Full text of G.19 Consumer Credit : June 7, 2012 Revisions

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June 7, 2012 revisions
Total Consumer Credit
Estimates of total consumer credit have been revised downward between January 2006 and March 2012, beginning
with a series break of approximately negative $28 billion in January 2006. In all periods through March 2012,
revisions are downward and relatively small, averaging slightly less than 1 1/4 percent of their former values. These
changes are driven by larger downward revisions to nonrevolving credit, offset partially by upward revisions to
revolving credit. Over the revision period, the new estimates are on average about $27 billion below the old
estimates. Toward the end of the revision period, from March 2011 through March 2012, the gap is tighter, caused by
a slight contraction in the downward revisions of nonrevolving credit and a slight expansion in the upward revisions
of revolving credit. The average revision over this period is approximately negative $18 billion.

Nonrevolving Consumer Credit
Revisions to nonrevolving consumer credit are caused almost entirely by downward revisions to the nonfinancial
business and securitized pools sectors. The average revision from January 2006 through March 2012 is slightly
greater than 3 1/2 percent of its former value, with the new estimates staying relatively close to their average value of
$55 billion below the old estimates. In the last two years of this period, the revisions contract moderately. From
March 2010 through March 2012, revisions average about negative $53 billion, owing to upward revisions to the
finance company sector.

Revolving Consumer Credit
Upward revisions to revolving consumer credit are due mainly to nonfinancial business. Prior to March 2010,
securitized pools contribute positively to the revisions, while corresponding declines in finance company estimates
somewhat damp their effect. After March 2010, finance companies contribute positively, while offsetting declines of
securitized pools estimates somewhat damp their effect. The average revision from January 2006 through March

2012 is slightly less than 3 1/4 percent of its former value, with most revisions about $27 billion above the old
estimates. In March 2010, the gap widens somewhat because of adjustments for the accounting rule changes,
Statements of Financial Accounting Standards (FAS) Nos. 166 and 167, which cause finance company estimates to
jump by more than the offsetting decline of securitized pools.

Nonrevolving Consumer Credit Sectors
Nonfinancial Business

Revisions to nonrevolving credit from nonfinancial businesses are large and negative, beginning with a 46 percent
decline in January 2006. The average revision through March 2012 is 53 percent (negative $24 billion) and accounts
for approximately half of the revision in overall nonrevolving credit. Revisions to nonfinancial business nonrevolving
estimates are caused entirely by a change in source data. Previously, estimates of nonrevolving nonfinancial
business credit were generated from retail sales data from the U.S. Census Bureau's Monthly Retail Trade Report.
New estimates, from January 2006 on, have been benchmarked to accounts receivable data from the U.S. Census
Bureau's Annual Retail Trade Report. These data are currently the most direct measure of consumer credit extended
by nonfinancial businesses. Monthly movements are estimated using the typical seasonal pattern for nonrevolving
credit.

Finance Companies
From 2006 through 2009, revisions of nonrevolving credit held by finance companies are relatively small. The
average revision over this period is approximately 1/4 percent (negative $1 billion) and has essentially no effect on
the overall downward revisions to nonrevolving credit. Alterations to this series are due to minor idiosyncratic
methodology changes and the incorporation of revisions to source data. Methodological changes include improved
adjustments for panel attrition, panel growth, and loan sales and purchases by panel members.
In the first quarter of 2010, the revisions increase in magnitude and can be attributed to the timing of the
implementation of the accounting changes FAS 166 and 167 2. In previous estimates, we allowed early (before the
first quarter of 2010) consolidations to appear in the data as they occurred. In the new G.19 estimates, we have
suppressed all increases in on-balance-sheet data due to FAS 166 and 167 until March 2010. This change causes
downward revisions of about 4 and 6 percent ($19 and $28 billion) in January and February respectively. In March
2010, prior consolidations are no longer suppressed, and a large amount of newly consolidated consumer motor
vehicle loans contribute the entire amount of the revision of approximately 7 1/4 percent ($34 billion). Because the
increase is due to consolidation, it is wholly offset by finance companies' corresponding contribution to the decline in
credit in securitized pools and thus does not affect total nonrevolving credit.
From March 2010 through March 2012, the new estimates are about $35 billion higher than the old estimates. During
this period, the new estimates also reflect minor idiosyncratic changes in methodology and the incorporation of
revisions to source data.

