Canada, Economy, US3 Comments

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

Colin Henderson

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

Economy

World Bank GDF highlights growing risks to economic forecasts

Colin Henderson

When thinking about the future and the economic position of countries that banks must consider, I listen far less to politicians and more to IMF and World bank forecasts. The use (misuse) of the term recovery fails to acknowledge what the circumstances for people and businesses will be on the other side of the recession. Here is a new report from World Bank that looks to the future with more pragmatism, although they still use the word recovery.  Note their focus is skewed by their mandate for developing countries, however they have to look at the entire economic picture to … Continue reading World Bank GDF highlights growing risks to economic forecasts

Security, Smart Cards5 Comments

6 years is too long for elimination of mag strip debit cards

Colin Henderson

We were just hit today with a case of fraud that affected my family personally, and it just validates my view that the security of our payments networks is a problem being swept under the carpet.  Every day, all banks contact thousands of customers to cancel their debit card because it was or may have been compromised.  This is a well kept secret, and has not made mainstream press yet. In our situation we actually were the card compromised, and I know enough about the card usage to narrow down the location of the compromise which is why this one … Continue reading 6 years is too long for elimination of mag strip debit cards

Economy1 Comment

Canadian Residential Mortgage Market – Boring but Effective | IMF

Colin Henderson

A new working paper from the IMF reviews the Canadian mortgage market, and compares to the US.  There are striking differences, which they characterise as ‘boring but effective’. Canadian Residential Mortgage Market | IMF working Paper {pdf – 18 pages] Mortgage securitization is not as pervasive in Canada as in the United States, despite the shift toward bank origination and stronger government presence in the market. Only $267 billion (29 percent) of loans have been securitized, compared to about 60 percent of U.S. residential mortgages. $245 billion of these securitized mortgages are held by special purpose vehicles that issue mortgage-backed … Continue reading Canadian Residential Mortgage Market – Boring but Effective | IMF

AI1 Comment

State Department official, Jared Cohen, e-mailed Twitter – delay scheduled maintenance

Colin Henderson

This has little directly to do with banking per se, but it has a lot to do with information seeking, gathering, and the seismic shifts in how transparency of otherwise opaque bodies can be nullified by the internet tools available.  It is also just plain fascinating, and something all strategists should watch and try to understand. Whether this was innocent or otherwise, it appears to be a fact that it happened hence the significance.  Also read here for discussion and note the ‘informed’ comments.  One cannot help but think that there is something deliberate to all this, and even that … Continue reading State Department official, Jared Cohen, e-mailed Twitter – delay scheduled maintenance

regulation

US releases draft regulatory framework for Financial Institutions

Colin Henderson

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 Continue reading US releases draft regulatory framework for Financial Institutions

Security

Tower Group are right – US financial services firms have lost the battle to protect the personal information of customers

Colin Henderson

This is a sufficiently provocative headline that I can hardly ignore. Financial institutions have lost battle to protect customer data – TowerGroup | Finextra US financial services firms have lost the battle to protect the personal information of customers and must now assume that all their clients’ data has been, or will be, compromised, according to TowerGroup. First of all I agree with the headline.  The battle is largely lost;  I would go further, and hesitantly admit what few bankers will, that control over customers information never really existed.  Why do I say that? Consider how banks have evolved, which … Continue reading Tower Group are right – US financial services firms have lost the battle to protect the personal information of customers

EU

Eurozone banks face $283bn writedowns| Report

Colin Henderson

Europe and the ECB are slow with dissemination of analysis and information when compared to the IMF, US and UK.  But when they do, here is 226 pages of analysis that tells us Euro Banks will write off $283 Bn over 2009/ 2010. More to come after I get a chance to digest, but meantime here it is for your reading pleasure.  They key is the general deterioration and reduction in forecasts since last in December 2008. ECB Financial Stability Review pdf The further significant deterioration of global macroeconomic conditions since the finalisation of the December 2008 Financial Stability Review … Continue reading Eurozone banks face $283bn writedowns| Report

AI

Credit Card defaults rising although manageable so far

Colin Henderson

As noted in Nov 2007, the next thing to watch following sub prime which was already prevalent then was credit card defaults.  It has taken longer than expected which is interesting, but it is now clearly a trend, although being managed so far.  It is clear that credit card companies are pro-actively managing the situation knowing full well that to ignore would bring disaster.  Read Calculated Risk here for examples. Capital One Chargeoffs Rise To 9.4%; American Express Chargeoffs 10%; Card Issuance Drops 50% Credit cards losses are accelerating at Capital One, a trend one should expect to continue given … Continue reading Credit Card defaults rising although manageable so far

Economy

Economic forecasts for Canada – latest June 2009

Colin Henderson

Here is a quick summary GDP forecasts for North American planners. Courtesy of CBC here is the summary of the banks and Bank of Canada GDP forecasts for 2009 and 2010.  For me the open question remains to what extent 2010 is wishful thinking.  The other and related problem with the graph is that GDP growth is calculated on a moving base. So the other way to read this is that even if the 2010 forecasts are correct, the absolute dollar GDP at December 2010 will not have achieved the level of Dec 2008, or 2 years previous. The IMF … Continue reading Economic forecasts for Canada – latest June 2009