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Regional Outlook

Camera-ready art of "Regional Outlook" (544Kb PDF file - PDF help or hard copy)

In Focus This Quarter

The Asian Economic Crisis: Implications for the U.S. Economy - The economic crisis in Asia is now more than one year old, yet its consequences are still reverberating throughout the global economy. There are growing indications that some sectors of the U.S. economy are beginning to experience slower growth directly attributable to problems in Asia. Consequently, lenders should be cognizant of their customers' exposure to global markets. Lending and strategic decisions predicated on an assumption of continued robust economic growth should be carefully scrutinized. By Paul C. Bishop

CLOs Lure Another Major Bank Asset off the Balance Sheet - Securitization of corporate loans and bonds is in full swing, with 1997 issuance exceeding that of securities backed by credit card loans. Collateralized loan obligations (CLOs) and collateralized bond obligations, securities with deal-and issuer-specific risks, are potential bank investments that may grow in popularity if a current proposal to lower the risk weights for AAA-rated securities is enacted. Banks with an ample supply of low-margin commercial loans are expected to issue more CLOs to an increasingly demanding secondary commercial loan market. An institution's CLO strategy may have implications that should be considered when evaluating its capital adequacy trends. By Kathy Kalser and Allen Puwalski

The Payment System: Emerging Issues - The payment system is the heart of the U.S. economic infrastructure, moving value at the rate of 90 times the U.S. gross domestic product each year. The banking industry, although historically central to this movement, now faces a tangle of new technologies, new exposures, and new competitors that challenges its hold on the payments business. Its regulators face a different dilemma--that of how much intervention, if any, these changes warrant and how best to prevent the systemic exposures that increasingly large and rapid flows of money can create. Together, the issues they face frame a payment system that is fast becoming a technical and political contest. By Gary Ternullo

Regular Features

Regional Economy - Housing permits were weak in 1997 in most states, but permit activity has rebounded in 1998 . . . Oregon and Utah are reporting declines in permit activity and softening housing indicators . . . in Oregon and Nevada, the number of new permits issued has substantially exceeded the number of new households over the past few years. By Gary C. Zimmerman

Regional Banking - Regional Banking--Banks and thrifts in the San Francisco Region continue to report strong earnings and solid asset quality . . . recent growth and high concentrations in construction lending in some states pose risks to community banks . . . residential lending standards have come under pressure from large bank and nonbank competitors. By Millen L. Simpson and Catherine I. Phillips-Olsen

A Publication of the Division of Insurance

Regional Outlook Information

Last Updated 7/26/1999

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