Search

This article presents a study which evaluates the potential for bank subordinated notes and debentures (SNDs) to impose market discipline by analyzing the default-risk premium on SNDs, and which seeks to determine whether the market discipline imposed is consistent with bank regulatory agency objectives. This study's methodology includes bank problem loans and measures the default premium on subordinated debt that allows for the debt's callability. The author concludes that risk premiums on long-term debt are unrelated to accounting measures of bank performance.

Some have suggested that housing policy, embodied by the Community Reinvestment Act (CRA) and affordable housing goals of the government-sponsored enterprises (GSEs), caused the subprime crisis. We examine if these programs led to worse mortgage outcomes using two approaches. The first examines whether more activity by CRA-covered lenders, or more loan sales to the GSEs, was associated with worse outcomes. The second uses regression discontinuity to determine if outcomes were worse at the geographic thresholds used by each program. Our results suggest that neither program played a significant role in the subprime crisis. [ABSTRACT FROM AUTHOR]

'Piggybacking credit' is a new practice that helps consumers improve their credit scores by paying to become 'authorized users' on established accounts. Authorized users are not liable for paying an account, but because of Regulation B (which implements the 1974 Equal Credit Opportunity Act), the account's history factors into their credit scores. As a result piggybacking can be used to manipulate the signal of creditworthiness that scores provide and may help borrowers obtain credit for which they would not have otherwise qualified. This article investigates the policy questions raised by piggybacking. First, we evaluate whether the credit history disparities that motivated these provisions of Regulation B have persisted since they were written. Then, we assess the potential for score improvement through piggybacking. Finally, we evaluate the likely score effects of allowing credit scoring models to exclude authorized-user accounts, the most widely proposed policy response to the emergence of piggybacking. [ABSTRACT FROM AUTHOR]

The widespread use of credit scoring in the underwriting and pricing of mortgage and consumer credit has raised concerns that the use of these scores may unfairly disadvantage minority populations. A specific concern has been that the independent variables that comprise these models may have a disparate impact on these demographic groups. By 'disparate impact' we mean that a variable's predictive power might arise not from its ability to predict future performance within any demographic group, but rather from acting as a surrogate for group membership. Using a unique source of data that combines a nationally representative sample of credit bureau records with demographic information from the Social Security Administration and a demographic information company, we examine the extent to which credit history scores may have such a disparate impact. Our examination yields no evidence of disparate impact by race (or ethnicity) or gender. However, we do find evidence of some limited disparate impact by age, in which the use of variables related to an individual's length of credit history appear to lower the credit scores of older individuals and increase them for the young. [ABSTRACT FROM AUTHOR]

The article discusses the condition of the mortgage market in the U.S. in 2010 based on data under the Home Mortgage Disclosure Act of 1975 (HMDA). It highlights the findings of the reviewed data including the reduction of refinance loans, the importance of price house declines, and home-purchase lending. Several charts are also presented including the number of home lenders, home loan activity, and volume of refinance originations.

Data made available annually pursuant to the Home Mortgage Disclosure Act of 1975 (HMDA) provide an opportunity to explore changes in mortgage market activity along a host of dimensions.1 HMDA requiresmost mortgage lending institutions with offices in metropolitan areas to publicly disclose information about their home-lending activity each year. The data include the disposition of each application for mortgage credit; the type, purpose, lien status, and characteristics of the home mortgages.

The Fair and Accurate Credit Transaction Act of 2003 (the FACT Act) directed several federal agencies to conduct studies related to the credit reporting industry. A primary concern was the accuracy and fairness of the credit reporting and scoring systems. In this article, Federal Reserve System Board economists report on a study in which they examined various issues related to credit scoring, including how credit scoring has affected the availability and affordability of credit. In a responding commentary, Calvin Bradford notes flaws and deficiencies in the Federal Reserve System study. [ABSTRACT FROM AUTHOR]

Objective: To describe the histopathologic findings in eyes with uveal melanoma that had secondary enucleation after failed brachytherapy plaque treatment. Methods: Histopathologic findings in eyes that had secondary enucleation after plaque radiation therapy in the Collaborative OcularMelanoma Study (COMS) were reported on a standardized data form. The findings were compared with eyes that had primary enucleation for uveal melanoma. Results: Seventy-five eyes that had secondary enucleation were studied. Compared with primary enucleations, tumors in the irradiated eyes had lower mitotic activity, a smaller proportion of histologically intact tumor,more inflammation,more fibrosis, and more vascular damage within the tumor. In addition, compared with primary enucleations, eyes previously irradiated had a higher frequency of retinal invasion by the tumor and greater damage to the retinal vasculature, consistent with radiation retinopathy; neovascularization of the iris; and vitreous hemorrhage. Tumor growth or extrascleral extension was confirmed histopathologically in 25 of 42 eyes (60%) enucleated because of a reported failure of local control. Conclusions: Eyes with secondary enucleation after brachytherapy differ histopathologically from eyes with primary enucleation for uveal melanoma. These histopathologic differences may be due to the effects of radiation, tissue conditions related to plaque failure, and, in some cases, tumor growth. In 40% of eyes enucleated because of suspected failure of local control, increased tumor size could not be histologically confirmed. [ABSTRACT FROM AUTHOR]

