NEW YORK (MNI) – The following is the text of highlights from the
New York Federal Reserve Bank’s Q4 2010 Quarterly Household Debt and
Credit report released Monday:

Aggregate consumer debt continued to decline in the fourth quarter,
continuing its trend of the previous two years. As of December 31, 2010,
total consumer indebtedness was $11.4 trillion, a reduction of $1.08
trillion (8.6%) from its peak level at the close of 2008Q3, and $155
billion (1.3%) below its September 30, 2010 level.2 Household mortgage
indebtedness has declined 9.1%, and home equity lines of credit (HELOCs)
have fallen 6.5% since their respective peaks in 2008Q3 and 2009Q1. For
the first time since 2008Q4, consumer indebtedness excluding mortgage
and HELOC balances did not fall, but rose slightly ($7.3 billion or
0.3%) in the quarter. Consumers’ non-real estate indebtedness now stands
at $2.31 trillion, the same level as in 2010Q2, 8.4% below its 2008Q4
peak.

About 211 million credit accounts were closed during the four
quarters that ended December 31, while 164 million accounts were opened
over the same period. However, the number of open credit accounts rose
slightly during the fourth quarter, suggesting a recent reversal with
more accounts opening than closing in Q4. The number of credit account
inquiries within six months an indicator of consumer credit demand
rose for the third quarter in a row. Credit cards have been the primary
source of the reductions in accounts over the past two years, and during
2010Q4 the number of open credit card accounts finally ended its long
decline, rising slightly from 378 to 380 million. Nonetheless, the
number of open credit card accounts on December 31 was down 23% from its
2008Q2 peak and balances on those cards were 16% below their 2008Q4
highs.

Total household delinquency rates declined for the fourth
consecutive quarter in 2010Q4. As of December 31, 10.8% of outstanding
debt was in some stage of delinquency, compared to 11.1% on September
30, and 12.0% a year ago. Currently about $1.2 trillion of consumer debt
is delinquent and $902 billion is seriously delinquent (at least 90 days
late or “severely derogatory”). Compared to a year ago, delinquent
balances are down 13.9%, and serious delinquencies have fallen 12.1%.

About 447,000 individuals had a foreclosure notation added to their
credit reports between September 30 and December 31, a 2.2% decrease
from the 2010Q3 level of new foreclosures. New bankruptcies noted on
credit reports fell 4.1% during the quarter, from 522,000 to 500,000.
However, new bankruptcies in 2010Q4 were still 2.7% above their levels
of 2009Q4.

Mortgage originations were strong during 2010Q4, rising 22% to $464
billion. While mortgage originations in 2010Q4 were 54% above their
2008Q4 trough, they remain nearly 40% below their average levels of
2003- 2007. Auto loan originations fell back in the quarter, to $66
billion, but remain more than 30% above their trough level of 2009Q1.
Still, auto loan origination balances remain well below their levels of
2003-2007.

About 2.4% of current mortgage balances transitioned into
delinquency during 2010Q4, reversing the deterioration in this figure
that we observed in the third quarter. The rate of transition from early
(30-60 days) into serious (90 days or more) delinquency continued its
trend of slow improvement, as it fell from 32% to 30%, the lowest rate
for this measure since 2007Q3. This improvement was accompanied by a
higher cure rate with the transition rate from early delinquency to
“current” increasing in the quarter.

While many of the national trends described here are present in
most areas of the country, the data for selected states and for the
twelve Federal Reserve Districts indicate substantial heterogeneity. For
example, data for Arizona, California, Florida and Nevada continue to
indicate higher than average delinquency and foreclosure rates, but
these rates are falling much faster on average than in the rest of the
country.

** Market News International New York Newsroom: 212-669-6430 **

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