies in the financial services industry (such as banks and brokerage firms) and emerging opportunities in the insurance and healthcare industries.

IXI's data, sourced through more than 95 leading banks, brokerage firms and other financial entities, is the most comprehensive database of invested and deposited consumer wealth in the country. IXI directly measures data on more than $10 trillion in U.S. consumer assets and investments, representing more than 42 percent of all U.S. consumer invested assets.

"Bringing together the differentiated data and analytic capabilities of each of the companies will allow us to deliver a deeper view of the consumer that includes wealth, credit, income, spending and other demographic data ," said Dann Adams, president, Equifax Consumer Information Solutions. "The caliber and breadth of intelligence and data we'll offer will significantly improve the opportunities for our clients to acquire, expand and retain customer relationships."

"We have worked closely with Equifax over the last 18 months and know their people, the solutions they offer, and their culture. I am convinced this will be a strong combination that will benefit customers and employees of both companies," said Tom Dailey, president and CEO of IXI.

IXI's unique capabilities combined with Equifax's expertise will allow the companies to offer more differentiated and in-depth income, wealth and other data, helping companies improve their marketing, collections, portfolio monitoring and customer management efforts across all product segments.

"This is a good match and our companies know each other well from a history of collaboration. Each of the companies excels in its particular area of the business; the skills and knowledge are complementary; and we serve similar customer bases," said Adams. "But the biggest beneficiaries will be our clients, who will have broader, deeper and more accurate customer information backed by a company with a strong tradition of protecting the security and integrity of the data entrusted to us."

The closing of the transaction is subject to the usual conditions and is expected to occur in the near future.

IXI was advised in the transaction by Wells Fargo Securities.

About Equifax (www.equifax.com)
Equifax empowers businesses and consumers with information they can trust. A global leader in information solutions, we leverage one of the largest sources of consumer and commercial data, along with advanced analytics and proprietary technology, to create customized insights that enrich both the performance of businesses and the lives of consumers.

With a strong heritage of innovation and leadership, Equifax continuously delivers innovative solutions with the highest integrity and reliability. Businesses - large and small - rely on us for consumer and business credit intelligence, portfolio management, fraud detection, decisioning technology, marketing tools, and much more. We empower individual consumers to manage their personal credit information, protect their identity, and maximize their financial well-being.

Headquartered in Atlanta, Equifax Inc. operates in the U.S. and 14 other countries throughout North America, Latin America and Europe. Equifax is a member of Standard & Poor's (S&P) 500® Index. Our common stock is traded on the New York Stock Exchange under the symbol EFX.

About IXI Corporation (www.IXIcorp.com)
For over 15 years, IXI has helped the nation's leading financial services and consumer marketing firms optimize marketing efforts, manage risk, identify growth markets, and enhance practice and performance management. IXI solutions enable marketing, sales, and risk management executives to differentiate and target consumer households based on measures of wealth, income, spending, credit, investment style, share-of-wallet, and share-of-market.

Through its exclusive network of more than 95 leading U.S. financial institutions, IXI directly measures approximately $10 trillion in U.S. consumer assets and investments, comprising over 42% of all U.S. invested assets. IXI combines its patented process for collecting and classifying consumer asset data with proprietary measures of income, spending, and credit, to create the most reliable and granular financial database available today. Using this unrivalled database, IXI builds solutions that provide firms financial and economic insight for every U.S. household.

IXI is a privately held company headquartered in McLean, Virginia. It was recently named to the Deloitte Touche 500 Fastest Growing Technology companies list.

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CFPA Debated in Committee this Week; Experts Weigh In on ARM Impact

2009-10-21T06:25:53-07:00

A committee in the U.S. House of Representatives was expected to move forward this week with legislation that would create a new regulator, the Consumer Financial Protection Agency (CFPA), which could supplant the Federal Trade Commission as the primary regulator for collection firms.

A bill currently before the House Financial Services Committee, H.R. 3126, would also take regulatory powers from the Federal Reserve and other agencies and place it in the hands of independent regulators who would oversee products such as credit cards and other financial services. As such, the CFPA would oversee the Fair Credit Reporting Act (FCRA) and the Fair Debt Collection Practices Act (FDCPA).

The idea has gained quite a bit of traction after the failure of bank regulators to catch many of the recent abuses in the financial services industry that led to a meltdown in the sector last year. But the Fed, along with much of the financial services industry, opposes the legislation.

