Mounting Household Debt, Lending Practices, and Legislative

1
Mounting Household Debt, Lending Practices, and
Legislative Regulatory Responses Federal
Reserve Bank of Cleveland 2008 Community
Development Policy Summit

• Prof. Adam J. Levitin
• Georgetown University Law Center
• June 11, 2008

2
Americans Savings Rate

• Source NIPA--U.S. Dept. of Commerce, Bureau of
  Economic Analysis, Table. 2.1, Line 34.
• FOF--Fed. Res. Statistical Release
  Z.1, Table F.10, Line 46.

3
Financial Obligations Ratios (Debt Service to
Disposable Personal Income)
Source Federal Reserve U.S. Dept. of Commerce,
Bureau of Economic Analysis Authors Calculations
4
Financial Obligations Ratio (FOR)Hypothesized
Without Mortgage Bubble
Source Federal Reserve U.S. Dept. of Commerce,
Bureau of Economic Analysis Authors
Calculations Assumes Mortgage FOR from 2001 on at
10 year historical average and 11 increase of
revolving debt to decrease In mortgage debt and
a 3.731 impact revolvingmortgage FOR exchange.
5
Nonmortgage Interest Payments per Household
Source U.S. Dept. of Commerce, Bureau of
Economic Analysis, National Income and Product
Accounts, Table 2.1, Line 29
6
Growth in Revolving Consumer Debt
Source Federal Reserve Statistical Release G.19
7
Effective Interest Rates by Card Type(includes
penalty rates and fees)
Source CardData.com (subscription data source)
8
Card Issuers Net Interest Margin(Interest Rate
of Card Loans Minus Cost of Funds)
Source FDIC Quarterly Banking Profiles, Net
Interest Margin by Asset Concentration Group
9
Declining Interest Free Grace Periods Means Less
Benefit to Creditworthy Cardholders
Source CardData.com (subscription data source)
10
Growth in Late and Overlimit Fees
Source CardData.com (subscription data source)
11
Growth of Securitization of Revolving Debt
Source Federal Reserve Statistical Release G.19
(not seasonally adjusted)
12
Card Issuer Annual Pre-Tax Profits
Source CardTrak