Importance of Measuring Household Liability Details and Net Worth

Importance of Measuring Household
Liability Details and Net Worth
Working Party on Financial Statistics
Paris, France
October 13, 2008
Susan Hume McIntosh
Sr. Economist and Special Project Coordinator
Federal Reserve Board
Washington, DC 20551
Background on Data Collection
SNA approach is to collect short-term and
long-term loans
OECD collects data on financial and
nonfinancial assets of households
Liabilities split into mortgages, consumer
credit, and other debt could be more useful
U.S. financial accounts present this split
Useful in analyzing current crisis
Household Home Mortgage Debt
U.S. Home Mortgage Debt
Mortgages not written down until lender
charges-off the loan
Charge-off treated as a flow
Better approach might be to treat charge-off
as an ”other volume changes”
MBS are recorded at book value
Mortgages on investment properties and
construction loans are recorded in the
nonfinancial noncorporate sector
House Prices
U.S. House Prices
Benchmarked to the 1999 American Housing
Perpetual inventory method using OFHEO
purchase-only price index
Investigating using Case-Shiller national price
index or national index from Loan
Consumer Credit
Consumer Credit
Continued borrowing in the form of consumer
Recently heavy reliance on revolving credit
Nonrevolving credit driven by auto sales remains
very weak
Tells different story than mortgage debt growth
Household Financial Obligations Ratio
Home Mortgage Lenders
Household Net Worth Relative to
Disposable Personal Income
What Does All This Mean
Collection of financial statistics is important
More liability details could help
Data on securitization vehicles would also be
A full household balance sheet should be a