ACA International, the association of credit and collection professionals, is also very concerned about the proposal. “The industry is very concerned about how this will work in practice,” said Adam Peterman, the group’s government affairs director. “It seems to me when you have the overall financial system governed by various regulators, you’re able to take into account all of the necessary parts of the economic cycle.”

Under the current system, the Federal Reserve handles economic growth; the Office of the Comptroller of the Currency (OCC) within the Treasury Department handles solvency and the FTC handles consumer protection, Peterman explained. “You are accurately considering the entire economy, and that provides for a healthy cycle. With the Consumer Financial Protection Agency, they will be trying to handle consumer protection in the financial arena.”

But some promoting the adoption of the new agency want to limit the development of any new financial products to ones that are “plain vanilla.” If limited to such products, the financial industry would stagnate, according to Peterman. He pointed out that the limited amount of financial products and services available in the 1970s would be insufficient in today’s economy. Similarly, products and services available now could very well be insufficient in 40 years.

Some in the accounts receivable management industry are taking a pragmatic approach to a potential CFPA, viewing it as inevitable. They are actively working to make sure the agency considers the position of the ARM industry.

“One regulator for both originating creditors and debt buyers could eliminate confusion for the financial services industry and consumers alike,” DBA International President Roger Knauf wrote in a letter to the editor Friday in the Wall Street Journal. “CFPA must be given pre-emptive rule-making authority over states, or this super agency will be an ineffective paper tiger with little authority to create protection for consumers nationwide.”

DBA International is an association of debt buying professionals.



Peterman likes the idea of one set of rules for collectors rather than different rules in different states. But he says that he is concerned that the CFPA would not provide a uniform set of rules that would make compliance easier. Instead, the agency would provide just another layer of rules and regulations, making compliance even more cumbersome.

Congressional Republicans have been focusing their efforts on the state pre-emption issue as well. “We can end up with a patchwork quilt of regulation from states that may be hard for people to follow and hard to do business in,” said Rep. Mike Castle (R-Del.) as he debated the bill in the Financial Services Committee.

The Republican position is in response to an amendment offered by committee chairman Barney Frank (D-Mass.) that would allow states to pass stricter laws governing national banks’ activities.

Knauf also sees some problems with the proposed legislation that would hurt rather than help consumers: “Shortening the time period in which creditors can collect on past due debts further tightens credit standards in order to limit a lender's risk. It leaves many creditors with no choice but to rush to the courtrooms seeking judgments, with the cost of that unnecessary litigation passed on to the consumer,” he wrote in his letter.

However, Dana Wiklund, research director, risk management, for Financial Insights, expects little change from the new legislation if it becomes law.

“I am not sure the CFPA will have any immediate or dramatic impacts on the collections industry,” he said. “Initially the CFPA will be focusing on rights and protections consumers have with their front line relationships with financial institutions. By front line, I mean that collections are a secondary relationship that consumers develop.”

The new regulator will concern itself with standardizing regulation around fees and rate practices that might impact consumers, according to Wiklund. “Many states have fairly evolved regulatory constraints on collections practices. That said, as consumer defaults climb, supply of collectable accounts will also rise, therefore lowering the fees and profits available to the collections industry. This environment will create greater competition and possibly more aggressive collections tactics. Consumer outcry may draw the attention of the CFPA at some point to look more closely at collections practices and tactics in this changed environment.”

Wiklund added: “My advice to the collections industry would be to rely on advanced analytics to improve their recovery rates and be very mindful of the regulatory environment they operate within, rather than on making their processes more aggressive.”

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Zions Bank Maintains Role as Utah's Top Lender to Small Businesses for 16 Consecutive Years

2009-10-16T06:36:04-07:00

SALT LAKE CITY -- Helping infuse small businesses with the capital they need to grow and create jobs, Zions First National Bank today announced its rank as the top lender of U.S. Small Business Administration (SBA) 7(a) loans in Utah for 2009. Zions has ranked as Utah's No.1 SBA lender for the past 16 consecutive years. It has also ranked as the top SBA lender in Idaho's Boise District for the past eight consecutive years.

Zions Bank approved 869 SBA 7(a) loans in Utah totaling $58.7 million for the fiscal year ended Sept. 30, 2009. These loans represent 38 percent of the 2,247 SBA-backed loans approved in the state during fiscal year 2009.