Securitized Pools
Prior to March 2010, revisions to the nonrevolving pools estimates are downward and average approximately 11 1/2
percent (negative $25 billion). These revisions also make up a large part of the revisions to total nonrevolving credit,
accounting for approximately half of its downward revisions from January 2006 through February 2010. Loans
originated and securitized by depository institutions (specifically savings institutions) and finance companies cause
the vast majority of these off-balance-sheet revisions, accounting for roughly 30 and 70 percent, respectively. These
estimates of nonrevolving pools decreased from January 2006 through February 2010 because of data adjustments
for both consumer motor vehicle and other nonrevolving loans. Upon review of the data and procedures used in this
sector, adjustments have been made to ensure that all outstanding pool balances are correctly measured and loans
are properly classified by type and holder.
From March 2010 through March 2012, revisions of credit in nonrevolving pools remain downward and increase in
magnitude over time, averaging approximately 66 percent (negative $55 billion) of their former values. With respect
to total nonrevolving credit, these revisions are largely offset by the corresponding upward revisions of finance
companies.

Depository Institutions
The depository institutions sector consists of the former commercial banks and savings institutions sectors.
Revisions to nonrevolving credit held by depository institutions are small, averaging less than 0.1 percent ($110
million) of their former values. These changes have a negligible effect on total nonrevolving credit and are caused
almost entirely by a methodology change in weighting weekly commercial bank data to generate monthly estimates.

In a few instances, alterations to this series are due to minor idiosyncratic data adjustments to better account for
panel attrition, panel growth, and loan sales and purchases by panel members.

Credit Unions
Small revisions to credit union estimates are caused by revisions to source data. The new estimates are, on
average, less than 0.1 percent ($117 million) below the previous estimates.

Federal Government
Nonrevolving credit held by the federal government is revised downward from January 2006 to March 2012 because
of the exclusion of a small amount of student loans for which data are no longer available. These revisions average
about 4 1/4 percent (negative $6.4 billion) of the former estimates over the revision period. In March 2012, these
loans account for only 1 3/4 percent of the former federal government credit estimate.

Revolving Consumer Credit Sectors
Nonfinancial Business
Revolving nonfinancial business revisions are upward and large. In January 2006, the new estimate is higher by
approximately $23 billion and nearly triples the old. The average revision from January 2006 through March 2012 is
approximately 275 percent ($24 billion) and accounts for approximately 85 percent of the revision to overall revolving
credit. These changes are caused entirely by a change in source data from a private trade publication to the U.S.
Census Bureau's Annual Retail Trade Report. The Annual Retail Trade Report allows for consistent measurement of
revolving and nonrevolving credit from nonfinancial business using one data source and encompasses a wide range
of retail sectors, including furniture, electronics, appliances, food and beverage, gasoline, sporting goods, clothing,
general merchandise, and department stores.

Finance Companies
Prior to March 2010, revisions of finance company revolving credit estimates are downward and average
approximately 11 percent (negative $7 billion) of their former values. These adjustments are due to the incorporation
of off-balance-sheet transfers that were not previously shown; corresponding increases occur in the revolving
securitized pools sector.
In March 2010, the new estimate jumps above the old by roughly 31 percent ($20 billion) because of the inclusion of
previously omitted consolidated loans. In terms of overall revolving credit, this upward revision adds to that of the
nonfinancial business estimates, though it is partially offset by corresponding downward revisions of the securitized
pools sector. The difference between the new and old estimates stays approximately constant at $21 billion through
March 2012.