Since 1975, the Home Mortgage Disclosure Act (HMDA) has required most mortgage lending institutions to disclose to the public information about the home loans they originate or purchase during a calendar year. In using these data, however, researchers need to be aware of a number of issues and potential problems that characterize HMDA. This article provides a comprehensive enumeration of these issues, focusing on practical problems that can potentially influence choices researchers make in using the data or in interpreting the findings. The article also includes an illustrative example of how the data that is reported in HMDA can be used to gain a better understanding of trends and practices in the home mortgage market. [ABSTRACT FROM AUTHOR]

The article reports on higher-priced home lending and updates on the Home Mortgage Disclosure Act (HDMA) in the U.S. in 2005. It has been noted that the HDMA data for the year focused on loan pricing and on the substantial increase in the reported incidence of higher-priced lending. The requirements needed by the Federal Reserve Board's Regulation C for lenders on their home-purchase and home-improvement loans as well as on the refinancing of these loans are also discussed.

Discusses the new information requirements under Home Mortgage Disclosure Act and its application in fair lending enforcement in the U.S. Expansion of coverage to more nondepository lenders; Revision of the definition of application to include certain requests for pre-approvals; Compulsory collection of lien status, property code and loan pricing; Incorporation of changes to the rules on collecting and reporting information on race and ethnicity.

Highlights the results of a research relating to the proposals to revise the regulations that implement the Community Reinvestment Act (CRA) in the United States. Need for federally insured banking institutions to be evaluated on their records of helping to meet the credit needs of their local communities, including low- and moderate-income neighborhoods; Brief description of the CRA; Large- and small-institution evaluation; Agencies' proposals to amend the CRA regulations. INSETS: The Large-Institution Evaluation;The Small-Institution Evaluation.

A number of researchers have recently questioned whether the Community Reinvestment Act (CRA) is still needed. In addition, economic analysis has explored the efficiency of many regulations, but not the CRA. This article seeks to address both issues to shed light on the necessity and efficiency of the CRA. On the basis of data from a survey on the performance and profitability of CRA-related lending activities, we reach three main conclusions. First, consistent with the view that the CRA is needed, we find evidence that the majority of surveyed institutions engaged in some lending activities that they would not otherwise have done in the absence of the law. Second, in terms of efficiency, the results are mixed: The vast majority of institutions increased credit flows profitably, but a significant minority incurred costs, albeit small ones. Third, quantitative evidence suggests that marginal CRA-related lending tended to be small. [ABSTRACT FROM AUTHOR]

Reports on the role of information that credit-reporting agencies maintain on consumers' credit-related experiences in credit markets in the U.S. Effects of data limitations on consumers' access to credit; Concern among financial analysts about the accuracy, completeness, timeliness and consistency of consumer credit records; Elements of credit models used to generate credit history scores.

This paper examines how bank consolidation activity affected small business lending in local U.S. banking markets during two 3-year study periods, focusing on the role played by community banks in the process. During the 1994-1997 period, we find that consolidation activity involving big banks is associated with lower loan growth, whereas community bank consolidations and a greater presence of community banks in the market are associated with higher loan growth. During the 1997-2000 period, consolidation activity is either unrelated to small business loan growth or is associated with higher loan growth. In both study periods we find that, net of organization reclassifications due to consolidation or asset growth, the share of small business lending funded by community banks rose, particularly in markets undergoing consolidation. [ABSTRACT FROM AUTHOR]

Presents an overview of consumer data and credit reporting in the U.S. Description of compilation and reporting practices of credit reporting companies; Information collected in credit reports; Major components of consumer credit report data.

Focuses on the special leading programs of the Community Reinvestment Act (CRA) in the United States. Implications of the CRA programs for banking institutions; Impact of the CRA on low-income populations; Characteristics of the special lending programs; Profitability of the programs in comparison with the overall mortgage lending.

Although credit scoring offers benefits to lenders and borrowers, its use raises important statistical issues that may affect the ability of scoring systems to accurately quantify an individual's credit risk. The evidence from a national sample of credit-bureau records suggests that concerns about omitted-variable bias may be justified, as local economic factors show significant correlations with credit scores. [ABSTRACT FROM AUTHOR]

Explores the relationship between consolidation and lending to purchase homes. Trends in banking consolidation; Consolidation and market-level changes in mortgage lending; Consolidation and mortgage lending at the banking organization level.

This paper demonstrates how a two or three component error structure can be used with seemingly unrelated regressions. Its application may be particularly useful with large panel data sets when the researcher wishes to estimate several equations simultaneously and believes that errors both between and within equations are correlated over time and across units. Relatively simple algorithms are presented for estimation of the error covariance matrix and generalized least squares coefficients. [ABSTRACT FROM AUTHOR]

Proposes orthogonality condition estimators for multiperiod probit models. Description of the models; Overview of multiperiod probit model; Problems with ML estimation; Orthogonality condition estimators for multiperiod probit models; Examination of model of female labor force participation.