"At a time when questions are being raised about banks' willingness to make loans, Zions Bank is proud to continue to demonstrate our institution-wide commitment to supporting small businesses as they build and drive our economies," said Zions Bank President and CEO Scott Anderson. "Even in a challenging environment, the fact that we approved just 40 fewer SBA loans than we did in fiscal year 2008 further demonstrates our willingness to lend to small businesses."

Zions Bank also leads all other financial institutions in Utah in marketing SBA loans to women-owned businesses. During fiscal year 2009, 28 percent (or 252) of the SBA loans approved by Zions Bank were to women and minorities. Additionally, 14 percent of loans approved by Zions were to rural businesses.

SBA 7(a) loans are the most basic and most used type of loan in SBA's business programs. The program offers up to 25-year, fully amortized loans that result in lower monthly payments for the borrower. Proceeds from the 7(a) program may be used for most business purposes, including the purchase of real estate for business operations, acquisition of equipment, and working capital.

The 7(a) loan category also includes SBA's new America's Recovery Capital (ARC) loans, designed to provide an immediate infusion of capital to struggling but viable small businesses. Zions Bank became the first financial institution in the nation to receive authorization by the SBA to extend a new ARC loan to a small business client on June 15, 2009.

Through the end of fiscal year 2009, Zions Bank approved 82 percent of all ARC loans in the SBA's Utah District, or 162 loans totaling $5.3 million.

Nationwide, small firms with fewer than 500 employees represent 99.9 percent of the 26.8 million businesses in America. Small businesses employ about 50 percent of the private workforce, account for more than half of the nation's private sector output, and are the principal source of new jobs in the U.S. economy. In Utah, about 97 percent of businesses qualify as "small businesses" (businesses with fewer than 500 workers).

Zions Bank, a subsidiary of Zions Bancorporation (Nasdaq:ZION - News), is Utah's oldest financial institution and is the only local bank with a statewide distribution of branches, operating 103 full-service offices. Zions Bank also operates 25 full-service branches in Idaho. In addition to offering a wide range of traditional banking services, Zions Bank is also a leader in small business lending and has ranked as the No. 1 lender of U.S. Small Business Administration 7(a) loans in Utah for the past 16 consecutive years. Founded in 1873, Zions Bank has been serving the communities of Utah for 135 years. Additional information is available at www.zionsbank.com.

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Barney Frank Moves to Push Credit Card Rules on Banks Early

2009-10-12T02:29:12-07:00

U.S. Reps. Barney Frank (D-Mass.) and Carolyn Maloney (D-N.Y.) have proposed legislation seeking to move up by more than two months the effective date of Credit Card Accountability Responsibility and Disclosure Act of 2009 (CARD Act), commonly known as the Credit Cardholders Bill of Rights.

The law, signed by President Obama at the end of May, included several restrictions for credit card companies in terms of rate changes and billing procedures. The first rules of the legislation are not slated to take effect until February 22, 2010. Other parts of the legislation will not take effect until August 2010. But the Expedited CARD Reform for Consumers Act of 2009, authored by Frank and Maloney, seeks to move up the date of enactment to Dec. 1.

The House Financial Services Committee, which Frank chairs, is scheduled to take up the new legislation Thursday.

Among the changes in the law:

No interest rate increases during the first 12 months of opening a credit card, unless the rate increase was disclosed when you first opened the credit card.
Promotional rates must last at least 6 months.
No interest rate increases on pre-existing balances. If the credit card issuer decides to increase your interest rate, that new rate would only apply to new balances. The current balance would continue to be subject to the old interest rate. There's an exception, however, if the cardholder becomes more than 60 days late on your credit card payments.
Credit card issuers must give a 45-day advanced notice before increasing your interest rate or making any major change to your credit card agreement.

Many card issuers have already instituted many of these changes and changed fee structures by raising interest rates, canceling cardholder accounts and reducing rewards programs. For example, Discover Card’s current promotion on 5 percent cash rewards on grocery store purchases is capped on the first $400 of purchases. After the cap is reached, card members receive unlimited rewards up to one percent.

But Tuesday, Bank of America issued a strong statement intended to stave off the accelerated implementation of the CARD Act. The major credit card issuer vowed not to raise interest rates between now and February, when the changes are slated to take effect. Cardholders could still see their interest rates increase, however, if their cards carry variable rates tied to the prime interest rate.

“Issuers are looking for different ways to charge cardholders,” said Adil Moussa, analyst for Aite Group. Many have instituted fees or heavily promoted new cards, like the Chase Sapphire card, with higher fees. Visa recently introduced its black card with a $495 annual fee.

