September 6, 2007

Auto Finance Teams Possible
Detroit Free Press (08/28/07) Higgins, Tim

Since Chrysler Financial and GMAC have been acquired by Cerberus Capital Management, Chrysler CEO and president Paul Knauss says there are prospects for a partnership between his company and GMAC. Knauss says that Chrysler will be unlikely to have a timely merger with GMAC due to the fact that its current separation from DaimlerChrysler Financial Services is taking up to six months. "What I do see, though, is opportunity -- since we're somewhere in the same family," Knauss says. Half of DaimlerChrysler's reported $2.3 billion in operating profits in 2006 was said to have originated from leases and loans on Chrysler vehicles. Chrysler is also overhauling measures to allow customers close their leases more quickly. Morgan Keegan & Co. analyst Pete Hastings says many dealers might want to deal exclusively with Chrysler or GMAC, so there is likely potential for cross-selling some GMAC products. As a part of Chrysler's efforts to work on its relationship with dealers, they have eliminated third-party inspections so that dealers perform inspections at turn-in. This way, customers will have a faster estimate of their bills, whereas in the past such a time frame could go on for months. The automotive giant has partnered with Ford Credit, Toyota Financial Services, and Route One.
(click for web site)
Back to Top

Make Mine Subprime
Business Line (09/09/07) P. 108

Even as banks in the United States worry about subprime borrowers, lenders in India are going out of their way to woo them. Growing awareness about small and personal loans, coupled with aggressive marketing by the financial services companies, has made them consider more mainstream sources. "An increasing population of customers with younger age profiles, driven by the confidence of employment opportunities and the overall buoyant economy, has led to the emergence of new aspirations and hence new attitudes towards debt," says Sandeep Soni, Managing Director, CitiFinancial India. CitiFinancial terms subprime borrowers "near prime," and observers agree this is a growing and very lucrative segment for financial services firms. GE Money's head of personal loans, Rajeev Yadav, points out that lenders to this untapped community are basically interested in two issues: the intention and the ability to pay. "It is impossible to ascertain the intention, but the ability to pay can certainly be gauged even through weak documentation," Yadav notes.
(click for web site)
Back to Top






Home-equity Loans Dry Up; People in Credit Card Jam Look For Other Options
USA Today (09/06/07) P. 5B; Dugas, Christine

More Americans are falling behind on their card payments, and credit card delinquencies are starting to rise. One big factor is the shrinking availability of home-equity loans. Some lenders have stopped offering home-equity loans, while others have tightened lending standards so that those with less-than-perfect credit scores can't always qualify. Until recently, many Americans took advantage of their homes' value to lighten their credit card debt. Since 2001, more than $350 billion in card debt has been shifted into home-equity loans or into mortgages refinanced by homeowners, says Robert Manning, a finance professor at Rochester Institute of Technology. "With sinking home values, higher interest rates and tighter underwriting, many consumers may not be able to consolidate credit card debt," says Robert McKinley, CEO of CardTrak.com. "And paycheck-to-paycheck families with a mortgage payment that resets to a much higher rate may not be able to pay for their credit card debt." Credit cards are still available, but card issuers are growing more cautious. "They're nervous about what the mortgage problems can mean for them," says Mark Zandi, chief economist for Moody's Economy.com. "So credit card lenders are not going to tolerate missteps by a borrower."
(click for web site)
Back to Top

Chevron Selling Credit Card Businesses
Associated Press (08/31/07)

Chevron announced Friday that it had sold its consumer and commercial credit card businesses. The company's Chevron- and Texaco-branded consumer credit cards were sold to GE Money Bank, the consumer lending arm of General Electric, while its branded commercial credit card business went to FleetCor, a provider of card-processing solutions for business fleets. Under the terms of the deal, which is expected to close later this year, Chevron will continue to work with both GE Money Bank and FleetCor to oversee customer experience and brands and images of the cards.
(click for web site)
Back to Top

Banks Score Poorly in Credit Card Poll
Centre Daily Times (PA) (09/04/07) P. A9; Mitchell, Evangeline

According to Consumer Reports magazine, credit cards issued by credit unions had a higher customer satisfaction rate than those issued by banks. JP Morgan Chase, Bank of America, Citibank, Capital One, and HSCBC, that account for 80 percent of the market, all received poor ratings when compared to credit unions. Consumer Reports executive director Greg Daugherty says a possibility for the disparity in scores could be attributed to credit unions' tendency to have better customer relations and consequently be "more consumer-friendly than big banks." The online survey was based on 36,298 responses, assessing 21 issuers in terms of billing issues, rate increases, and the issuer's ability to resolve problems. Scores were given in categories of fairly well satisfied (60), very satisfied (80), and completely satisfied (100). Though credit unions have expanded their membership base, the two CUs that scored highest have tight membership restrictions: USAA Federal Savings, with a score 95, limits membership to military, retired military personnel, and their families; and the Navy Federal Credit Union, scoring 93. Providian card, scoring 61, ranked at the bottom of the list; a majority of Providian cards are now issued under the Washington Mutual name.
(click for web site)
Back to Top

CUs Continue Selling Off Cards
Credit Union Journal (09/03/07) P. 13

Brookwood Capital reported that 35 credit unions with over $1 million in outstanding balances sold their portfolios in the first half of 2007. For the year, total balances sold were $233 million while portfolios sold for the first half totaled $6.7 million. AssetExchange noted that of nearly 2,050 credit unions with credit card portfolios totaling $1 million or more, CU credit cards have gained market momentum. From June 2006 to June 2007, card balances have increased about 10 percent while the number of CU cards in circulation increased. During the same period, credit card assets grew twice as quickly as credit union assets, at a rate of 6.5 percent.
(click for web site)
Back to Top

Debit Volume Grows With Link to College ID Cards
American Banker (09/06/07) Boyer, Meghan

Transaction volumes for open-loop and closed-loop cards associated with colleges and universities has been growing in recent years as more schools adopt the cards, according to Tim Sloane, the director of debit advisory service at Mercator Advisory Group. Open-loop cards associated with colleges and universities accounted for $400 million of transactions in 2006, while closed-loop cards accounted for $13.6 billion. Among the colleges and universities that have adopted closed-loop cards is Slippery Rock University in Slippery Rock, Pa. The university partnered with Heartland Payment Systems and Central National Bank and Trust to issue contactless identification cards linked to a PIN-based, FDIC-insured prepaid account to its 9,500 students, faculty, and staff. The cards, along with adhesive electronic tags that can be placed on cell phones or other items, can be used to pay for purchases at on-campus merchants, vending machines and ATMs, as well as at off-campus merchants that work with Heartland Payment Systems. Meanwhile, Truman State University in Kirksville, Mo. has begun issuing identification cards that double as debit cards to its students, faculty and staff. The open-loop, Visa-branded debit cards can be used at all ATMs and merchants that accept Interlink.
(click for web site)
Back to Top