Money Talk: Mortgage debt continues to decline, auto lending soars in Fed’s Eighth District

Editor’s note: Each Monday, Talk Business & Politics provides “Money Talk,” a wrap-up of banking and financial news.

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MORTGAGE DEBT CONTINUES TO DECLINE, AUTO LENDING SOARS IN FED’S EIGHTH DISTRICT

Second quarter consumer debt grew across the U.S. and all of the major metropolitan areas across the expansive St. Louis Eighth District of the Federal Reserve that includes the state of Arkansas and the Little Rock metropolitan area.

Among the findings, per capita mortgage debt grew marginally for St. Louis and the nation, while declining slightly in Little Rock. Within the past year, the change in total mortgage debt by age groups shows that overall mortgage debt growth well outpaced that of the metro areas.

Unlike St. Louis and Little Rock, non-metro Illinois and Arkansas derived considerable growth from borrowers under the age of 31. Growth within the 31-40 and 56-65 age groups for non-metro areas also outpaced St. Louis and Little Rock.

Additionally, serious delinquency rates for mortgage and credit card balances declined across all non-metropolitan areas with the exception of credit card debt in non-metro Arkansas. Auto debt grew at an average rate of about 8% across the nation as well as in the four St. Louis district metro areas, including Little Rock.

To view the full report from the Fed’s Quarterly Debt Monitor, click here.

COMMUNITY BANKERS GROUP FILES LAWSUIT AGAINST NATIONAL CREDIT UNION REGULATOR OVER LENDING RULES

The Independent Community Bankers of America recently filed a lawsuit in federal court against the National Credit Union Administration (NCUA) challenging the agency’s unlawful commercial lending rule issued earlier this year.

If allowed to stand, the NCUA’s final rule would allow tax-exempt credit unions to exceed limitations on commercial lending activity established by Congress while relaxing regulatory oversight—putting consumers and the financial system at risk, ICBA officials said. NCUA is the federal regulator for credit unions. In February, it created a rule that allows credit unions to lend more money through commercial loans.

Credit unions are considered nonprofit organizations and don’t pay income tax, but are allowed to do a certain amount of commercial lending in order to raise capital. Federal law allows credit unions to make loans worth up to 12.25% of the union’s total assets.

By allowing a credit union to exclude non-member commercial loans or participations from its calculation of the member business loan cap, the NCUA has provided the credit union industry with a huge loophole it can easily exploit to increase commercial lending in violation of the law, ICBA said in a statement.

ICBA’s lawsuit notes that the NCUA rule puts consumers, taxpayers and the financial system at risk by jeopardizing the safety and soundness of federally insured credit unions. It also expands the federally funded competitive advantages these tax-exempt institutions enjoy over community banks.

U.S. INTERNATIONAL CAPITAL ACTIVITY TOTALED NEARLY $141 BILLION IN JULY

The U.S. Department of the Treasury recently reported that the sum total in July of all net foreign acquisitions of long-term securities, short-term U.S. securities, and banking flows was $140.6 billion.

Of this, net foreign private inflows were $162.7 billion, and net foreign official outflows were $22.1 billion. Foreign residents increased their holdings of long-term U.S. securities in July; net purchases were $72.6 billion. Net purchases by private foreign investors were $90.5 billion, while net sales by foreign official institutions were $17.9 billion.

U.S. residents decreased their holdings of long-term foreign securities, with net sales of $31.3 billion. Foreign residents decreased their holdings of U.S. Treasury bills by $4.5 billion. Foreign resident holdings of all dollar-denominated short-term U.S. securities and other custody liabilities increased by $8.8 billion. Banks’ own net dollar-denominated liabilities to foreign residents increased by $47.6 billion.

The next release, which will report on data for August 2016, is scheduled for October 18, 2016.