Annual fees were common for credit cards up to the 1990s, when the practice went out of vogue.

Tim Smith, senior vice president of collections for Firstsource Advantage LLC in Mumbai, India, points out that 80 percent of credit cards in the United Kingdom have annual fees, but only 20 percent of the cards in the U.S. had them before the legislation was signed in May. So there is certainly room for those fees to rise, and many issuers have already moved in that direction.

Moussa said he expects more cards to institute fees and direct rewards programs to be further cut now that issuers will no longer be able to increase fees within 15 days, as under the earlier rules, or require payments to be posted early in the day -- sometimes before the mail arrived, new rules call for payments to be on time as long as received before 5 p.m., or follow other business practices that generated plenty in fees, but gave rise to consumer complaints that led to the initial legislation.

Another major change that will impact the industry is the one that requires card issuers to apply payments to the highest interest charges first, then to the lower ones, said Alan Mattei, managing director of Novantas, a New York-based management consultancy. “This takes the practice of applying the payments to lower interest charges first and turns it upside down.”

The practice of applying payments to lower rate charges first led to a large number of 0 percent balance transfer offers, according to Mattei. The idea behind the transfers – typically with six or 12 months to pay off the balance – was that people would use the card for other purposes and would usually incur an interest charge on those purchases because they wouldn’t be able to pay for those and the balance transfer, at least not in the first month.

Therefore, Mattei expects to see more aggressive pricing on the balance transfer programs.

Mattei also pointed out that the new rules enable a card issuer to reduce charges at any time. So many are raising prices aggressively now because increases in the future are restricted, but may cut them once cardholder accounts have some time under the new law.

Issuers who haven’t already done so will be scrambling to institute any changes if the “expedited” bill passes, said Smith, who expects the legislation to be approved. The moves that issuers have already made were made to reduce exposure, particularly for accounts issuers expected to eventually charge off, Smith said.

There’s a much lower tolerance for risk, Mattei agreed. Since the fees they can charge are much more limited, card issuers will be much less likely to provide credit for higher risk customers.

With less available credit, cardholders have less liquidity with which to pay off their debts, negatively impacting collections, Smith added.

If the measure passes, there will be further tightening of credit granted by card issuers in the fourth quarter, which could further weaken what retailers already expect to be a soft holiday shopping season, according to Smith.

“I don’t see a huge advantage for consumers by moving [the rules] up three months,” Smith added.

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Manufacturing Companies Turn to FTRANS to Increase Cash Flow and Manage Trade Credit

2009-10-09T06:40:42-07:00

ATLANTA, Oct. -- FTRANS Corp., a leading provider of accounts receivable and credit management solutions, announced the addition of several manufacturing companies to its platform that enables U.S. manufacturers to easily access capital as bank loans and credit remain hard to secure.

Commercial Plastic Composites (Newnan, GA), Power Brake LLC (St. Petersburg, FL) and Clean Air America (Rome, GA) are just a few of the many manufacturing companies that have turned to FTRANS as an alternate source of funding as the U.S. manufacturing industry attempts to evolve from its 18 month decline. FTRANS is able to support the growth of manufacturing companies by increasing cash flow through more efficient accounts receivable and cash management processes.

"At FTRANS, our intention is to help small and medium-sized businesses manage their accounts receivable and access capital so they can grow," said Dan Drechsel, CEO of FTRANS. "Our goal is to be a resource for manufacturing companies as they bounce back from the recession so they can sustain growth over the coming quarters."

With FTRANS, manufacturing companies use accounts receivable as collateral for lines of credit from local banks. Increasing cash flow is especially important for manufacturing companies because of the nature of the manufacturing process. Companies make large investments upfront for raw materials and do not see the return on those investments for several weeks or months. And, because the payment process for the supply chain is longer than other B2B industries, manufacturers typically wait an average of 55 days for payment on invoices from customers. FTRANS' manufacturing customers receive payment in 3-4 business days.

"FTRANS helps me to continue growing my business and so I'm not held up or limited by a long payment cycle or slow paying customers," said Van Pell, CEO of Commercial Plastic Composites. "Because I'm able to access capital faster than I normally would, I can expand my business and continue growth on a more rapid pace."

