Housing Stability Requires Banking Stability

The government’s $700 billion bailout plan, which has thus far proved
to be little more than a band aid on a ruptured artery caused by the
failure of Lehman Brothers, continues to ignore the core issue of
housing stability. A new report by John Burns Real Estate Consulting
underscores the need for stability in the banking system to produce
stability in the housing market. The report calls for continuing to
insure deposits up to $250,000 and unlimited amounts in payroll accounts
and to close all poorly managed and under-capitalized banks ASAP. Burns
suggests temporarily providing a down payment match to all home buyers
at a cost of approximately $40 billion and temporarily doubling the
mortgage interest rate deductions for all homeowners at a cost of $188
billion per year. Also, allow companies to utilize their current losses
to recapture taxes paid over the last 4 years so they can keep enough
cash in the bank to meet payroll and create government-backed
initiatives to help banks make good loans to employers.

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Clickbooth Addresses Auto-Deduct Chargebacks

A new service has been introduced that addresses the challenges of auto-shipped products that are auto-charged to payment cards. Sarasota, FL-based IntegraClick’s Clickbooth.com says it has developed a new standard to protect consumers from overcharges and advertisers from chargebacks. The standard was developed drawing on its consumer advocate and its online experience with several advertisers. Details of the regulations cover payments terms, refund/cancellation policies, standards regarding potentially false or unsubstantiated claims to promote product, and pre-authorized electronic fund transfers, in accordance with the EFTA. The Company notes that affiliate networks are not currently forced to employ such guidelines by any national or government entity. But, credit card auto-deduction are vital for the cash flow of some online marketing companies. Clickbooth says advertisers face increased interest rates or cancellation of their merchant services of the number of chargebacks increase.

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NOV DEBT

Credit card outstandings continued to rise in November by GBP 396 billion. Year-on-year credit card outstandings (not seasonally adjusted) were up about 8.6%. According to the The Bank of England, net credit card lending rose to GBP 52.9 billion in November from GBP 52.5 billion in the prior month and compared to GBP 48.7 million one-year ago.
The increase in total net lending to individuals in November (GBP 1.5 billion) was higher than the October increase, but below the previous six-month average. The twelve-month growth rate slowed further, to 4.1%, and the three-month annualized growth rate ticked up by 10 basis points to 1.3%. The increase in net consumer credit in November (GBP 0.8 billion) was in line with the October increase, but below the previous six-month average. Net credit card lending and net other loans and advances each rose by about GBP 0.4 billion, both in line with their October increase. The annual growth rate of consumer credit continued to slow, to 5.2%; the three-month annualised growth rate slowed by 0.4 percentage points, to 3.2%.

NOTE: Chart does not include about GBP10 billion from specialist lenders, retailers, and insurance companies. SOURCE: Bank of England

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Small Biz Owners See a Slight Dec Uptick

Despite all the gloom and doom news, economic confidence among small business owners rose slightly in December. The “Discover Small Business Watch” found that 21% of small business owners believe that economic conditions for their businesses are getting better, up from 15% in November, which was the all-time low in the 29-month history of the “Watch.” Fifty-one percent feel the conditions are getting worse, which is down from 54% last month. The “Discover Small Business Watch” rose to 72.8 in December, up 5.3 points from November. Cash flow issues decreased slightly in December as 42% of owners say they held off paying some bills in the past 90 days. Forty-four percent said the same in November. Small business owners remain cautious about the amount of time it will take the economy to crawl out of its slump. Forty-two percent of owners anticipate that economic recovery will take between 12 and 24 months, while 27% believe that it will take longer than 24 months. Twenty-three percent think that the recovery will take less than 12 months.

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Wells Fargo and Wachovia Merger Wraps

Wells Fargo and Wachovia have completed their merger,
creating North America’s most extensive distribution
system for financial services with 11,000 stores, 12,260 ATMs,
wellsfargo.com and “Wells Fargo PhoneBank”. Wells Fargo for the first
time has a Community Banking
presence in Alabama, Connecticut, Delaware, Florida, Georgia, Kansas,
Maryland, Mississippi, New Jersey, New York, North Carolina,
Pennsylvania, South Carolina, Tennessee, Virginia and Washington D.C with
community banks in 39 states and is #1 in deposit market share in 18 of
those states plus
the District of Columbia. It also is #1 in the U.S. in community
banking presence (6,650 stores), small business lending, middle market
commercial banking, agriculture lending, commercial real estate lending,
commercial real estate brokerage, and bank-owned insurance brokerage. It
is #2 in banking deposits in the U.S., home mortgage originations and
servicing, retail brokerage (number of financial advisors), and debit
card. Wells Fargo serves 48 million banking households and is one of
America’s largest private employers with 276,000 team members.
At closing, Wells Fargo acquired all outstanding shares of common stock
of Wachovia in a stock-for-stock transaction. Wachovia shareholders
received 0.1991 shares of Wells Fargo common stock in exchange for each
share of Wachovia common stock they owned. Shares of each outstanding
series of Wachovia preferred stock were converted into shares (or
fractional shares) of a corresponding series Wells Fargo preferred stock
having substantially the same rights and preferences. As a result of the
transaction, Wells Fargo acquired all of Wachovia Corporation and its
businesses and obligations, including all of its banking deposits.

