- New home construction
- Technology and software
- Federal spending
- Sales of existing homes
- Credit card lending
I would bet that in these economic times that it is the last one. Why? We have an epidemic. As I see it everyday it is not housing costs that are driving people into financial ruin it is loads and loads of credit card debt. With that in mind, did anyone catch the fact that on Friday the Fed, in concert with other federal banking oversight agencies, proposed to end some very widespread practices. Maybe they are trying to prevent another subprime mortgage crisis. The changes also apply to overdraft protection accounts at banks.
- They will eliminate penalty interest for default
- They will require firm offers of credit--applicants couldn't be told they're "pre-approved" unless they really were, for specific terms and credit limits
- Statements would have to give cardholders at least 21 days to make their payment
- They'd have to pay off high-balance rates before low-balance, thereby making the "cash advance check" more advantageous to card holders
- They would have other principal-balance reducing requirements
- Fees would be aligned more favorably for the consumer
- They could no longer do the "two cycle calculations" that essentially amount to retroactive interest rate application.
Here's the press release:
http://federalreserve.gov/newsevents/press/bcreg/20080502a.htm
Here's the introduction by Chairman Bernanke:
http://federalreserve.gov/newsevents/press/bcreg/bernankecredit20080502.htm
Highlights of the proposals:
http://federalreserve.gov/newsevents/press/bcreg/highlightscredit20080502.htm
I for one say it is about time. There are those in my industry that believe this is bad for the mortgage industry because it will potentially eliminate a line of business in the future: Those desperate people that need to refi, at any cost, to save themselves!!!!
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