FTRANS also simplifies the tasks involved with customer credit administration and reduces the risk involved with trade credit. Recently, FTRANS introduced a credit scoring model to its customers that helps identify the credit worthiness of a company's customers and acts as an alternative to trade credit insurance. Through the credit scoring model and FTRANS' credit verification process, companies are able to mitigate the risk of lending trade credit to financially unstable or potentially bankrupt customers.

"Not only does FTRANS help me increase cash flow, it helps protect that capital from risky customers," said Bertil Brahm, Senior Vice President of Clean Air America. "With FTRANS' credit scoring model, I'm able to make informed decisions on which customers are likely to pay upfront, pay late or not pay at all, which is priceless information in today's economic environment."

For more information on FRANS, visit www.ftrans.net

About FTRANS
FTRANS Corp., located in Atlanta, GA, provides innovative technology solutions for businesses and financial institutions. We provide a complete accounts receivable and credit management solution that enables businesses to operate more efficiently and with greater access to capital. From payment matching and account reconciliation to credit approvals, access to capital, and collections - FTRANS has the tools businesses need to achieve superior business results. We provide financial institutions with a program that enables them to lend to small and medium sized businesses with accounts receivable as professionally managed and transparent collateral for banks.

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Teres Solutions and RateGenius Bring Automated Auto Loan Refinancing to Credit Unions and Financial Institutions

2009-10-06T06:29:18-07:00

AUSTIN, Texas -- Teres Solutions™, Inc., one of the top providers of direct, indirect and merchant lending software to credit unions and financial institutions, today announced it has partnered with RateGenius to integrate the company’s direct-to-consumer auto loan refinancing solution with the Teres Solutions SAIL® lending platform. The integration will give Teres Solutions clients access to auto loan refinance and insurance applications submitted through the RateGenius system, helping them to expand their direct lending businesses. To date, RateGenius has helped credit unions and financial institutions book over $1 billion in auto refinance and recapture loans and related insurance offerings.

“Whether or not automobile sales are growing, there’s always an opportunity for organizations to expand their lending businesses with refinance and recapture programs,” said Chris Brown, president and CEO of RateGenius, Inc. “With the help of Teres Solutions, we are providing a new way for credit unions and financial institutions to tap into the refinance market and automate the entire process from loan application review and approval to funding.”

The integration with RateGenius provides SAIL software clients with electronic access to a growing network of auto refinance applications. In addition, users can also tap into applications for other kinds of products, including Gap insurance, credit life, accident and health, warranties, auto and home insurance and more. After setting up their underwriting criteria in the SAIL system, credit unions and financial institutions can automate their loan application review, approval and funding procedures. As a result, they’re able to process and fund more refinance loans then ever before.

“We’re impressed with the power of the integrated system developed by RateGenius and Teres Solutions for auto loan refinancing,” said Mike Fisher, senior vice president of lending, Velocity Credit Union. “We believe that this program will benefit both Velocity and our membership.”

“Auto loan refinancing provides new ways for lenders to expand their direct loan portfolios,” said Tim Kelly, CEO of Teres Solutions. “In many instances these direct-to-consumer loans perform better over time. We’re honored to be working with RateGenius to give our clients easy access to this growing and important lending market segment.”

For more information on Teres Solutions, visit www.teressolutions.com.

About RateGenius, Inc.
RateGenius is a multi-state, web-based loan brokerage company based in Austin, Texas. Established in 1999, RateGenius has brokered more than 47,000 loans resulting in $1 billion million in loan volume for its lender base. For more information on the company and its offerings, visit www.rategenius.com.

About Teres Solutions, Inc.
Teres Solutions™, Inc., a wholly-owned subsidiary of CRIF, was founded in 2002 for the express purpose of developing direct and indirect lending software products that define the state-of-the-art for the financial institution market. Its Software Application for Integrated Lending (SAIL ) direct and indirect lending products allow financial institutions to streamline lending decisions, increase revenue through enhanced loan application processing efficiency, improve dealer and member relations, and augment loan tracking and reporting capabilities. Teres Solutions has been recognized as a Microsoft Gold Certified Partner with accredited core competencies. Visit www.teressolutions.com for more information on Teres Solutions, its products and services.

About CRIF
CRIF is a global company specializing in the development and management of credit reporting, business information and decision support systems. Established in 1988 in Bologna, Italy, CRIF has an international presence – operating in over four continents, including Europe, America, Africa and Asia.

SAIL is a registered trademark and Teres Solutions is a trademark of Teres Solutions, Inc. All other company and product names mentioned are used only for identification and may be trademarks or registered trademarks of their respective companies.