Securitized Pools
Revisions to revolving securitized pools are driven primarily by loans originated and securitized by finance
companies and depository institutions and account for up to roughly 15 percent of the revisions to total revolving
credit prior to March 2010. For the majority of this period, the revisions are upward, owing to nearly constant upward
contributions of loans originated and securitized by finance companies. These changes are due to the inclusion of
previously omitted securitized loans which are about 6 3/4 percent of the old estimate of total revolving pools. In
March 2010, the newly included loans are consolidated in the finance companies sector and cause no further
revisions to securitized pools.
These upward revisions are offset to varying degrees by revisions to loans originated and securitized by depository
institutions. Both commercial banks and savings institutions contribute downward revisions before March 2010. Upon
review of the securitized consumer loan market and procedures used to estimate securitized pools, estimates have
been adjusted to ensure that all outstanding pool balances are correctly measured and loans are properly classified
by type and holder.
Revisions to revolving securitized pools are largest beginning in the fourth quarter of 2009 (about $30 billion or 7 1/2
percent of their former values). These revisions reflect the timing of the incorporation of FAS 166 and167-related
consolidations at commercial banks. In the previous estimates, consolidations before March 2010 appear in the data
as they occur, causing a substantial decline in outstanding credit in securitized pools in the last quarter of 2009. In
the new estimates, all declines in off-balance sheet data because of FAS 166 and 167 have been suppressed until
March 2010. Note however, that corresponding increases in on-balance-sheet data have also been suppressed until
March 2010, so the net effect of such revisions on total revolving credit is essentially zero.
Finally, from March 2010 on, both the new and old estimates fall sharply, with the new estimate falling to
approximately 30 percent ($13 billion) below the old estimate. This downward revision in revolving pools is caused
by data adjustments for consolidations which were not previously shown, and modestly offsets the upward revisions
of total revolving credit from March 2010 through March 2012.

Depository Institutions
The depository institutions sector consists of the former commercial banks and savings institutions sectors. From
January 2006 through September 2009, revisions to revolving credit held by depository institutions are small,
averaging less than 0.1 percent of their former values (negative $146 million). These changes have a negligible
effect on total revolving credit, and are caused almost entirely by a methodology change in weighting weekly
commercial banks' data to generate monthly estimates. In a few instances, alterations to this series are due to minor
idiosyncratic data adjustments to better account for panel attrition, panel growth, and loan sales and purchases by
panel members.
In the last quarter of 2009, the new estimate drops below the old estimate by approximately $25 billion. This drop is
caused by the timing of FAS 166 and 167-related consolidations at commercial banks. In the previous estimate, we
allowed early (before the first quarter of 2010) consolidations to appear in the data as they occurred. In the new G.19
estimates, we have suppressed all increases in on-balance-sheet data because of FAS 166 and 167 until March
2010. The decrease in commercial banks' contribution to securitized pools is also suppressed until March 2010, so
the net effect of these revisions on total revolving credit is essentially zero.
Beginning in March 2010, the revisions to depository institutions' credit shrink back toward zero and have an
insignificant effect on total revolving credit.

Credit Unions
Minor revisions to credit union estimates are caused by revisions to source data. These revisions average less than
0.1 percent (negative $3 million) and have a negligible effect on total revolving credit.

Footnotes
1. See footnotes 2 and 4 of the G. 19 release
and http://www.federalreserve.gov/releases/g19/about.htm for more information about
series breaks.Return to text
2. In 2009, the Financial Accounting Standards Board (FASB) published Financial
Accounting Statements FAS 166, Accounting for Transfers of Financial Assets, and
FAS 167, Amendments to FASB Interpretation No. 46(R )(Consolidation of Variable
Interest Entities), which change the way entities account for securitizations and special
purpose entities. Because of these statements, many financial institutions consolidated
related special purpose entities onto their balance sheets. Return to text