Presents a model for evaluating credit risk, credit scoring and the performance of home mortgages. Mortgage underwriting; Risk mitigation; Relation between credit history and mortgage performance. INSETS: Developing a credit history scoring system.;How to obtain your credit report and what to do to ..;The elements of an affordable home loan program.;Freddie Mac's gold measure worksheet.

If the research goal in applying classical discriminant analysis techniques is to test for differences in the general characteristics of groups, then standard tests from multivariate analysis of variance are appropriate. Statistically significant differences among group means and dispersions indicate that the groups arose from separate populations. If, however, the goal is to explore group structure in terms of group overlap and the locations of individual observations relative to each other and to the group means, then it can be shown that the significance tests provide incomplete and often misleading representations of the data. Similarly, in problems involving just more that just two groups, the null hypothesis can be rejected, when in fact only one of the several groups arose from a different population.

Describes the Federal Reserve System's developed program designed to use Home Mortgage Disclosure Act (HMDA) data as a screening device for fair lending enforcement. Reasons for designing the program; Motivation behind the adoption of the program: Provisions of federal fair lending law.

In many metropolitan areas (MSAs) newspapers post mortgage terms for Leaden in a manner designed to permit an easy comparison of discount points and note rates. Using these advertised rates for 73 lenders in three MSAs we examine I) how applicants respond to short-run changes in relative rates, and 2) the relationship between the services provided and quality of applications received by lenders and their long-term market positions. We find that applicant flows increase when lenders lower their rates. We also find that persistent cross-lender differences in rates are associated with differences in product quality reflected in processing limes, loan sales, and PHA/VA lending; and that high-risk borrowers tend to apply to lenders posting above average rates. [ABSTRACT FROM AUTHOR]

In this paper the authors present evidence on household saving in the U.S. based on the panel data from the 1983 and 1986 waves of the Survey of Consumer Finances. Saving is measured in these surveys as the change in wealth over the three-year period. Using a variety of models, we are able to explain only about 7 percent of the variation in the level of saving. Demographic factors appear to be modestly useful in explaining saving. However, one her is very clear from the patterns of correlation extracted so far; either the measurement error in the data is quite large, or idiosyncratic factors are very important in explaining saving behavior, or both. [ABSTRACT FROM AUTHOR]

Because wealth estimates from survey data have usually fallen substantially short of independent aggregate estimates, survey data have not been seen as adequate for assessing questions dependent on a good representation of the entire distribution of wealth, such as estimates of wealth concentration. The 1983 Survey of Consumer Finances (SCF), which contains a supplementary sample of very high income households drawn from a tax-file sample frame, is the first U.S. survey since the 1963 Survey of Financial Characteristics of Consumers that offers hope of accurately measuring the entire wealth distribution. In this paper, we discuss the design of the survey, the critical issue of proper weighting to merge the supplementary sample with an area probability sample, and the role of imputation. We show that the use of ordinary area probability samples alone leads to probable bias in the measurement of highly concentrated assets such as stocks and bonds. We compare the SCF data with aggregates derived from the flow-of-funds accounts of the Federal Reserve Board. While methodological issues cloud exact comparisons, it appears overall that the SCF estimates are at least as credible as other aggregate measurements. Finally, we use the data to assess the change in concentration of wealth from 1963 to 1983. We estimate that the concentration of wealth in terms of households did not change significantly over this period. [ABSTRACT FROM AUTHOR]

The author comments on the paper "Cash, Paper, and Electronic Payments: A Cross-Country Analysis," by David B. Humphrey, Lawrence B. Pulley, and Jukka M. Vesala, published in the November 2, 1996 issue of "The Journal of Money, Credit and Banking." He states that the writers expand on the payments system framework to consider cross-country variation, but suggests that if countries are idiosyncratic with basic cultural factors causing differences in the payment systems rather than the countries being at different development stages, then cross-country comparisons can give misleading forecasts. He comments on differences between the U.S. and several European countries concerning noncash transactions.

Angiolymphoid hyperplasia with eosinophilia (ALHE) is an uncommon, benign disorder that presents as solitary or multiple nodules in the dermis or subcutaneous tissue. Orbital ALHE has been reported on occasion. We report a case of orbital ALHE which was refractory to systemic steroids but effectively treated with low-dose subcutaneous methotrexate. To our knowledge, this is the first reported case of methotrexate as a successful treatment for refractory ALHE. [ABSTRACT FROM AUTHOR]

The article comments on the paper entitled 'A Theory for Pricing Nonfeatured Products in Supermarkets,' by John Little and Jeremy Shapiro, published in the July 1980 issue of the "Journal of Business." The theory illustrates some of the commonalities between marketing and economics. Assuming a traditional well-behaved customer utility function, they derive the store pricing rule which maximizes store profits for a given level of customer utility. The pricing problem is basically divided into two parts--for any given level of customer utility, setting relative product prices to maximize store profits without making customers worse off, and setting absolute prices by adjusting customer utility to maximize long-term profits. Little and Shapiro argue that the typical store pricing scheme consists of assigning prices by percentage markups. Retail prices are set in a complex environment where retailers must deal both with customers and manufacturers. In effect, retailers let manufacturers determine relative product prices.