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VeriFone Delays its 2008 Annual Report

VeriFone confirms it has delayed the release of its “10-K Annual Report” for the fiscal year ended October 31st. The Company expects the report to be out by January 14th. Since mid-September the payment terminal maker has experienced higher-than-expected foreign exchange losses, volatility in exchange rates resulting in product costs, adversely moving faster than could be reflected in local-currency pricing. As a result, it recorded an estimated pre-tax charge for impairment of goodwill and related write-down of intangible assets in its international segment. The Company is completing its impairment analysis of the affected goodwill, including the related tax impact, for fiscal 2008. In late 2008 VeriFone filed amended and restated quarterly reports for the last two years. (CF Library 11/21/08)

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2008 Online Holiday Sales Rise 3.5% Y/Y

Based on sales data through January 1st, overall 2008 online shopping
season dollar sales increased by 3.5% while sales transactions increased
16% year-on-year. As a result, the average holiday e-sales ticket dropped
by 11% in the 2008 holiday season, compared to 2007. The latest tracking
by the “Pulse Index” from Chase Paymentech reveals that Tuesday,
December 16th was the busiest online shopping day of 2008 in terms of
transactions. The highest e-sales dollar volume was recorded on Tuesday,
December 2nd and was 74% higher than “Cyber Monday,” December 1st. Sales
for that day were up 47% versus last year and transactions were up 55%,
the largest single day ever for the “Pulse Index.” Chase Paymentech
monitors the daily activity of 25 of the largest 150 Internet retailers.
For December 2nd (Tuesday) the tracking dollar volume was $219 million.

2008 Cyber Holiday Pulse Index
Nov 5: $ 74.10 million
Nov 12: $ 99.58 million
Nov 19: $103.17 million
Nov 26: $108.97 million
Dec 3: $197.81 million
Dec 10: $178.84 million
Dec 17: $217.55 million
Dec 24: $ 82.47 million
Dec 31: $ 43.92 million
SOURCE: Chase Paymentech

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Spartanics Issues Laser Cutting Guide

IL-based Spartanics, which manufactures laser cutters for plastic card
manufacturers, has released “Laser Cutting Technical Guide: How to Match
Today’s Laser Cutting Technology to Application Requirements – Parts I
and II”. Spartanics, which manufactures both lower-cost systems and
high-end laser cutters, created this laser cutting technical guide to
help plastic card manufacturers select the types of components and
features they need in laser cutting technology, without encumbering
either excess cost or inadequate performance capabilities. The Laser
Cutting Technical Guide chapters include “Choosing Between Laser Cutting
vs. Tool-based Die Cutting Systems”; “Quality and the Soft Marking
Standard”; “Cutting Speed vs. Web Speed; “Fallacy of the Double Scan
Head Advantage”; “Systems Integration, User-Friendliness and Production
Output”; “Selecting System Components”; and “Suggested Method for
Sourcing Laser Cutting Technology”.

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MasterCard to Acquire Orbiscom for $100MM

MasterCard has inked a deal to acquire Ireland-based Orbiscom for about $100 million which includes earn-outs. The software provider offers enhanced B2C, B2B and P2P payment solutions primarily based on its patented “Controlled Payment Number” technology. Orbiscom’s products cover “Consumer Card” solutions, “Commercial Card” solutions and “Alternative Payment” solutions. MasterCard says the acquisition will build on its existing Orbiscom partnership that created “MasterCard inControl,” a platform featuring an array of advanced authorization, transaction routing and alert controls designed to assist financial institutions in creating new and enhanced payment offerings. Last year, Royal Bank of Scotland became the first financial institution to implement “MasterCard inControl” for its commercial card customers.

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RBS WorldPay Confirms Breach of STV Cards

RBS WorldPay (formerly RBS Lynk), the U.S. payment processing arm of
The Royal Bank of Scotland Group, confirm over the holiday period that
its computer system had been improperly accessed by an unauthorized
party. The breach affected U.S. pre-paid cards include payroll cards and
open-loop gift cards. Personal information associated with certain
payroll cards may have been improperly accessed. PINs for all
PIN-enabled cards have been or are being reset. Affected individuals are
being notified and information has been posted on the RBS WorldPay Web
site. Actual fraud has been committed on approximately 100 cards.
Certain personal information of approximately 1.5 million cardholders
and other individuals may have been affected and, of this group, Social
Security numbers of 1.1 million people may have been accessed. RBS says
the breach was identified on November 10th and law enforcement agencies
and federal regulators were notified by RBS WorldPay shortly thereafter.

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