Monthly Archives: April 2017

The U.S. Makes It Easy for Parents to Get College Loans—Repaying Them Is Another Story

The federal Parent Plus loan program has millions of borrowers, many with subprime credit ratings; its default rate exceeds the rate for U.S. mortgages at the peak of the housing crisis

Rebecca McEvoy, a retired public-school teacher coping with multiple sclerosis, borrowed $84,000 through Parent Plus to help her oldest son through an art and design college.PHOTO: MADDIE MCGARVEY FOR THE WALL STREET JOURNAL

By Josh Mitchell
April 24, 2017 11:23 a.m. ET

Millions of U.S. parents have taken out loans from the government to help their children pay for college. Now a crushing bill is coming due.
Hundreds of thousands have tumbled into delinquency and default. In the process, many have delayed retirement, put off health expenses and lost portions of Social Security checks and tax refunds to their lender, the federal government.

Student loans made through parents come from an Education Department program called Parent Plus, which has loans outstanding to more than three million Americans. The problem is the government asks almost nothing about its borrowers’ incomes, existing debts, savings, credit scores or ability to repay. Then it extends loans that are nearly impossible to extinguish in bankruptcy if borrowers fall on hard times.

Read the full article here.

Banks Get Personal in Their Marketing

Financial institutions are tapping customer data to make pitches, aiming to make them useful and effective without being creepy. Some banks are mining their customer data to target messages narrowly based on what they think people will be interested in. 

ILLUSTRATION: ROB SHEPPERSON FOR THE WALL STREET JOURNAL

By
Christina Rexrode and Emily Glazer
April 24, 2017

Banks know more about their customers than ever, and increasingly are trying to get more use out of that information.
The results can be convenient, or just creepy.

Banks can look at customers’ debit-card and credit-card transactions, online-bill payments and account activity to see what they’re buying, who they’re working for and other information. Now, from the largest Wall Street behemoths to small community lenders, the banks are looking to use that data in new ways, investing in more-advanced technology to better target prospective customers and sell more services to existing ones.

Read the full article here.

In Las Vegas, Drinks Flow a Little Less Freely

Casinos are introducing technology to signal when a person has played enough poker to get a complimentary pour; the green light

A video poker player at Sully’s bar at Bally’s Las Vegas Hotel and Casino in Las Vegas. Photo: Chris Kirkham/The Wall Street Journal

By Chris Kirkham
April 18, 2017 1:33 p.m. ET

LAS VEGAS—On a recent trip here, Phil Fletcher and his friends were at a video poker bar at Bally’s casino when they noticed a series of red and green lights on the back of the machines.

He had heard about the lights, but as a longtime visitor to Vegas, he was shocked upon seeing them in person: The lights signal when a person has played enough poker to deserve a free drink, upending decades of tradition. Typically, guests got a complimentary pour at the bar regardless of how much they bet, without being tracked.

“It’s become very frustrating with all the nickel-and-diming,” said Mr. Fletcher, of Winnipeg, Canada, who visits Las Vegas at least three times a year. “As a customer, it throws you way off.”

Read the full article here.

The Rise of the Smart City

Officials are tapping all kinds of data to make their cities safer, healthier and more efficient, in what may be just the start of a sweeping change in how cities are run

As city officials across the country begin to draw on data about income, traffic, fires, illnesses and more, big changes are already under way in leading smart cities.Tatiana Plakhova for The Wall Street Journal by Michael Totty
April 16, 2017 10:12 p.m. ET

As city officials across the country begin to draw on data about income, traffic, fires, illnesses and more, big changes are already under way in leading smart cities. ILLUSTRATION: TATIANA PLAKHOVA FOR THE WALL STREET JOURNAL

Cities have a way to go before they can be considered geniuses. But they’re getting smart pretty fast.

In just the past few years, mayors and other officials in cities across the country have begun to draw on the reams of data at their disposal—about income, burglaries, traffic, fires, illnesses, parking citations and more—to tackle many of the problems of urban life. Whether it’s making it easier for residents to find parking places, or guiding health inspectors to high-risk restaurants or giving smoke alarms to the households that are most likely to suffer fatal fires, big-data technologies are beginning to transform the way cities work.

Read the full article here.

The Risk of Rising Consumer Borrowing

Bank investors should start paying attention

Credit card defaults are ticking up at some lenders and, though they are still at very low levels relative to history, are expected to rise further. PHOTO: ELISE AMENDOLA/ASSOCIATED PRESS By Aaron Back

Consumers have been ramping up debt in the U.S., adding a potential new risk to banks and a weight on the economy.Since the financial crisis, mortgage lending has been hogtied with new regulations that make it more difficult, especially for young or subprime borrowers, to get home loans. But other forms of consumer credit, including auto, student and credit card loans, have been growing strongly in recent years, helping boost retail spending, a major driver of economic growth.

Last week, data from the Federal Reserve showed that balances have now topped $1 trillion for all three of these consumer debt categories. Credit cards breached that threshold in February, joining auto and student loans above that level. Credit card debt rose to the highest level since January 2009.

Read the full article here.

Casinos Get Into the Esports Game

U.S. casinos are turning to videogame competitions, as they look for ways to jump-start growth

Microsoft Corp. earlier this month booked space at Caesars’ Atlantic City casino for a three-day ‘Gears of War 4’ contest featuring dozens of teams. PHOTO: DAVID DORAN

By Sarah E. Needleman and Chris Kirkham
April 11, 2017 12:02 p.m. ET

U.S. casinos are turning to videogame competitions to attract younger visitors and turn around years of subdued growth.

MGM Resorts InternationalMGM -0.49% plans to convert a former nightclub at its Luxor Hotel and Casino in Las Vegas into a permanent venue for hosting esports contests starting next year, the company said Tuesday.
Other gambling properties already have built or are leasing space for such events, including Downtown Grand in Las Vegas and Caesars in Atlantic City, N.J.

Read the full article here.

Slowdown in a Borrowing Defies Easy Explanation

Strong bond market and rebounding energy industry don’t fully explain decline

Oil is pumped in Texas. Energy companies paying down their bank lines as oil prices have rebounded may be one reason why commercial lending has declined in recent months.PHOTO: SPENCER PLATT/GETTY IMAGES

By Aaron Back
April 11, 2017

One of the great mysteries and biggest concerns in the economy right now is the slowing growth in bank lending. Economists are searching for answers but none are entirely satisfying.

Total loans and leases extended by commercial banks in the U.S. this year were up just 3.8% from a year earlier as of March 29, according to the latest Federal Reserve data. That compares with 6.4% growth in all of last year, and a 7.6% pace as of late October.

Read the full article here.

America’s Credit-Card Tab Hits $1 Trillion

Credit-card debt hits its highest level since the last U.S. recession

Credit-card debt in the U.S. breached the $1 trillion threshold, joining auto loans and student debt.PHOTO: ASSOCIATED PRESS

By AnnaMariaAndriotis
Updated April 7, 2017

Credit-card debt breached the $1 trillion threshold in the U.S., joining auto loans and student debt in crossing that level, and hitting its highest mark since the nation’s last recession.

The new data from the Federal Reserve marks the latest sign of a growing appetite for household debt. Rising consumer borrowing is often a positive sign for the U.S. economy as it typically means consumers are spending more on big-ticket items, such as cars, and smaller purchases often charged on cards. And while some are concerned about auto lending to risky borrowers and defaults on student loans, the quality of most credit-card debt remains strong.

Read the full article here.